Alterative fee arrangements (AFAs) seem to be consistently in the news. With clients demanding greater efficiencies and increasingly clamping down on legal fees, I’m often asked about technology’s role in alternative fee arrangements. Clients want to know what the secret software or best technologies are to make AFAs a breeze. I’ll let you in on a secret. There are none.
Some people are quite surprised when I won’t champion technology as the total solution. Don’t get me wrong, there are some great (and simple) technologies out there. But the best technology is a bad investment if you don’t couple it with great processes and the right people. So what do I tell my clients when the technology/AFA subject arises?
In firms that only have experience with the billable hour, the accounting and/or case management systems become key technologies.
Are you able to use any historic data to help create your AFAs? Are you capturing the right data as you open and close matters, so that you can analyze the success and profitability of your AFA? Knowing how you did, and using that information to improve your next round of AFAs, is a good thing.
Sometimes all that’s required are some tweaks to the existing system and an overhaul of the new matter intake workflow. Other times more drastic intervention is required.
Project Management Tools
While we may define AFA in a variety of ways, project management processes, skills and tools are important to their execution. While I’m a huge believer in project management (PM), I’m not so much a fan of the term, legal project management. But that’s a discussion for another time. PM tools that support resource allocation, scheduling, budget and time control can all be applied to support alternative fee arrangements as well. A good project management plan can also provide the outline of a best practices system.
I’ve already talked some about workflows. Some firms have workflows for marketing and a workflow for new matter intake. There are usually budget and timekeeping workflows, and even a matter closing workflow. The problem is that most of the time these workflows are disjointed and unconnected. If you want to optimize your matter management, you need to connect all the workflows that impact it. Information must flow and be reused from one section to the next. With such a link, lawyers won’t have to research, be presented with conflicting information, guess, or re-input information. And from a project management perspective, you’ll know exactly where you are in the process. You must also make sure workflows work when accessed from a mobile device (smartphone or tablet). The days of a lawyer sitting at their computer approving a process are long gone.
While this is another thing to consider with AFA, I almost feel bad placing document assembly on a list of technologies in 2013. I can remember first talking about it some 20+ years ago. Back then, lawyers saw it as having a negative impact on their billable hours. However, with AFAs, being able to assemble a complex document or a set of documents in a shorter time period now has a positive impact. But when you tackle document assembly, be prepared to do it properly and talk about how the system will be maintained and updated (and I don’t mean from a software perspective).
Having just added one of the oldest down-to-earth technologies to my list, let’s now go up into the clouds. In many cases, cloud computing isn’t so much a change in technology, but more a change of access and process. Some lawyers and IT professionals are still concerned about the cloud, as they should be, but that concerns shouldn’t stop you from taking advantage of it. I always recommend you start any cloud consideration with due diligence on the provider, knowing their response to subpoenas and government requests, and of course, formulate your exit strategy (how to get your information out). One of the best ways to get experience with the cloud is to take advantage of virtual data rooms. You can gain all the advantages of enhanced collaboration with your clients without having to invest in the infrastructure.
So while there is no magic technology bullet for supporting alternative fee arrangements, there are several types of technology that, when coupled with the right processes and people, will provide greater efficiencies and help you control your costs.