Be wary of incentives to law firms that then drive their strategy

When a law department and a law firm agree on bonuses for the law firm if the firm accomplishes certain objectives, it is to be expected that the law firm will try to perform such that it earns the bonus. All well and good, unless it becomes apparent later in the matter that the sought-for objective no longer benefits the company. Success on a motion for summary judgment may make sense as a goal at the start of a case, but as events turn out may cease to be a desirable objective. The law firm’s pursuit of its financial well-being should not thwart the client’s emergent best interests.

Even with this caveat about alternative fees, we should recognize that hourly billing serves also to drive strategy and firm performance. That which takes longer to accomplish may look more attractive to the firm; research into legal nooks and crannies has its appeal; and avoidance of early settlement may cut against the financial interests of the client.

In short, money changes behavior and you may get what you wish for.