Fixed-fee arrangements and out-of-pocket disbursements

Fixed-fee deals are bespoke. Even so, to the extent any fixed-fee arrangement with a law firm is typical, it often includes in the set payment the firm’s out-of-pocket disbursements. It is also standard for those arrangements, however, to exclude very large disbursements such as for expert witnesses and sophisticated software.

A variation is for a law department to agree with its litigation counsel, handling cases on a fixed-fee, that the firm will pay all disbursements up to $10,000 per case. Regardless of the figure chosen, that approach makes sense. Something like a deductible, it shifts the initial cost burden to the law firm except for cases where there are extraordinary expenses such as significant travel, electronic discovery, or expert witnesses.