Data on the percentage of law firm fees that are billed other than on an hourly basis and the two-year trend
LexisNexis CounselLink, an e-billing and matter management provider, found that approximately 16 percent of “law firm fees billed to clients in the first six months of 2010 were invoiced according to rules of AFAs” (alternative fee arrangements). The article that states this, Met. Corp. Counsel, Oct. 2010 at 42, adds that the same analysis for the first six months of 2008 found 3.9 percent and last year 10.5 percent. The author’s conclusion is that “the use of AFAs has been growing rapidly in the past 24 months.”
It is terrific to have some empirical data, even if several questions about it come to mind. I have written the author for clarification. For one, hopefully the definition of AFA does not include discounts from hourly rates. Strictly speaking, discounts may be an alternative to full hourly rates, but discounts do not change the underlying economic dynamic. Fixed fees, unit costs, performance-based payments, contingency work, those are all true alternatives to hourly billing.
Meanwhile, whatever the definition, the trend upwards from this data remains unarguable.