Alternative fees survey: Preview edition released today

Over the last few months, I interviewed chairmen, CEOs, CFOs, CMOs and senior partners at 37 AmLaw 100 firms about how they are using alternative fees.  (For background on the survey, including a list of the firms interviewed, see my recent progress report.)

The survey data will take a few months to analyze completely, and the final report will be published in December.  This morning, we released a 27-page .pdf Preview Edition describing initial findings, including:

•    While there has been a significant increase within the last year in the frequency of alternative fees, AmLaw 100 firms have many years of experience in structuring fixed and contingent billing arrangements.
•    78% of respondents said that alternative fees work well in every practice area.
•    There was significant disagreement about only one practice area: some felt alternative fees work well in litigation, others did not.
•    With experience, firms can predict the types of matters that will work best with alternative fees.
•    Every single survey participant predicted that AmLaw 100 firms will use alternative fees more often in the future.  However, there were dramatic disagreements about how much more often.
•    Estimates of the projected five year growth rate in alternative fee revenue ranged from 20% to 900%, with an average of 198%. 

Today’s report also provides data on how firms track alternative fee revenue internally, and on their radical differences of opinion about the percent of AmLaw 100 revenue derived from alternative fees not just in the future, but even today.

The December complete report will tie these conflicting opinions to increasing differentiation among AmLaw 100 firms.  Some large firms are aggressively pursuing the development of alternative billing, while others are taking a much more conservative approach.

Since the survey interviews were anonymous, senior decision makers spoke frankly and openly about issues that will help and hinder the growth of alternative fees.  For example, here’s what one chairman said about law firm culture, associate salaries, and costs:

I think it hurts lawyers’ egos to suggest that all of the work that they do is not brain surgery. And then when you suggest that they might be able to get away with using people who are not junior brain surgeons, almost everyone will say, “Oh, no no no. To do my stuff, you really need to be a brain surgeon like me.” And it’s just ridiculous....I think that there’s an odd and irrational pride in wasting money. It’s gratifying for people to brag to their friends about how much they have to pay summer associates, and how much they pay starting associates, like “Isn’t this a crime? We’re paying young associates more than judges, but hey, they’re brilliant. They work for me.” And so it’s an odd situation. But I think we’ve been able to do that because the market has paid to deal with it. And that may all be over.

For more comments from another survey participant, see last week’s post.

When the December report is published, it will include a list of the most common types of alternative billing arrangements, and discuss when and how to use each.  It will also offer detailed guidance to those who want to increase the use of alternative billing, whether they work in a law department, a large firm, or a small one.

The total cost for the printed report plus the preview edition is $395 plus shipping ($5 in the US, $30 outside the US).  If you order your copy today, we will send you the Preview Edition pdf immediately, and ship the printed report directly from the printer the day it is released in December.  For more details and an order form, see the alternative fees section of our web page or Download LegalBizDevSurveySummaryZ.  For background on the issues behind the survey, see the third edition of our free LegalBizDev Guide to Alternative Fees.