Alternative Fee Arrangements and Value Billing: Lesson IV – Drafting the Alternative Fee Arrangement Agreement


With the increasing proliferation of Alternative Fee Arrangements and clients’ demands for value billing, rather than hourly billing, we turn to some of the important issues in drafting an AFA agreement. Recent surveys show that 45% of corporate law departments require AFA’s; 90% of law firms routinely offer Alternative Fee Arrangements. Recent litigations between law firms and disaffected clients too often resulted in the law firm getting the short end of the straw and losing lawsuits, I believe because insufficient care and attention was devoted to the drafting of the AFA agreement. Having spent a substantial amount of time recently with law firms in preparing AFA agreement templates and having been consulted as an expert witness in some pending cases, I share with the reader some of the lessons learned.

Great lawyers and grand law firms, while exerting every effort on behalf of their clients, assuring that no stone is left unturned and no contingency affecting their clients is not addressed, have not always done the same for themselves in protecting the law firm in drafting an AFA agreement. Here are some important basics.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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