ACC Value Practice: GE- Successfully Using Alternative Fee Arrangements for Complex IP
Litigation. (Illustrates strategic use of competitive bidding among known and trusted firms.)
Bottom line: The scoping process asks “what needs to be done” and “what is the
most effective way to perform the work” – and thus begins to outline a plan for effective
execution. Critical to this process is identifying tasks that are “marginal” and which may not
add sufficient value so as to justify doing. It is about properly allocating resources – not so you
can save every dime on cost (being penny wise on fees and pound foolish on outcomes), but
so you can strategically re-invest in stronger legal services to increase your chance of getting
desired results and winning where it counts most.
• In defining the scope, focus on both legal work and what is required to properly manage
it, and discuss both with the law firm(s), emphasizing the joint long-term benefits for both
client and firm.
• Keep in mind the key questions: What are we buying? What should it cost?
Is this changing at all as the matter progresses? How do we readjust?
• Effective value-based fee arrangements require provisions to address changes in matter
activity assumptions. A hidden risk of flat and fixed fees is an unanticipated decline (or
increase) in matter activity, which 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 is one
remedy (adjusting up or down as necessary), and shadow hourly rate invoicing is another.
• Make or Buy Decision. Decide what is best done internally and externally. Some clients don’t
have certain operational resources (e.g. to fully manage e-discovery) so they outsource that
to law firm or even a third party vendor. This might be the right decision, but you only know
• Concept of Unbundling. De-constructing an aggregate bundle of work, focusing on
component tasks and costs, can help identify opportunities to assign more effectively either
to: (1) other lower cost firms or vendors who would deliver the requisite quality, or ( 2)
to the same firm or vendor that is performing most of the aggregate work, but at more
effective price points for the less specialized components. Yes, this analysis requires increased
administrative efforts and coordination, but net savings are worth it.