If you believe Vivia Chen’s recent post on Careerist, neither chief legal officers at corporations nor their outside counsel firms are seriously interested in alternative fee arrangements. Chen bolstered her thesis with an opinion from Corporate Counsel writer Nigel Holloway: “True, more than three-quarters of legal departments surveyed are initiating talks with their law firms over alternative fee arrangements, but these rarely bear fruit.”
What this perfunctory analysis elides is that even if clients are not aggressively pushing for AFAs, that doesn’t mean they are unquestioningly paying whatever bills they get. There are other reliable, time-tested ways to lower costs. As long as outside firms are willing to write off billable hours, clients can achieve their cost and productivity objectives without the trouble of negotiating complicated new service agreements.
While the profession dithers with what to do about the billable hours pricing model, a few firms are pioneering a wide range of technology-enabled efficiency and cost saving applications. As Hamlet observed, “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.”
Hal M. Stewart, Chief Operating Officer of Chadbourne & Parke, recently offered a more action-oriented take on how innovative law firms are lowering operating expenses. His excellent post outlines nine innovative technology applications already in use by some law firms that offer significant opportunities for cost reduction and organizational effectiveness:
- Full digitization of incoming mail
- “Hoteling” office space arrangements
- E-billing for law firm vendors
- Workflow automation for billing adjustments and A/R write-offs
- Automated notification for AFA threshold reporting
- Unified VOIP communication, collaboration and messaging infrastructure
- Social media for recruitment and associate communications
- Workflow-enabled transaction experience systems
- Data mining for alternative fee arrangement pricing
The pressure on both in-house legal departments and outside counsel to deliver exceptional legal services at competitive rates is real and growing. AFAs are only one piece of the puzzle.
Do you think there’s a tipping point coming for bold moves into cost control and reduction, or will it continue to be more talked about than acted on?