Page 16 - CCCA Magazine Winter 2014

{ legal MarKetPlaCe } neW developments In an old proFessIon By Joe Milstone new technology is a signifcant subset of the vast amount of pricing innovation occurring in the legal services industry. However, Innovation in pricing? Isn’t that a legal oxymoron? Not anymore. Traditionally, there are other important subsets that both on their own and the legal services industry basically had coupled with new technology provide the greatest opportunity two options: an arbitrary set amount for services rendered or hourly bill. Now, for in-house counsel. however, there are a number of providers, both traditional and newer entrants, who reconstructed delivery models garding their ability to exploit such op- offer alternative fee arrangements (AFAs), Survey after survey shows the continuing portunities to complement internal legal which can include fxed fees, fat fees and primary predicament of in-house coun- resources in a cost-effective manner. bonus arrangements. sel: how to meet all the demands placed I should point out that AFAs based on on them without the commensurate in- disaggregation and re-aggregation estimated hours for a worst-case scenar- creases in legal department resources For a number of years, the most profcient io with some added padding for further and budget. industry followers have espoused the ben- contingencies are neither alternative nor While traditional business frms have efts of not only calibrating different re- innovative, and offer no greater value for struggled and even failed in this new en- source options between different projects the client. The real innovators in this area vironment—the Altman Weil 2014 Chief but within the same project. Practically provide both cost certainty and cost sav- Legal Offcer (CLO) Survey found that speaking, however, that remained futur- ings. They look at the upfront and after only 4% of CLOs are satisfed with the tra- istic until new service and cost delivery the fact (but before fee rendering) value of ditional legal service delivery—alternative models could take hold on their own. the work from the perspective of the cli- model (known as NewLaw) frms have Now that such options have been estab- ent, and ensure that this proportionality fourished. They eliminate non-value- lished and proven lasting success, the next is refected in both the fee structure and adding overhead and adopt business-like stage of innovation—dubbed by some as fnal amount. Some recent examples that differentiation, for example, by creating “co-opetition”—is happening right now. have been successfully rolled out are bulk frms of parallel in-house counsel and This is the stage that the likes of Profes- discounts, or fxed charges, for embedded boutiques of on- or offsite specialists. sor Richard Susskind predicted, where the services; close/no-close fee structures on On another level, both legal and non- best GCs begin to disaggregate discrete le- transactions; value adjustments based on legal frms that specialize in repetitive gal matters and projects into their various client-rendered scorecards; and even af- processes, primarily concerning intensive component parts, and allocate them to the fnity plans for industry groups on non- and high-quantity document review in most effcient and effective providers (new conficting matters. the corporate and litigation felds, have and traditional providers alike) before re- evolved. They offer customer-need fo- aggregating the fnished project for delivery technology tie-in cused external services at a lower cost or implementation. Further, the disaggre- Of course, while technology and alterna- than traditionally incurred. gation/re-aggregation function itself can tive approaches are both subsets of in- As non-legal executives and boards be outsourced to one of the providers—the novation, they are not and should not become aware of these new models in the “prime” or project manager—as has been be divorced from each other. In fact, par- legal market, they increasingly scrutinize recently done in the large-scale litigation ticularly as Software as a Service (SaaS) and assess in-house counsel leaders re- and corporate transaction spheres. becomes increasingly specialized for the 16 CCCa Magazine | Winter 2014 Hiver