A proponent of alternative fee arrangements summarized six “major benefits” of AFAs, one of which set me on the path to this post. The author does not define AFA, but seems to assume everyone knows it as fixed fees for a volume of legal services, primarily litigation. He writes that a major benefit is that AFAs “Reduce the average cycle time (age) of litigation resulting in potentially significant timesavings (sic) for attorneys and expense savings for companies.” Later in the article in Lit. Mgt. Mag., fall 2011 at 51, the author says that the insurance company (Selective Insurance) where he practices has more than 5,000 cases a year on fixed fees. To the point: “the average age of cases decreased by more than four months.”
The implication seems to be that before, firms didn’t mind stringing out a case because they could keep opening the cash register; now, under a fixed fee, speedier resolution earns them more (See my post of March 5, 2008: cycle time with 18 references; Nov. 29, 2008: part of AKS-Labs balanced scorecard; March 19, 2009: matter cycle time from matter management systems; April 9, 2009 #3: Takt time; and Dec. 30, 2009: no linear relationship between length and cost.). Whether settlements go up to enable those speedier resolutions the article doesn’t mention.
Logical, I agree, that shorter cases give les opportunity to charge time, but what about cases that languish because they are weak? Let sleeping dogs lie, perhaps, even if that ruins your average cycle time – and stick with medians. Perhaps too the extra effort, if it is required, to close a case quickly piles up more time – or more senior lawyer time – than a less rushed approach because cycle time was a target.