Alternative fees go mainstream

Alternative fees go mainstreamAlternative fees go mainstreamVault Law Blog special legal correspondent Raj Selvadurai is down in Washington, DC this morning at a symposium sponsored by BisNow on rapidly changing relations between law firms and corporate law departments. The panel includes Citigroups GC Michael Helfer and 3 of BigLaws biggest machers Eric Friedman of Skadden, Bruce McLean of Akin Gump, and Tom Yannucci of Kirkland Ellis. The topic The tectonic shift in the legal profession, including alternative fee arrangements (including fixed fees and performance incentives), the role of junior associates (or lack thereof), changing expectations for results and delivery of services, and more.One interesting aspect of the discussion is the public airing of alternative fee arrangements expectations and practices. According to Helfer, alternative fee arrangements account for 30% of Citigroups total legal spend (the bulk of that fixed fee), and plans to increase that percentage. All t o the panelists reported that their firm use discount (or alternative, or special, depending on the firms jargon) fees to varying degrees. Discount rates make up about 15% of Akins revenues andabout 10% of Kirklands (fruchtwein all in litigation). Skadden has just begun experimenting with alternative arrangements, which currently constitute less than 10% of the firms total. Questions to Helfer Is it relevant to GCs how law firms are run? Do they care about law firm profitability? Paraphrased Answer Yes, of course. GCs value stability and morale in their outside firms. But what is most essential is developing and maintaining business trust, and key to that is flexibility and reasonableness of billing arrangements. For example, clients should not be expected to subsidize the training of junior associates. -posted by brian