LawVest: silk embroidery

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  • This line in the article is quite telling:

    "Quinn Emanuel, for example, is more than happy to estimate trial costs for its big-money clients and does rather well out of it."

    I thought that the argument for fixed costs was that the client would do better out of them than hourly billing. Is there any data one way or another on that?

    Genuinely curious to see data on this.

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  • Andrew, I'd also be interested to hear if any readers know of research on this topic. Here's the link to the Quinn Emanuel article we ran earlier this year. http://www.thelawyer.com/sugar-coated-bills/1010926.article

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  • There's no contradiction between law firm profit and client satisfaction in a fixed-fee billing system; unlike the inevitably zero-sum hourly billing model, fixed fees give each party a fighting chance to come away happy.

    The classic example is FMC Technologies in the US, whose GC, Jeffrey Carr, is a leading fixed-fee advocate. His outside counsel agree to the following system: 80% of the pre-set fee is guaranteed, while the remaining 20% depends on the success of the mandate. If the firm fails to meet the client's criteria for success, the 20% is lost. If the firm meets the criteria, the 20% is paid. If the firm exceeds expectations, the 20% is paid and an additional 20% is tacked on as a bonus.

    Jeffrey has stated that his average payout is something like 106% of the agreed fee. The firms obviously are happy, but so is he. Number one, he has price predictability: he knows he will pay no less than X and no more than Y. And number two, he knows the firm is heavily motivated to meet his performance indicators and earn a bonus -- and like all GCs, performance is his number-one priority. That kind of common ground is usually impossible with time-based billing, though it stands to become more common as more LawVest-type operations emerge in the corporate/institutional legal market.

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