Administrative obstacles to law firm partners when agreeing to alternative fee arrangements

Law firm partners, especially those in very large firms, often cannot act unilaterally when they seek to work out the economic terms for how they will represent a law department. At least five gatekeepers may put up their hand to stop or alter a deal.

Partners may have to run a conflict check (See my post of July 16, 2007 on law firm conflicts of interest and references cited.) but as far as the billing arrangements go, the only “conflict” I can think of might be related to a most-favored nation commitment (See my posts of Oct. 30, 2005; Nov. 21, 2005; and Jan. 25, 2006 on difficulties with MFNs.). Law department managers hear the line “We can’t concede those terms or we’d have to do it for many other clients.”

Sometimes partners have to obtain approval from a new matter committee or a committee or partner who vets deviations from the firm’s standard billing rates (See my post of June 10, 2007 regarding alternative billing arrangements.).

In some firms the partner must seek approval from staffing coordinators to make available particular team member (See my post of Dec. 8, 2006 about core teams in law firms.). Clever fees don’t work sans clever lawyers.

Practice group leaders may have to weigh in on workload, staffing, or billing terms (See my posts of Oct. 4, 2005 and March 11, 2007 on practice groups and secession from a firm; March 6, 2007 on comparisons of law firms by practice group strength; and March 11, 2007 on how practice groups in law firms might use social network software.).

Even the accounting department may have a say in potential arrangement, such as regarding its e-billing requirements or the format or content of invoices (See my post of Feb. 21, 2007on e-billing vexations of law firms.).

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