Making Alternative Fee Arrangements Work in Litigation

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Lawyers and Clients Share the Risk

In the alternative billing philosophy that increasingly is embraced by Corporate America and its law firms, lawyers become partners along with their clients in the resolution of each specific matter. The sharing of the risk is based on the outcome. And that is based on communication right from the start, on appropriate early case assessment and budgeting. When this is approached successfully, lawyer and client have a mutual success goal. The risk for the lawyer is in not meeting the goal and possible impact on billing; the reward is in meeting or even exceeding the goal and perhaps a bonus billing.

Start with Case Assessment

Litigation provides a good framework for analysis, starting with case assessment. Corporate clients should have in mind how much money they want to spend to resolve a problem, just as they know what they want to spend on a piece of equipment. In either case, a higher initial cost may be acceptable if the long-term return on investment justifies it. Sometimes a legal problem is large enough that spending big sums on it is justified. Most issues, however, involve everyday costs of doing business. It makes no sense to budget spending $2 million to try a case if a $100,000 settlement will meet the client's objectives.

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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.

© Ed Poll, LawBiz | Attorney Advertising

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