Rules of the Road For Creating Alternative Fee Arrangements Versus Pure Hourly Rates.
Peter D. Zeughauser (formerly with The Irvine Company) is now a consultant who frequently writes about client-attorney fee arrangements. In his article “Alternative Reality” (pp. 75-76), he offers these “rules of the road” for creating an intelligent alternative fee structure:
- Understand each other’s position;
- Follow the money (flat rates work best for “cost pool” cases and contingency fees work well for “results pool” cases);
- Avoid windfalls;
- Share the risk—and the rewards (hybrid fee arrangements often do this);
- Avoid capped fees; and
- Always have a reopener.
2008 Shows Attorneys Are Also Impacted by the Economy.
In a special report entitled “The Party’s Over” (pp. 105-186), The American Lawyer reported that 2008 was one of the worst years for the top 100 American law firms surveyed in the report. Average revenue per partner decreased 1%, while average head count rose 4.5% (which outpaced average gross revenue growth of 4.1%). Average 2008 compensation for all partners in the top 100 slipped 4.2% (however, don’t feel too sorry, because that amounted to $960,976). The biggest slips hit well-known New York firms (with 7 out of the 10 biggest decliners being venued there), with Washington, D.C. having 5 out of the top 10 revenue-per-lawyer gainers for 2008.
BLOG BONUS COVERAGE—Jill Redhage, Daily Journal Staff Writer, has written an article in the May 13, 2009 Los Angeles Daily Journal—“Legal Work Drops Sharply in L.A., Not S.F.—in which she confirmed the downturn in most California legal markets. Based on the Hildebrandt Peer Monitor Economic Index released May 10, 2009, demand for legal services in San Francisco in the first quarter 2009 only dipped 1.2% from the same time frame in 2008, while demand dropped 8.2% from the prior 2008 first quarter in 33 legal markets worldwide. How did other well-known U.S. or English cities do? They all dipped on the demand side in first quarter 2009 versus first quarter 2008 as follows: New York—9.5% decrease; Washington, D.C. and London—12% decrease; Chicago and Los Angeles—8% decrease. The main bright spot was bankruptcy work, which was up 13.2% first quarter 2009 as compared to the first quarter 2008.