Jimerson Birr is committed to providing creative and flexible billing alternatives to our clients. We encourage our lawyers to pursue opportunities to engage in alternative fee arrangements as a means to provide predictable costs to our clients, accommodate budgetary needs, reduce billing complexities and align the cost and value of our legal services. There are a number of ways that we can increase certainty in legal expenditures that the standard hourly-rate billing agreements may not provide. Although our experience is that some matters are more suitable for unconventional billing agreements than others, we are willing to consider alternative billing methodologies for most matters.
Alternative fee arrangements offer the opportunity to balance the client’s and the law firm’s interests and needs. In return for investing our efforts and revenue sources in the client’s matter, or for unconventionally assuming fee or collection risks otherwise not inherent in the representation, we earn an agreed upon service fee based on a set of specified criteria. Designing a workable alternative structure typically requires review of detailed information about services to be performed, including, for example, historical volume/billing information, personnel assignment, issue analysis and disposition details, achievement metrics, and other information needed to determine the scope, complexity and duration of the work, and to develop a fee structure that represents a strong value for the client and a reasonable return for the firm. Any such alternative fee arrangements are evaluated on a case-by-case basis and are held in strict confidence.
In response to client needs, under appropriate circumstances, Jimerson Birr has negotiated the following value-driven alternative fee structures with our clients:
Fixed or Flat Fees:
Just what the name implies, clients have engaged Jimerson Birr to provide a specific service for a set price. Flat fees can be subject to an overall cap paid up front, or they can be for a fixed amount per month without a cap. Our firm will assume the risk associated with cost overruns.
In litigation, flat fees may be implemented for a single case or for an entire portfolio of litigation cases. Our firm has also handled specified transactions for a set price. Fixed or flat fee arrangements are best suited to situations where the time and effort to complete a project are predictable or divisible by a volume of matters. Clients who desire budgeting certainty often find fixed fee arrangements attractive.
Under contingency fee arrangements we have reached with our clients, the law firm gets paid solely on results achieved, with payment often expressed as a percentage of the recovery, settlement, or amount saved. Typically, the client pays the expenses of the litigation; however, Jimerson Birr is also willing to discuss sharing part or all of the expense risk with clients. When a contingency fee arrangement is agreed upon, our firm assumes the risks of cost overruns and unfavorable results.
Defending a matter on a contingency basis requires the firm and client to agree on the difference between a favorable and unfavorable outcome in the matter. If the case ends with a better result than the favorable outcome agreed upon, the firm gets a percentage (or multiple) of the difference between that result and the unfavorable outcome. In other words, the fee is dependent on the savings the client realizes through the firm’s legal representation.
Hybrid (Hourly or Fixed Fee Plus Contingency):
The client agrees to pay a reduced hourly rate in exchange for a shared risk or “bonus” of some sort based on the achievement of an agreed-upon result. Hybrid fee structures reduce the cost of litigation to our clients by aligning the firm’s financial incentives with its clients through assumption of litigation risk. With fixed fee plus contingency arrangements, if the outcome does not meet the mutually agreeable favorable result, the firm will not receive the specified contingency bonus.
Blended Hourly Rates:
A blended rate represents an agreement to bill all of the firm’s time at an equal rate regardless of the standard rate of the professional performing services on the matter. It can be effective for highly leveraged engagements where less expensive lawyers can be utilized.
Small and large clients occasionally have needs for a “pocket in-house counsel,” usually for set periods of time. These representations are governed by a fixed monthly payment amount for a general scope of work on issues requiring legal attention as they arise and within specified subject areas.
Unit or “Task-Based” Billing:
Under some circumstances, the firm and client may agree to unit costs for the component parts or discrete phases of the representation, e.g., the pleading phase of litigation, or the pursuit of a potentially dispositive motion. This type of arrangement works well for matters with defined segments that can be estimated and scope of work well delineated.
Jimerson Birr will collaborate with its clients to develop a budget for the work to be performed. This may be used when both parties have a good sense of fees and costs involved in the representation. Many of our larger clients request that their legal fees be planned and fixed for incremental accounting periods. Once a budget is established and implemented, the firm and the client are able to pay with installments and evaluate the budget from one period to the next. The firm and the client are then able to make adjustments for any under or over payments from the prior accounting period and into the next period.
Under a holdback fee arrangement, Jimerson Birr has allowed the client to withhold an agreed-upon amount or percentage of the fee until an agreed-upon milestone or result is achieved, or until completion of the engagement. If the matter is concluded successfully, Jimerson Birr receives a multiple of the holdback or an agreed upon success fee. This structure is often used in defense cases, or when the result sought in the matter is not monetary. This arrangement can be combined with a number of the other alternative fee arrangements described herein.
Guaranteed Volume-Based Discount:
Jimerson Birr can offer clients who entrust multiple matters with us a discount based upon their commitment to our firm. Under this arrangement, we have agreed to reduce our hourly rates as the volume of legal work reaches certain agreed-upon levels within specified periods. Further, we have entered into arrangements with clients that pool groups of plaintiffs cases on a contingency fee basis, as well as groups of defense cases on a fixed or flat fee basis.
Litigation Finance and Claims Insurance:
Jimerson Birr is willing to engage on behalf of financially troubled clients and negotiate third party litigation financing agreements. Our firm also is able to engage in the negotiation and purchase of litigation insurance to reduce the impact of a bet the company trial.
Fundamentally, each billing agreement we reach with our clients is designed to be mutually beneficial and pass the cost savings that accompany our internal efficiencies and training on to our clients. At Jimerson Birr, we are prepared to discuss and pursue any reasonable alternative fee structure that balances the relative investment and risk taken on by the firm with the client’s objectives for success in the matter. In order for the firm and our clients to evaluate whether an alternative fee arrangement is a viable option, the specifications regarding the work to be performed need to be clear. Poorly thought-out legal fee agreements can be an obstacle to a productive and mutually satisfactory attorney-client relationship. Well-conceived arrangements, clearly understood by all parties at the outset of the matter, however, can create the climate of mutual confidence and incentive between lawyer and client that makes for a successful relationship. For more information about alternative fee arrangements, contact us to set up a free consultation.