Impossible to test alternative fee arrangements in advance

The website of The Devil’s Advocate contains a 28-page document that discusses many aspects of managing external lawyers and their costs. John W. Toothman, the author of the tract, writes about alternative fee arrangements (at 4). Specifically, he comments that for progressive law departments (“Third Wave Legal Management”) “alternatives [to hourly billing] are tested before implementation by firm and client to demonstrate feasibility and build trust.”

What does that mean? It isn’t possible to run a test lawsuit or prototype a lease negotiation. You can’t simulate a fixed-fee arrangement for reviewing termination agreements. How do you rehearse the future?

Part of the apprehension about alternative fees present on both sides of the table, inside and outside counsel, is that they significantly raise the level of unknown and thus the blood pressure. At the start you can’t know how the matter or assignment will work out or what the economics will be. Toothman’s statement and recommendation are toothless.

We welcome comments

Your email address will not be published. Required fields are marked *