After assessing the options, the next step is to implement your value-based approach,
assigning the various pieces of work to the right firms and vendors, under the right fee
structures – all with a mechanism to monitor progress.
There are four key items to focus on in terms of implementation – terms, tracking,
frequency of updates, and provisions for changed assumptions. Each is addressed in more
Four Key Aspects of Implementation:
PROVISION FOR CHANGED ASSUMPTIONS?
FREQUENCY OF UPDATES
o Pricing. Is it all value-based fee structures or a hybrid approach retaining
some hourly rate billing? (See flow chart on p. 21 on selecting the right
value-based fee terms.)
o Payment. How should payment be phased for value-based fee
structures? It is equally apportioned across a certain number of periods,
or does payment flow depending upon the completion of the underlying
projects or the achievement of certain targets?
o Outcomes. What happens to the outcome-driven portion? (Set aside
by client? Paid, but credited back by the law firm if necessary?)
Both parties must pay close attention to this point since a common
problem for some firms has been either: 1. professional concerns
about setting arrangements that could raise ethical problems
(see, e.g., ABA Model Rule of Professional Conduct 1.5 that precludes
firms for charging fees “not earned”) or 2., clients setting an outcome-based fee, but then suggesting that the firm should split the difference
when the “windfall” was larger than expected or the matter resolved
earlier than anticipated.