The following resources provide more detail on the use of capped fees under an hourly rate.
“Value Practice: Value Matrix for Intellectual Property Matters - Alternative Fee
Structures Based on Level of Difficulty, Staffing Mix and Billing Guidelines and
Informal Training,” ACC Value Practice (July 2009), available at
www.acc.com/legalresources/resource.cfm?show=458576 (Illustrates the use of
capped fees of varying amounts based on complexity of underlying work).
“Outside Counsel Fee Valuation Toolbox, Part 1,” ACC Presentation (Oct. 2010),
Flat Fee Per Month (or Some Other Period)
A flat fee per month (or some other period) is typically used to cover services delivered during the
course of a specified period. Litigation examples include: a monthly or quarterly flat fee to cover
strategy or case management in the course of litigation and/or a “per diem” fee for trial. Other
examples include: a monthly fee for advice and counsel requests in addressing a particular issue of
law. This resembles the “retainer” approach used more frequently in years past (e.g., pay X in
advance for the right to call upon the lawyers for services in that particular area, over a given
period of time).
■ Advantages: Provides certainty and sets the price based on the value to the client
(and presumably based on market reference prices for what other law firms of
similar quality would charge for this period).
■ Drawbacks: Some have argued that efficiency incentives may not arise if the flat fee
amount per period is not actively managed (i.e., periodically reviewed and adjusted
in light of actual experience regarding use and scope). Without further prodding
from the client, outside counsel may not really have the incentive to adopt process
improvements to reduce the monthly figure and share some of those savings with
Portfolio Fixed Fee
Some clients have implemented a broader application of the fixed-fee approach by assigning large
portfolios of work to a single firm (or a given volume of work to a firm) for a fixed fee, often after a
competitive bidding process. These engagements also commonly provide for separate ways to
address “one-off” matters outside the normal scope of the portfolio (e.g., a class action lawsuit),
and also contain provisions to verify that scope/activity assumptions proceed as planned.