The legal industry is undergoing one of the most prevalent transitions in its history. Law firms are under increasing pressure from clients to reduce costs and justify expenditures, and alternative fee arrangements (AFAs) are rising to the challenge.

While AFAs aren’t exactly a new concept to the legal industry (personal legal services have offered them for years), they are becoming more prevalent in new practice areas, such as corporate law and litigation work. In fact, 95% of law firms now have some kind of alternative fee arrangement in place.

It’s a major shift for a profession that has historically been married to the billable hour. The billable hour has long been the preferred method of billing, first recommended by the American Bar Association in 1958. But with increasing competition and more budget conscious clients, law firms are adapting to the change, and there has been a reported 62% increase in using AFAs.

Alternative fee arrangements can encompass many different offerings – fixed fee, phased fee, collared fee, value fee, holdback, blended rate, contingent fee – for just about any type of legal service. There are also a wide range of technologies that have been developed to support the implementation of AFAs.

We’ve brought together a list of the best tools, technologies and processes that can support the successful adoption of alternative fee arrangements in your legal practice:

1.    Project Management Tools
Ensuring the efficiency, productivity, and profitability of every firm activity is of primary importance to implementing AFAs. Project Management tools that support resource allocation, scheduling, budget and time control can all help. There is a plethora of legal software available with programs customized to your needs. Have your IT Department educate you on your options.

2.    Workflows
A connection of all the workflows that impact matter management is integral to optimizing AFAs. Information must flow seamlessly from one section, or department, to the next. With better workflows, lawyers can be more economical with their time, without having to research, be presented with conflicting information, guess, or re-input information. From a project management perspective, this will also make it obvious where in the process you are. The days of a lawyer sitting at their computer approving a process are long gone.

3.    Document Assembly
When document assembly emerged more than 20 years ago, 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 has a positive impact. However, there needs to be vigilance on how the system will be maintained and updated.

4.    Cloud Computing
Cloud computing is changing the process of accessing information, and enhancing collaboration with clients. It also provides significant cost savings to firms by not having to invest in their own infrastructure or support. However, when choosing a cloud service provider, lawyers should ensure they ask the right questions. For example, what is the vendor’s response to subpoenas and government requests? And when the time is right, what is your exit strategy for getting your information out?

* This article was supplied by Firmex who are now publishing a regular series of articles on law firm trends on their Firmex Blog at

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