Alternative fee arrangements are here to stay and offer firms an opportunity from a profitability, infrastructure and business development standpoint. By AFAs, I’m referring to a nonhourly billing arrangement; this does not include a discounted hourly rate, nor contingency work. The level of talk, puzzlement and concern currently exceeds AFA’s actual implementation, but interest keeps mounting and will only continue. While the financial aspect of AFAs is vital, using them to your marketing benefit as a point of differentiation is equally important.

When a firm lets its markets know that it is willing to create compensation arrangements that let go of the billable hour, it is sending several messages. A primary message is that the firm is listening to its clients and the marketplace. It has heard and understood the dissatisfaction many clients have with the hourly arrangement and has put its financial and creative minds to work to develop a different offering. By implementing AFAs, the firm is also more closely aligning with its clients. The firm imparts the message that it understands clients have also been under tremendous pressure to not just cut costs, but to be more efficient. By releasing its tenacious grip on the billable hour, the firm conveys that it also has done an internal review and fashioned a way to deliver value more efficiently and profitably.

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