The intricacies of law firm pricing and the use of alternative fee arrangements (AFAs) are examined in this new white paper, entitled The Alphabet Soup of Law Firm Pricing: Alternative Fee Arrangements, Behavior, Cost Predictability, Demand and Efficiency, by Fred Esposito, CLM, Executive Director of Rivkin Radler, LLP.
In the paper, published by Thomson Reuters’ Legal Executive Institute, Mr. Esposito discusses how law firms can use AFAs – which the author describes as impacting areas of practice group development, cost predictability and client relationships – to their fullest advantage.
Law firms that are prepared to address pricing pressures will have a competitive edge and will differentiate themselves from their competition. With that said, firms need to get a better handle on their internal economics and ascertain what it actually costs to generate the work. You would think based on pricing pressures, the message would be loud and clear, but many firms continue to move forward in a more reactive than proactive manner in addressing this growing trend.
Firms that are proactive and understand their own economics can propose pricing alternatives to clients that will not only prove profitable as the methodologies become more fine-tuned, but will also facilitate capturing business that other firms cannot otherwise take on because they have not explored this ever-growing area. More and more clients are saying they want some form of alternative fee arrangements (AFAs) at least some of the time, but law firms still do not approach AFAs proactively.