Examples include: all employment litigation for a fee of X; all product liability litigation of a certain
type for a fee of Y; all transactions of a certain type for a fee of Z; and handling all securities
portfolio filings for a fee of XX.
■ Advantages: This larger pool of work enables the client and firm to better manage
and “cover” or “self-fund” individual outlier matters where the activity and budget
assumptions proved to be off. It also provides the firm with a greater incentive to
help the client reduce legal risks and problems since the firm is paid to service a
portfolio (e.g., HR and employment litigation) and can make more by preventing
problems rather than rationing services. In fact, some clients build in an explicit
provision linking outside counsel’s compensation to maintaining or decreasing total
liabilities paid in connection with that portfolio of work.
The assigned firm often pays local counsel and manages vendors under this
arrangement. To successfully execute a portfolio fixed fee, the client must perform
due diligence, including assessing 2-3 years of historical data on: scope of work, fees
paid, and outcomes/liabilities/recoveries. This due diligence is critical to properly
define the scope of work to be performed and answer questions like: what are we
buying, what has it cost us in the past, and what is a sound portfolio fixed fee
number to deliver greater value?
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 provisions to verify that scope/activity assumptions proceed as planned.
Without these mechanisms, there is a risk that the actual scope of work could
diverge significantly from the anticipated scope of work, thus upending the fixed fee
■ Drawbacks: Properly implementing portfolio fixed fees requires time and effort to
analyze historical data regarding matter activity and spending patterns. It also
requires an assessment of how repeatable these patterns will be in the coming year
or two. Not everyone is equally comfortable with making such projections and
committing in advance to assigning to a single law firm.
The resources below illustrate these portfolio fixed fees in action, within larger and smaller legal
“BCE Inc. & Bell Canada: Value-Based Fee Arrangement for Commercial Agreement
Work,” ACC Value Practice (June 2010), available at
“Ford Motor Company: Value-Based Fees for Litigation- Annual Engagements for
Product Liability Matters on a Flat Fee Basis,” ACC Value Practice (May 2010),