Fees of law firms based on the total dollar volume of a transaction

Amidst all the talk about law firm billings and their relation to value delivered, why is there not more pricing of legal services based on how much money is involved in the transaction? Back in the late 1980s, Wachtell Lipton often charged as much is one percent of the total dollar value of the transaction, according to the Wall St.J., Nov. 11, 1989 at A10 (See my post of Nov. 22, 2007 about the debate over value delivered.).

This method of pricing might work with tax transactions, real estate deals, and certainly with purchases or sales of many kinds of products or services. If there is an exchange of money, the pricing based on that exchange value could follow.

A variation on this idea, borrowed from the world of patent applications, would be to create two or three tiers of transaction values. The firm and the law department would not have to place an exact value on the transaction but could determine fees according to which broad a tier a particular matter fell into.

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