The Evolution of Alternate Fee Arrangements

Best Practices, Project Management, and Future Predictions

Introduction

• Emmanuel Kyrinis – Sr. Director Product Management, Aderant

What We’ll Cover

• Background• Problem Space• The AFA Proposal• Project Management• Next Steps• Your Stories

Background

A Little Background

• Billable hour still the predominate fee arrangement– Includes discounting

A Little Background

• AFA usage increasing primarily around– Fixed/Flat Fee– Blended Rates– Capped Fees

A Little Background

• AFA Drivers beyond the economic climate– Gain / Maintain Clients– Manage Risk– Communication

Problem Space

Problem Space

“Setting price high enough to meet profitability targets and low enough to ensure winning the work.”

“Managing the work so I meet client expectations and projected profitability targets.”

Proposal

Understanding Past Experience

• Firm Resume– Past relevant matter experience– Team domain expertise

“Provides the starting point for estimating the scope of the new work”

Understanding Past Experience

Scope / Plan

• Utilize relevant work as a starting point• Ideally matters that utilized Task Based

Billing (TBB) / Work Breakdown Structure (WBS) information

• Alternatively utilize proven templates“Build a project plan to understand the hours and resources required.”

Scope / Plan

Resource Scheduling

• Sourcing resources and allocating work in a timeline

• For most firms should be looked at as a Phase II concept for rollout

“Scheduling is commonly done once the proposal is accepted.”

Resource Scheduling

Pricing Models

• Determine objectives for proposal• Regardless of pricing model utilized,

understanding costs is essential• Cost should not necessarily dictate price

Pricing Models

Additional Thoughts

• Data collected can be utilized to prepare engagement letter using document assembly

• Data collected can be fed backing into accounting system for billing purposes

Project Management

Setup

• Work Breakdown Structure• Rates• Other engagement terms

Tracking

• Data entry of time and expenses– The challenge of time entry

• Updating of schedules• Understanding percentage complete

“Control Costs, Meet Schedules, Manage Risks”

Tracking

Reporting

• Budget vs Actual• Revisions• eBilling

“Client communication and managing the relationship”

Reporting

Review

• Update appropriate matter attributes such as scope work types

• Completion notes – How did we do?– What could be improved?

• Update templates

Summary

Planning Pricing Management Review

Next Steps

Next Steps

• AFAs not going away regardless of economic climate

• Project management mainstream for larger transactions and client communication

• Adoption of eBilling budget standards• Integrated software to handle AFAs• Resource/talent management usage

Questions?emmanuel.kyrinis@aderant.com