Making Alternative Fee Arrangements Work—Incentives and Consequences

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To be successful at making a change from the billable hour to alternative billing methods, you must be clear about the benefits to you and to your clients, and the consequences for failing to make the change. Otherwise, change is unlikely.

In a recent Corporate Counsel article on Law.com, Amy Miller reported that corporate counsel are beginning to realize that workable alternative arrangements must be tied to incentives and consequences in the form of cash. In other words, lawyers need to work with their clients to determine performance standards that will be used to measure the success of the engagement. Those performance standards will then be directly tied to financial rewards (incentives) or penalties (consequences) depending upon the performance of the attorneys.

Clients can be skeptical of alternative billing arrangements when they do not understand how those arrangements will benefit them. By working with your clients to develop specific performance measures and joining in the client’s risk by tying your fees to your performance, you can show your clients that your fee arrangements truly are in the best interests of the client.

(photo: nathangibbs)

Allison Shields is a law practice coach and consultant with Legal Ease Consulting, Inc. She writes the Legal Ease blog and the Lawyer Meltdown e-newsletter.