Will the numbers reported on alternative fees please stand still a moment?

It is frustrating to lack consensus on such a basic fact as the percentage of fees billed by law firms that are not based on hourly rates, i.e., alternative fee arrangements. AFAs incite a huge amount of publicity, but definitions of it vary, measurements use different methodologies, and interpretations rely on ideology more than mathematics. AFA foxes elude the benchmark riders.

Another batch of numbers arrived recently. Kerma Partners surveyed UK, US and European law firms with 25-300 partners. They wrote in Managing Ptr., July-Aug. 2010 at 14, that “A third of respondents estimate that 26-50% of their work is now on an AFA basis, while another third estimate this to be 11-25%.” The final third must use AFA’s for 10% of their bills or less.

This finding moves around quite a bit. The article doesn’t define the term “alternative fee arrangement” as used in the survey. It does not hint at differences between law firm practices in the three very different regions; the size distribution of the law firms isn’t mentioned. It never considers whether the “estimates” come close to reality or not. We can tell nothing about whether a few kinds of services account for most of the AFA deals or whether they apply across the board.

Inquiring minds want to know, but AFA numbers – not just Kerma’s findings – bob and weave.

We welcome comments

Your email address will not be published.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