Anecdotes and desires don’t equal empirical data, as proved by all the talk about alternative fee arrangements, yet inadequate studies

“Despite the anecdotal perception that demand for alternative fee arrangements may have
grown stronger following the 2008 collapse, there are no publicly available longitudinal data to evaluate such claims. Comprehensive empirical data on the market penetration of alternative fee arrangements, and the demonstrable benefits of those arrangements to corporate clients, are lacking.” The damning quote comes from An Early Assessment of the Civil Justice System After the Financial Crisis (Rand Corp. 2012) at 34.

I agree. We lack empirical evidence regarding the touted growth of AFAs. Several times this blog has referred to putative “findings” about the increasing prevalence of AFAs, but the posts have been laden with methodological doubts. Most have to do with the definition of “alternative fee” – is a discount an alternative fee? – and some have to do with the bias injected by “right-thinking” respondents – who these days would say that their department does not make use of this trendy technique (See my post of Aug. 23, 2011: AFA posts since early 2009 with 35 references.)? Always, there is the question of penetration – if a firm says it uses AFAs but in fact only for a few small matters, does that support the claim? We need much better data.

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