Fixed fees are used to affix a price to a “deliverable” or a distinct piece of work, with all ancillary
preparation and effort reflected in that price. Data to determine an appropriate fixed fee can come
from multiple sources (historical information, other items in the portfolio, bids or price quotes
from existing firms or new firms). Litigation examples include paying X as the “all in” fee for a
law firm to draft and argue a summary judgment motion; paying Y as the “all in” fee per
deposition taken’ and paying Z per page or per gigabyte for first level / responsiveness review on
a document production. Transaction examples include paying X to produce an initial draft of a
license agreement; Y to negotiate outstanding issues with other side; and Z to finalize documents
and conduct closing.
Of course, not all matters or all deliverables are equally complex. As a result, ostensibly similar
pieces of work—like a summary judgment briefing and argument—may cost very different
amounts across two different matters based on complexity. That is as it should be. Increasingly,
sophisticated clients are capturing their data over time to build fee schedules for pieces of work
based on degrees of complexity. This enables them to compare prices of “like” projects or
deliverables with similar complexity profiles to arrive at apples-to-apples assessments on cost.
This requires an investment of time and effort, but the case studies below illustrate the larger
■ Advantages: This approach accommodates uncertainty and provides flexibility in
the future scope of work by pricing “units” of work, which allows for fee
adjustments as the number of units rises or falls. Such per unit tracking can also
help avoid a hidden risk of flat and fixed fees—the potential that an unanticipated
decline (or increase) in matter activity would produce a windfall (or shortfall) to the
law firm if the original terms anticipated a higher (or lower) level of activity. Per
unit tracking allows for fee adjustment up or down as necessary in order to avoid
such windfalls (or shortfalls).
■ Drawbacks: This approach may involve increased costs up front because it takes
time and effort to properly craft the numbers and adjust for changes in case activity.
The following resources provide further insight into the use of flat and fixed fees.
“General Electric Company: Successfully Using Alternative Fee Arrangements for Complex
Intellectual Property Litigation,” ACC Value Practice (Feb. 2010), available at
“De-‐constructing Legal Services -‐ Calculating Unit Costs & Component-‐Based Pricing
Structures - Johnson & Johnson’s Approach to Alternative Fees,” ACC Value Practice (Nov.
2009), available at
“Value Practice: Deconstructing IP Litigation Matters and Implementing Alternative Fee