Strategic Legal Technology 
Last week I spoke at the Ark Group Conference on Alternative Fee Arrangements (AFA). I gave a short presentation called Unbundling Repetitive Aspects of Large Matters, my effort at de-mystifying and simplifying alternative fees.
Inside and outside counsel would find AFA easier if, instead of thinking about entire matters, they thought about the components of big matters. By big matters I mean single large matters such as major litigation or an M&A deal or “portfolio” matters such as real estate transactions, sales contracts, or managing NDAs.
These big matters typically include high volume, repetitive elements that can be treated as fairly discrete activities and therefore costed and priced separately. Here are some examples of common “discrete activites:”
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Matter Type
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High Volume Elements
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Litigation
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•Document review •Motions
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Deal
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•Due diligence •Employment contracts
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Real Estate
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•Environmental review •Lease agreements
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Sales contract
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•Drafting and execution •Manage rights and obligations
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NDA
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•Standard language •Managing
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The key to achieve reasonable alternate fees for both clients and firms is to unbundle these and other high volume tasks and treat them as discrete activities. Doing so can lower the cost and improve the predictability. All that’s needed is to apply the appropriate selection of process, technology and human resources:
- Process
- Workflow analysis
- Metrics and QC
- Data analytics (EDD)
- Knowledge management
- Business intelligence
- Project management
- Technology
- Document assembly
- Conceptual review tools
- Repositories
- Contract management
- Human Resources
- Paralegals
- Contract lawyers
- Outsourced lawyers (onsite, onshore, offshore, multi-shore)
By unbundling - that is, separating matters into discrete “chunks of work” - and then applying the tools above, tracking costs and effort, and monitoring and repeating the process to refine estimates, clients and lawyers likely will find that they reduce cost and, as important, make cost more predictable. That in turn should make AFA much easier.
Am I missing something, or is AFA easier than meets the eye?
I agree completely. Tasks that are high volume,repeatable and somewhat predictable, as are many types of contracts, are prime candidates for automation. Technologies such as document assembly will lead the way in helping law firms develop alternate fee arrangements.
Comment by Adine 11/16/2009 @ 11:19 am
I think this is absolutely right, Ron. To serve as a starting point, fixed fees aren’t meant to be exactly equal to what you’d have billed per hour; rather, they are in aggregate (mean value) the same. Thus one set of trial motions might run more than estimated, while another runs less.
Underlying fixed fees – and most AFAs – is the requirement that law practices 1) understand how they do the work they do and then 2) approach it with a plan not just for the legal issues but for how to do the work itself. With this information in hand, they’ll find they’re able to control their costs, better structure conversations with clients, and improve their profitability – not necessarily gross billings, but the profit on each dollar they bill.
Comment by Steven Levy 11/16/2009 @ 2:34 pm