Law Practice Management

Do alternative fees work in litigation matters? These lawyers are using them

Alternative legal fees are often discussed, but less often embraced, especially in litigation matters.

The Washington Post spoke with two lawyers who are putting their beliefs into action.

One is Crowell & Moring partner Kathy Kirmayer, a litigator who charges alternative fees for most of her work. Often Kirmayer will charge a flat fee with a success fee for positive outcomes such as early dismissal of a case.

“What I’m looking to do is provide the lowest cost to the client as possible—asking how few people can do this task?” she told the Washington Post. “How quickly can we get this task done? What’s the lowest cost to the law firm, and what’s a reasonable return on that investment? It’s cost-up pricing rather than basing off an hourly rate.”

Another believer in alternative fees is Steven Greenspan, head of litigation at the legal department of technology and aerospace company United Technologies. About 70 percent of the company’s legal fees, including its litigation fees, are based on alternative billing. For litigation matters, the company’s outside law firms charge for different phases of a case, such as investigation, discovery, trial preparation, trial and appeal.

“We believe the hourly rate is dead, and we shouldn’t engage outside counsel on an hourly rate basis,” Greenspan told the Washington Post. “I almost never get pushback [from law firms] today. Two or three years ago, I got pushback all the time.”

The article cites an Altman Weil survey showing that 80 percent of law firm leaders believe alternative billing is a permanent trend in the legal industry. Some law firms, including Holland & Knight and McDermott Will & Emery, have entire teams of people who don’t charge by the hour. Another firm, McKenna Long & Aldridge, is working on an internal software program to predict how much a litigation matter will cost.

Tami Azorsky, who heads McKenna Long’s litigation department, said there’s a movement for alternative fees in litigation, but it’s not as far along as some would believe. “It’s definitely a topic of conversation, but there are still many [clients] out there that feel comfortable with the concept of an hourly arrangement,” she said.

See also:

ABA Journal: “Facing the Alternative: How Does a Flat Fee System Really Work?”

ABA Journal: “Alt Billing: How it really works” (PDF)

How law firm mergers can go wrong

Thirty-eight 3Ls who took the Arizona bar in February await the test results

Leave a comment
Your screen name.
Your email address.