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Navigating the World of Alternative Fee Arrangements The Network of Trial Law Firms

Navigating the World of Alternative Fee Arrangements The Network of Trial Law Firms Litigation Management: Driving Great Results Naples, Florida May 12-15, 2011 Linda S. Woolf Goodell, DeVries, Leech & Dann, LLP Baltimore, Maryland. Panel Members. Linda Woolf Goodell, DeVries

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Navigating the World of Alternative Fee Arrangements The Network of Trial Law Firms

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  1. Navigating the World of Alternative Fee Arrangements The Network of Trial Law Firms Litigation Management: Driving Great Results Naples, Florida May 12-15, 2011 Linda S. Woolf Goodell, DeVries, Leech & Dann, LLP Baltimore, Maryland

  2. Panel Members • Linda Woolf Goodell, DeVries • Kevin Schiferl Frost Brown Todd • Nicole Bearce Albano Lowenstein Sandler • Rick Barnes Goodell, DeVries • Marjorie Adams-Franzblau ADP • Rita McConnell Medtronic • Michael Troisi Samsung Electronics

  3. What’s on the AFA Menu? • Risk Collar • Fixed/Flat Fee • Phased fees • Fee Cap Pricing • Task-Based Billing • Blended Hourly Pricing • Reverse Contingency • Variations of all of the above and more

  4. Real Life Experiences with AFAs • Medtronic • Ford Motor Co. • ADP • Samsung • Experiences of Outside Counsel

  5. Advantages of AFAs for the Clients • Perspective of corporate counsel • Cost Certainty • Alignment of Interests and Goals • Eliminate time spent reviewing budgets and bills • Law firm shares in risk • Instills trust and loyalty • Early assessment of case adds value later

  6. Advantages of AFAs for Law Firms • Perspective of outside counsel • Predictable income • Stronger relationship • Better understanding of client’s goals • Eliminate time spent on budgeting and billing • Reduce conflicts over billing issues

  7. Concerns/Disadvantages of AFAs for Clients • Perspective of corporate counsel • Early resolution makes AFA a bad deal • Push down of work to less qualified attorneys • AFA matters put on back burner • Financial cushion required by law firm may be too large • Smaller companies lack experience to properly price AFAs

  8. Concerns/Disadvantages of AFAs for Law Firms • Perspective of outside counsel • Requires time up front for which law firm may not be compensated • Difficulty in pricing case/engagement correctly • Difficulty determining individual attorney compensation • Risk that cost overruns will be shifted to law firm

  9. Concerns/Disadvantages of AFAs for Law Firms • Perspective of outside counsel (cont’d) • Training attorneys to focus on efficient resolution rather than billable time • Change or increase in client’s demands • Agreeing on what is considered a “win”

  10. Ethical Implications of AFAs • Detailed written agreements • Interests of lawyer and client diverge • Termination of relationship mid-stream • Entering into partnership with non-lawyers • Staffing and prioritizing cases with best interest of client in mind

  11. Metrics • Monitoring and evaluating an AFA program

  12. Practice Pointers • Do your homework in advance • One size does not fit all • Include fail-safe • Spread the risk • Invest in up-front time with client • Flexibility is key • Keep lines of communication open

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