Despite a sense that the use of alternative fee arrangements (AFAs) between law firms and in-house legal departments would gain a new urgency with the economic downturn that started in 2008, their adoption has been slow, as both sides struggle to figure out how to make them work, according to a new survey from ALM Legal Intelligence (ALM also owns The Legal ).
The report, “Speaking Different Languages: Alternative Fee Arrangements for Law Firms and Legal Departments,” found that only 6 percent of law firm respondents used AFAs billing methods based on metrics other than an hourly rate for more than half of their legal work in 2011, with 67 percent using AFAs for less than a quarter of billing. Just 12 percent of legal department respondents said they used AFAs for more than half of the work they assigned to outside counsel in 2011. Six percent of legal departments and 17 percent of law firms did not know what percentage of work was billed using anything other than the billable hour or discounting. However, the survey suggests stronger adoption of AFAs may be still to come.
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