Years ago, when I was just starting in the practice of law, I was having lunch with a similarly junior colleague, and we were discussing the types of cases we were working on. As he ticked off his list of cases and told me how busy these cases were keeping him, a moment of clarity illuminated my young professional mind. There is a basic propositional truth about the attorney client relationship: Clients don’t hire lawyers to work on cases – they hire lawyers to solve problems. Any good lawyer always keeps that fact uppermost in their mind if they have the client’s interest as their foremost goal.
Conscientious attorneys and all clients recognize that there is no more basic truth than the fact that litigation can be time consuming and costly. Clients not only bear the direct costs of fees and expenses in litigation, they suffer the indirect costs imposed by the litigation process. In most business cases these unquantifiable costs include (1) time and effort diverted away from the client’s essential business activities, (2) concerns about how ongoing business decisions may impact the litigation and (3) the allied considerations of how the litigation impacts both day to day and longer term decision making. These concerns merely scratch the surface of indirect costs and expenses in litigation. A lawyer who is merely “working on a case” has lost sight of the fact that his ongoing work may be compounding, rather than solving, the client’s problems.
Lawyers and clients recognize that in a system based on hourly billings a lawyer’s financial interest can run counter to a client’s interest. The hypothetical lawyer who is driven solely by the need to have billable hours is rewarded for working on a problem, not solving it. The longer the case lasts and the more hours it requires the more lucrative it is for the attorney. On the other hand, the longer a case lasts the more direct and indirect costs are incurred by the client. It doesn’t take a rocket scientist to recognize the inherent tension in an hourly billing arrangement in litigation.
Of course, lawyers are constrained both by professional ethics and their fiduciary role from putting their financial interests ahead of their client’s. However, as I have worked with many of my Butler Snow colleagues the last few years on developing Alternative Fee Arrangements (AFAs) I’ve come to recognize the potential benefits for clients. A properly structured AFA can help insure that a client’s problem is solved expeditiously while meeting the client’s goals.
There is no one size fits all solution. But an experienced attorney who can (1) analyze a client’s problem, (2) understand the client’s business objective and (3) creatively develop a strategy to solve the problem and meet the objective has performed the preliminary steps needed to develop an AFA. Once these steps are taken, the lawyer sand the client should be able to develop objective milestones and develop a fee structure that rewards an attorney for meeting these objective milestones.
Any case has its own challenges and requires its own set of skills. But every case is a problem that a client needs to have solved. AFAs assist in solving the client’s problem by providing a means to reduce time, as well as direct and indirect costs of litigation.