The New Normal: Cost-effective, predictable fees for legal services

Traditionally, clients have demanded high-quality legal services that provide successful outcomes without regard to cost, ‘Perfect Service.’ We have a new normal. Today’s clients demand that those high-quality legal services are delivered efficiently and economically, ‘client-focused.’ They are also demanding predictable fees to enable inside counsel to budget effectively. To meet these new demands, both inside counsel and lawyers within the law firm will need to improve their processes. This, however, is an evolutionary course of action and will not happen overnight.

Alternative fee arrangements

The initial response to these client demands typically involves alternative fee arrangements (AFA) and the concomitant need to create budgets and monitor them. Whenever an AFA or budget is in place, the responsible lawyer needs to monitor budgets to understand if the matter is being delivered within the agreed price or budget and if the work is profitable to the firm. Budget monitoring also enables the responsible lawyer to have a proactive conversation with a client. Instead of shocking a client with a surprising invoice, they can discuss the value or risk of taking an extra deposition or performing additional research. These conversations unquestionably improve the way clients perceive the value delivered.

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Understanding legal costs leads to process improvement

As lawyers begin to understand the cost and price of delivering services, they start to understand where processes need to be improved and how costs can be reduced. This manifests itself in a variety of ways, ranging from simply understanding that certain work should always be handled by the least expensive resource or eliminating repetitive, unnecessary, or duplicative work.  For example, upon examination it often becomes clear who should be responsible for scheduling a deposition to eliminate the time wasted when case files are not properly organized.

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Process improvement leads to standardized tasks

Once a law firm tackles a basic process, they typically take a deeper dive into the individual tasks within that process. They soon see that, while all matters are different in some way, the tasks performed for each type of matter are actually standardized. A good illustration is the activities related to taking a deposition:

  • Schedule the deposition
  • Pull the relevant hot documents and deposition transcript pages
  • Review the information
  • Prepare the line of questioning
  • Take the deposition

While the effort to take a deposition obviously varies depending on its length, the activities should remain the same. Once this type of task breakdown has occurred, task templates can be developed for matters that allow you to monitor budgets and/or manage the matter at a detail level.

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