ACC VALUE CHALLENGE - Guide to Value-Based Fees
portfolio filings for a fee of XX.
>>Advantages: This larger pool of work enables 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, many 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 assess 2-3 years of historical data on: scope of work, fees paid,
outcomes / liabilities / recoveries.
These engagements also commonly provide for separate ways to address “one off”
matters outside the normal scope of the portfolio (e.g. class action lawsuit), and also
provisions to verify that scope / activity assumptions proceed as planned.
>>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 case studies below illustrate these portfolio fixed fees in action, within larger and
smaller legal departments.
Case Studies & ACC Resources
ACC Value Practice: Ford Motor Company:Value-Based Fees for Litigation- Annual Engagements
for Product Liability Matters on a Flat Fee Basis
ACC Value Practice: Implementing a Portfolio-Wide, “All In” Fixed Fee with a Single Law Firm...
Pfizer’s Employment Law Arrangement with Jackson Lewis
ACC Value Practice: Alternative Fee/Value-based Arrangement Implemented by Smaller Law
Department - Securities Portfolio Work for Wolverine World Wide, Inc.
ACC 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