Alternate Fee Arrangments
The Shanker Law Firm, P.C. and Alternative Fee Arrangements.- The Shanker Law Firm, P.C. has been utilizing Alternative Fee Arrangements with clients for over 15 years. In general, we earn an agreed-upon fee based on a set of specified criteria. Read/Click HERE for my story on how I stumbled upon the flat fee as the optimal Alternative Fee Arrangements, why I believe most clients prefer to utilize such and why it is a superior methodology to the old school billable hours model.
What are Alternative Fee Arrangements?- Alternative Fee Arrangements (AFAs) are agreements between The Shanker Law Firm, P.C. and a client to provide compensation to The Shanker Law Firm, P.C. that is based on fee a structure other than standard hourly billing. Typically, the structure involves a flat fee arrangement. These AFA’s can be used on one case or multiple cases. They can also be utilized in transactional, litigation and/or appellate matters.
We also offer other AFA structures that take the form of contingency fees, value or success-based fees, and other alternatives to hourly fees that are appropriate under the circumstances of a specific matter. AFAs can be hybrids in which The Shanker Law Firm, P.C. receives a portion of its hourly rate, with the remainder contingent on the outcome of the matter. It can also be structured as a fixed fee with a contingency fee aspect. If there is an unfavorable result, no added monies are paid. If there is a positive outcome, the firm may receive additional monies. We have successfully negotiated AFA with clients that provide a fixed fee or a fixed contingency to handle a group of defense cases at a reduced rate, in exchange for a contingency on cases that a client may have.
Why Do Clients Seek Alternative Fee Arrangements?- Clients now recognize the inherent benefits in shifting some or all of the inefficiency of the billable hours model to law firms. First and foremost, shifting the fee risk to the law firm aligns the law firm’s incentives with the client’s, encourages efficiency, and reduces the risk that the client will overpay the law firm because it is simply not operating in an efficient manner. In addition, when feasible, clients who lack the financial resources to pursue important but expensive litigation matters are provided the opportunity to pursue such matters by having us invest in the case with the client. In the absence of AFAs, such matters might never be pursued. An AFA with a fixed monthly fee or flat fee is a prime example of a structure that virtually guarantees certainty in legal expenditures. More clients utilize AFAs because they provide predictability to cash flow and budgeting.
How Does the Process Work?- Clients sometimes initiate the discussion of AFAs, but we almost always offer AFAs to our clients when the issue of legal fees is brought up. The ability to handle cases on an AFA basis and the nature of the arrangement often depends upon the nature and complexity of the legal matter, the likelihood of success or difficulty in achieving success, the likely fees to be incurred by the client if it were a billable hours’ model and the client’s objectives for success. We ensure that the AFA fairly balances the risks and rewards to the client and the law firm.
Fixed Fee- Fixed fee or flat fee arrangements are typically arrangements whereby we agree to handle a matter or group of matters for a sum certain or for a certain rate per month. Fixed fees can be subject to an overall cap paid upfront, or they can be for a fixed amount per month without a cap. The specific nature of fixed-fee arrangements depends upon the needs of the client, the goals of each client, and the nature of the matters under consideration. Clients who desire financial certainty often find fixed fee arrangements most attractive.
Overall- As long as the risks are fairly balanced between the firm and the client, there is no type of matter that cannot be structured as an AFA
For further information, or for a free consultation, please contact us at (212) 461-2244. Thank you.