Navigating the AFA Maze

It seems more and more that standard rates are becoming a formality in our industry. Every year, law firms raise their rates but their clients react simply by demanding deeper discounts. Thomson Reuters’ latest Peer Monitor survey illustrates this trend with the increasing gap between the steadily ascending standard rate (the grey line) and the relatively flat dollars collected (the orange line).    

Some firms have mastered the art of creating win/win alternatives, while others have gotten lost in the maze, conceding to discounts and hoping to make up for it with volume. But understanding the various AFA structures (fixed, flat, capped, collared, blended, holdbacks, etc.) and when to introduce them into a negotiation with a client is a skill well worth learning. It’s also important to remember that not all AFAs are monetary. Oftentimes a firm can request intangibles that are relatively easy for the client to grant and worth far more from a business development perspective than the discounted dollars—things like attendance at the next board meeting or an introduction to a client's subsidiary.
 

On February 15 at 1pm EST, I will be presenting a webinar with Terry Williams, Global Director of Strategic Pricing at Hogan Lovells, on key AFA strategies. I hope you will join us and discover how to stop leaving money on the table.