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Baker Donelson is committed to adding value to our services by taking a holistic approach to helping our clients manage their budgets and improve the predictability of their legal spends.

Overview

Baker Donelson is committed to adding value to our services by taking a holistic approach to helping our clients manage their budgets and improve the predictability of their legal spends. We frequently collaborate to develop flexible alternative fee arrangements – compensation options that offer choices beyond the billable hour model and often involve sharing both risks and rewards with our clients.  To facilitate this process and determine which potential AFAs will best achieve their business and legal objectives, we work closely with our clients to understand their businesses and define the scope of a project from the beginning.

AFAs can reduce inefficiencies, increase productivity and improve the way we deliver legal services, while better aligning the cost of the engagement and value to the client. By working with our clients to define “success” from the outset of an engagement, we are able to focus on results and outcomes that add value, building even stronger relationships and ultimately gaining intelligence that will enable us to offer even better alternatives in the future.

Options are tailored to meet the needs of the specific client, based on the type and volume of the work. These AFAs are often developed in conjunction with BakerManage, the Firm's legal project management system, which helps define scope and establish consensus expectations for legal services to be provided.

Among the potential alternatives are:

Fixed or flat fees often can be set on matters for which our attorneys' time is relatively predictable; sometimes these fees can be developed based on stages of a matter or case and offer success-based incentives.

Volume discounts/discounted fees, which are most appropriate for repeat work of the same general type where efficiencies can be achieved for our clients (such as litigation in which brief banks, expert witness biographies and cross examination materials can be developed and maintained).

Risk/reward fee arrangements, which involve a shared risk/reward agreement that provides an added financial incentive for us to stay within the agreed-upon budget, and shared financial consequences for both parties when we exceed budget.

Blended hourly rates, in which a single median rate is charged for junior and senior level attorneys working on a specific matter or client.

Fee caps mean that specific work will be performed for no more than a fixed amount.  If a matter is completed for less than the cap, the client is billed only for the actual time spent on the matter, not the cap.

"Collars," in which a budget limit is set. In a "collar up" agreement, if that limit is reached, the client won't be charged for additional work until a certain amount above the limit (or "collar") is reached. At that point the client would be charged a certain percentage of the amount over the limit. A "collar down" agreement is similar but provides percentage rewards for coming in under the budget limit.

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