;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 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
initial draft of 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, what is
ostensibly a similar piece of work – 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 and investment
of time and effort, but the case studies below illustrate the larger benefits.
>>Advantages: This approach accommodates uncertainty and provides flexibility in the
future scope of work by pricing “units,” which allows for fee adjustments as the number
of units rises or falls.
>>Drawbacks: It takes time and effort to properly craft the numbers and adjust for
changes in case activity.
Case Studies & ACC Resources
ACC Value Practice: De-constructing Legal Services - Calculating Unit Costs & Component-Based
Pricing Structures - Johnson & Johnson’s Approach to Alternative Fees
ACC Value Practice: Confluence Law Partners: Deconstructing IP Litigation Matters
ACC Value Practice: Aligning the Interests of Client and Firm in Complex Litigation and Complex
Transactions- Practices Implemented by Womble Carlyle Sandridge & Rice
ACC Value Practice: Class Action Defense Via Flat Fees & Performance Incentives...
Nationwide Insurance and Fowler White’s Different Approach
;Capped fees under an hourly rate approach are commonly used to set a ceiling on
what the client will pay the law firm on a particular matter, or for a particular piece of
work. Examples include payment of not more than X to prepare and argue a summary
judgment motion, and payment of not more than Y to close an M&A transaction.