;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.
>>Drawbacks: But the model is arguably flawed in that it does not measure efficiency,
or create incentives to produce the work in less time.
;Performance-based holdback. Any of the approaches listed above can be
supplemented with a provision tying a portion of law firm compensation to achieving
pre-defined outcomes or success metrics. This can (and is) also 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:
o Winning on summary judgment, at trial or on appeal
o Resolving a matter at or below a specified amount
o Closing out a matter within a specified period of time
o Completing a merger, acquisition or deal
o Managing the entire matter at or below budget
o Reducing the overall number of new cases filed
o Successfully achieving transaction results (e.g., shifting certain risks, etc.)
The case studies below provide more details on how to correlate outside counsel
compensation with outcomes generated.
Case Studies & ACC Resources
ACC Value Practice: FMC Alternative Billing
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: Outcome-Driven Fees in High Stakes Litigation...
Bartlit Beck’s Alternative Approach