Building Trust through Alternative Fee Arrangements
Trust ought to be the bedrock of the client-attorney relationship: if a client does not trust their attorney, the relationship is doomed to failure. The financial arrangement between the client and attorney rests at the center of the relationship and is the one of the main determinants of whether a client trusts their attorney.
So, why is it that the vast majority of attorneys insist on basing their financial relationship with their clients on the billable hour, a structure that is designed to undermine the trust between client and lawyer?
The billable hour places all of the control of the financial aspects of the client relationship in the hands of the attorney. In most billable hour relationships, the client has no idea of the cost of the endeavor that they have begun. They are, in a sense, along for the ride and awaiting each month the bitter pill represented by the bill for last month's work. The billable hour approach leaves clients feeling vulnerable and even abused; attorneys are not accountable for efficiency or performance.
To see this in context, ask if there in any other product or service that you might be in which the provider says simply, "I have no idea what this will cost. But when I am done, I will send you a bill for however much time I have spent based upon a rate for my time which I have unilaterally determined."
With each new billable hour engagement, we lose the opportunity to find a better way, a path forward to a greater level of trustworthiness.
The solution lies in our ability to implement alternative fee arrangements or "AFA's". There are many forms of AFA: flat fees, success fees, percentage fees, stage payment fees, capped fees, hybrid fees among others. Each offers different shades of nuance that allow the attorney and client to reach shared expectations for their financial relationship. Many of these arrangements have the unique benefit of aligning the interests of the client and the attorney as a team, instead of placing the two protaganists at odds as done in billable hour relationships.
So, why, then are AFA's not more prevalent? In many instances, we resist change because our status quo pro