Somehow, I missed the release of Fulbright’s 9th Annual Litigation Trends Survey Report (WEBSITE) back in March. If you did, too, or if you weren’t wearing your ‘pricing’ cap, there are a few take-aways worth noting.
First, the report uncovered a “new direction” for alternative fee arrangements (AFAs). After a three-year climb (’09 – 49%, ’10 – 54%, ’11 – 62%), companies using AFAs slipped to 52%. This was fueled by U.S. companies, which saw a ten-percentage-point drop (61% to 51%), as compared to a minor drop by U.K. companies (66% to 63%). It’s likely the unpredictability of lititgation, coupled with the lack of pricing knowledge, caused many to pull back on their enthusiastic rush to adopt AFAs.
Second, more than half (51%) of U.S. companies use alternative arrangements, even with the “new direction” noted above. Rarely does any innovation get adopted so quickly in a law firm. With more than two dozen firms hiring pricing professionals (ROLL CALL) in recent year, the legal pricing profession seems to have appeared overnight.
Third, fixed fees once again were ranked highest for effectiveness among U.S. counsel, with a significant jump over the last year (46% from 29%). Other options — blended rates, capped fees, contingency fees, success fees — are familiar to U.S. companies, but success fees are nearly twice as effective for U.K. companies (60% v. 35%).
Fourth, following 2012’s dip in usage, 61% of U.S. counsel expect no increase in AFAs. Already at pre-2010 levels, AFAs could slip to pre-recession levels, which would be a major signal that the U.S. economy has shed all remnants of the Great Recession.