Alternative fees (Part 15): The LegalBizDev survey

In a recent survey conducted by the Association of Corporate Counsel, 60% of general counsel and chief legal officers said that the best way for outside counsel to improve relations is to offer more alternative billing arrangements.  77% would like to increase the percent of their budgets spent on alternative fees.

However, in the long run, the use of alternative fees will grow only if arrangements can be structured in a sustainable way that makes business sense for both sides.   It takes two to tango, and law firms must lead the dance because the personal risks and rewards are far greater.  While inside counsel are negotiating with their employers’ money, law firms are risking their own.

Surprisingly little is known about how large firms are implementing alternative fees these days.  As a result, my company LegalBizDev is now announcing our own survey of alternative billing and the AmLaw 100. 

A few weeks ago, I recruited a Survey Advisory Board (Lisa Damon of Seyfarth Shaw, John Dragseth of Fish & Richardson, Richard Rosenblatt of Morgan Lewis, and Harry Trueheart of Nixon Peabody) to get insights from senior partners into the questions to ask, and the best way to approach large law firms. 

These days, most surveys are based on questionnaires posted on the web.  We wanted to get deeper information, and more assurance that we were listening to the most qualified sources.  So we decided to start by approaching the chairman’s office at each firm, describing our national survey of alternative fees, and asking whether the firm would like to participate.  First we email a standard description of the survey to the chairman, then we follow up by calling the assistant up to six times until we get a decision one way or the other.  When firms agree, we ask the chairman for the name of the most appropriate senior partner to interview.

The interviews started last week: open ended discussions of what works for alternative fees and what does not.  Each 30-minute interview focuses on the areas of greatest interest to a particular senior partner including RFP requirements, bidding, managing the work for quality and profitability, future trends, and more.

After each interview, the lawyer will be sent a written summary of the discussion and will have the option to approve it to be included in the final report “as is,” or to fix any details before publication.  All interview statements will be considered confidential and proprietary until the written account has been approved.  Firms will also have the option of commenting on sensitive matters anonymously, or of making public statements.  While these steps may not sound like a hard-hitting journalistic investigation, they do help assure that the maximum number of firms will participate, that they will speak openly, and that they will be quoted accurately.

I will post occasional survey updates in this blog, and will publish a final report next fall.  It will include a list of the AmLaw 100 firms that chose to participate in the survey, and those that did not.  I will also present the findings to senior legal executives from companies across North America at the 4th Corporate Counsel Exchange next December in San Diego.

For a summary of this series and more, see the second edition of the free LegalBizDev Guide to Alternative Fees, in the Alternative Fees section of our web page.  The third edition will be released in July. 

Comments

[Rob Kahn]

Jim: I wonder if that's the best source for this info. Why not the CFOs, or the most senior biz dev person? In my experience, they are likely to have more hands-on knowledge of all the AFAs being used at the firm than the Chair or MP.

In the same vein, why not the AmLaw 200? In general, I think the smaller firms are moving more quickly in this area.

Rob – We discussed approaching others, and ultimately decided that given the many differences between firms, it was best to start at the top and work our way down. We ask the chairman who we should talk to. To date, only one chairman has nominated himself for the interview. The rest referred us to other senior partners, who have a variety of titles and roles.

I think the AmLaw 200 is a great idea, and we may extend the survey to them at some point. But for now, I want to see how quickly we can finish the AmLaw 100 and get the information out there. - Jim

[Allen C. Chichester]

Good luck with this survey, Jim. Terrific initiative. It would be great to track reaction by corporate counsel to the results you find. Although the clarion call for alternative fees is being heard loud and clear, the devil is in the details as GC's look for workable agreements that provide incentives for both sides. As more workable solutions are found and publicized, we may finally reach the tipping point. - Allen