ALTERNATIVE FEE ARRANGEMENTS
At Paul Hastings we have partnered with our clients to develop risk-sharing
solutions and alternative fee arrangements to help them address some of today’s
most pressing business challenges. Alternative fee arrangements can provide
greater fee predictability and better value in appropriate matters by focusing on
results and efficiency, often without being based directly on the time expended.
Paul Hastings has embraced the changes occurring in the legal market and the
manner in which our clients do business, and we are prepared to partner with our
clients to meet their objectives. In this regard, we have developed a proprietary
Matter Management System that allows us to successfully budget, manage, and
execute alternative fee arrangements.
Each situation is different, and we collaborate with clients to develop tailored
alternative fee arrangements to provide the best value and result. Here are some
examples of programs we have successfully employed:
Legal Risk Sharing and Hybrid Arrangements
Performance-Based Success Fee/Holdback
- Typically used with hourly and fixed fee
arrangements, a portion of the client’s fees is
placed into a separate account or held back.
- Upon reaching predetermined benchmarks
determined in collaboration with the client, fees may
be disbursed to the firm, refunded to the client, or
divided between them. If Paul Hastings achieves a
successful measurable result, it may receive a
multiple of the holdback.
- Depending on the nature and extent of the success,
the client may further provide a discretionary bonus.
- We work with the client to establish a set of
performance metrics, an appropriate holdback,
and circumstances in which a multiple will be
applied to the holdback. These types of
arrangements can promote creative lawyering
and encourage us to be more collaborative with
Partial Contingency Fees
- An arrangement in which Paul Hastings receives a
portion of its hourly rate plus a percentage of any
recoveries in a lawsuit.
- Aligns the financial interests of the firm and its
clients while also reducing the costs of litigation.
- Generally used in plaintiff cases seeking monetary
relief, but can also be used for defendants where
the level of damages avoided determines the
amount of the contingency.
Periodic Flat Fee
- Value-based fixed fee is created and then split into
equal payments for a predetermined period (e.g.,
quarterly, monthly, etc.).
- This structure typically incorporates the concept of a
“look back,” which allows for a cooperative reassessment
of the fixed fee due to unexpected developments.
- Encourages transparency and predictability.
Portfolio Fixed Fee with Periodic Adjustments
- An efficient way to handle large portfolios of work
for a value-based fixed fee.
- Allows for periodic adjustments if additional
unexpected work arises.
- Incorporates the concept of a “look back,” which
allows for a cooperative reassessment of the fixed
fee due to unexpected developments.
- By handling a group of cases in a particular area,
Paul Hastings gains a unique ability to handle
matters efficiently and help clients reduce
overarching legal risks and problems. It also enables
both the firm and the client to better manage the
fee risk of individual outliers where the assumptions
about the scope of the work may be off.
Phased Fixed Fee with Collar
- Based on hourly fees subject to a case budget and
a collar (a range above and below the budget). If the
fees are less than the lower collar, outside counsel
receives a bonus. If the fees are higher than the
upper collar, the client receives a discount from the
regular hourly rate.
- The collar can be adjusted for each phase of
the litigation to account for varying degrees of
- Encourages risk sharing and efficiency while
promoting greater collaboration.
Other Arrangements Multiple-Matter-Based Relationship Incentives
- An incentive in exchange for the client’s willingness
to work with us in an area in which we have not yet
provided significant service to the client.
- A sliding scale discount on rates based on the
volume of legal work, with higher discounts for
higher volumes of fees collected.
On-Site Legal Expertise
- A flexible arrangement in which a legal team
member is stationed at your offices for a set period
of time (e.g., three months, one day per week) to
offer dedicated support.
- Forms a true partnership in which our teams
collaborate and strategize in the same environment.
Blended Hourly Rates
- Establish blended rates for specific titles or one
rate for all lawyers who work on a client’s matter
irrespective of seniority.
For more information, please contact
your Paul Hastings lawyer.