I am frequently asked how I go about pricing the handling of a lawsuit. I am always tempted to answer with the old line, “I could tell you but then I’d have to kill you.” My real answer goes something like this: “Before talking about how, you need to know why. Why is it that your client wants a fixed fee (or some other alternative to the billable hour) and why do want to offer it?” The latter question frequently draws the “I want the business” answer, which in my view is utterly unsatisfactory. It reflects a lack of recognition that AFA pricing is as much about how you do the work, how you approach problems and how you relate to your clients as it is about the dollars you receive.
Here is what I believe. The money the clients spend on piece of litigation belongs to the client, not me. I have never had a client with unlimited resources, so I assume there are other ways the client could spend the money it is considering spending on the lawsuit or dispute. It could buy a machine, it could acquire a business. You get the picture. Those other investments all have projected returns. Why shouldn’t the defense of the lawsuit? The corollary to this is that the client has a right to chose how and how not to spend its money. If I incur fees the client has not approved, I am taking this right away from the client. Who the hell am I (or any lawyer for that matter) to do so? Most AFAs (and budgets “with teeth”) are designed to address these two premises. Once you have the why, the how, while not easy, is not as hard as it otherwise is.