A pathway to non-hourly fees for regular and complex legal work is outlined. The most appropriate configuration of alternative fee arrangements will stimulate efficiency, effectiveness and innovation in external counsel. The article simulates a costing of work allocation to multiple firms. Four factors are proposed when evaluating the projected costs of external counsel when conducting a sourcing initiative.
Six non-financial and eight financial elements are listed as objectives when negotiating fees with external counsel. Provisional work allocations by law firms and two rounds of fee negotiations are described. Negotiation logistics and administrative support requirements are proposed.

Several building blocks for pricing were presented. These include multi-year forecasts of the demand for legal services, why alternative fee arrangements (AFAs) should be prioritized in Requests for Proposals (RFPs), the importance of setting firm pricing targets when sourcing legal services, the significant impact of developing optimal staffing distributions for various categories of legal work, replacing individual billing rates with blended rates, and finally how to pay for law firm performance. Four law department surveys form part of the article.

Several steps for the Law Department and Procurement are described to formalize a collaboration arrangement to source external legal services. These include a formal program, non-financial objectives and financial targets, and detailing responsibilities for legal leadership, legal operations, and Procurement.
Scoping is that portion of the Request for Proposals designed to inform law firms of the scope of work to achieve the company’s objectives. This part of the article focuses on portfolios of legal work and multiple jurisdictions. The importance of historical data, preferred practice patterns by legal specialty for law firms, and four considerations when developing multi-year projections are outlined.

Six non-financial and eight financial elements are listed as objectives when negotiating fees with external counsel. Provisional work allocations by law firms and two rounds of fee negotiations are described. Negotiation logistics and administrative support requirements are proposed.

This case study shows how three different law firms can offer simpler work intake and allocation protocols, and move away from hourly billing in order to secure predictable pricing that is effective for multi-year portfolios of legal work. The prerequisite is a well-drafted RFP based on solid data analytics. The scope of work should set hour work volumes and complexity levels for each legal specialty.

A pathway to non-hourly fees for regular and complex legal work is outlined. The most appropriate configuration of alternative fee arrangements will stimulate efficiency, effectiveness and innovation in external counsel. The article simulates a costing of work allocation to multiple firms. Four factors are proposed when evaluating the projected costs of external counsel when conducting a sourcing initiative.

Scoping is that portion of the Request for Proposals designed to inform law firms of the scope of work to achieve the company’s objectives. The article focuses on portfolios of work and multiple jurisdictions. The importance of historical data, preferred practice patterns by legal specialty for law firms, and four considerations when developing multi-year projections are outlined.

The article describes some steps for the Law Department and Procurement to formalize a collaboration arrangement for sourcing external legal services. These include a formal program, non-financial objectives and financial targets, and detailing responsibilities for legal leadership, legal operations, and Procurement.