Alternative fee arrangements lead the way in ROI according to research, especially fixed fees

A presenter at a December conference cited research from the General Counsel Roundtable on outside counsel management practices. The GCR found that “seven of the top ten … practices with the highest return on investment were alternative fee arrangements.” The rest not being given, I would nominate selection of firms, budgets, and staff controls to round out the top ten.

Interestingly, while legal departments perceive volume discounts to be the most effective in reducing costs, the GCR tagged them as least effective. “[F]ixed fees (defined as a set fee ‘for all work in a given area for a period of time’), risk sharing, and flat fees (defined as a set fee for a particular matter) were the most effective, in that order.” This information comes from the Met. Corp. Counsel, Vol. 18, Jan. 2010 at 18. Those three fee arrangements make sense to me based on my consultancy (See my post of Oct. 12, 2009: tiered discount levels with 11 references.).

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