Book Review: Alternative Fee Arrangements (Pat Lamb)
Posted By Rob Millard - 0 Comments -
One of the latest offerings from Managing Partner comes as a complete breath of fresh air. Alternative Fee Arrangements: Values Fees and the Changing Legal Market is written by Pat Lamb, who I count as a good friend, but who more importantly is managing partner of Valorem Law Group in Chicago. Valorem is a law firm that has been successfully practicing the art of not billing by the hour for some years now. Many readers of this blog will no doubt also know Pat's excellent blog In Search Of Perfect Client Service.
Pat's book is an easy and well-crafted read on a quite complex topic. At the outset, he provides a series of vignettes outlining all-too-familiar case studies that illustrate over-charging sins that billing by the hour encourages. He also eschews the term "alternative fee arrangements."
"‘Alternative’ sounds so counter- cultural, like a 1970s hippie movement in San Francisco, some lifestyle no-one in the mainstream wants to emulate. It certainly does not sound ‘corporate’. Alternative fees, or alternative fee arrangements, simply does not cut the terminology mustard. I believe the essential characteristics of the fees that stand in contrast to hourly fees are:
- The fee must align with the economic interests of the client and the lawyer;
- The fee must create a financial incentive for the lawyer to reduce cost, not increase it; and
- The fee structure must create incentives to accomplish a specific, identifiable client objective.
These are the same characteristics that we would use to define value delivered to a client. Hence, I believe the term that should be applied to non-hourly fees is ‘value fees’."
Pat goes on to unpack the various kinds of value fees that are being used. He shows how pricing structures influence lawyer behaviour and, with great clarity, outlines the "cause-and-effect" of the different kinds of pricing models from the perspective of how they impact the value delivered to the client. He goes into a great deal of detail describing what firms need to take into account when pricing matters, again from the perspective of somebody who has "been-there-done-that" rather than theory. For many law firms, this may be the most valuable part of the book. His FAQ section at the end is also a veritable goldmine for law firm's preparing to engage clients in discussions on this topic.
As with all Managing Partner publications, at +/- GBP300/USD450 the book costs more than the average offering down at the corner bookstore, but I would be surprised if investing in it does not yield a very good return for any law firm leader. A really awesome contribution to the body of knowledge on law firm strategy and management, Pat!
http://www.robmillard.com/admin/trackback/207626
