“Implementing a Portfolio-Wide Fixed Fee with a Single Law Firm,” ACC Value
Practice (Nov. 2009), available at
“Levi Strauss & Co.: Global Partnerships for Corporate, Commercial and Intellectual
Property Work,” ACC Value Practice (Mar. 2011), available at
“Value Practice: Alternative Fee/Value-based Arrangement Implemented by
Smaller Law Department - Securities Portfolio Work for Wolverine World Wide,
Inc.,” ACC Value Practice (Sept. 2009), available at
“Value Practice: Employment Litigation and Counseling Portfolio Services on a Flat
Fee Basis- Value Practices Implemented by Toyota Motor Sales, USA, Inc.’s Law
Department,” ACC Value Practice (Sept. 2009), available at
Per Capita Fees / Ad Agency Model
While the fixed fee model described above focuses first and foremost on the project/deliverable,
the per capita approach focuses on the professional(s) performing the work. The “ad agency”
model fixes a set price to “purchase” the full-time or half-time services of a certain person or team
of people, on the presumption that they effectively produce all the work required.
■ Advantages: Savings, from the client’s perspective, are calculated vs. “rack rates”
for an equivalent amount of that person’s time. The law firm typically conveys a
discount in exchange for the advance certainty provided under this arrangement.
■ Drawbacks: But the model is arguably flawed in that it does not measure efficiency,
or create incentives to produce the work in less time.
Any of the approaches listed above can be supplemented with a provision tying a portion of law
firm compensation (i.e., a holdback amount) to achieving pre-defined outcomes or success metrics.
This also can be (and often is) done in more conventional engagements structured under the
hourly rate model. The holdback amount (e.g., 20% of fees billed) is typically subject to a
multiplier (e.g., 0, 1, 2, or 3) depending on the extent of success achieved. Examples of pre-defined
outcomes or success metrics include:
■ Winning on summary judgment, at trial or on appeal;
■ Resolving a matter at or below a specified resolution cost;
■ Closing out a matter within a specified period of time;