Hi there,

When in-house teams transition from hourly billing to alternative fee arrangements, they sometimes hold on to old habits.

Like shadow billing — continuing to track hours even when working under a fixed-fee agreement.

And I get it.

One of the hardest things for in-house teams is to move away from the “time = value” model that’s so ingrained in the billable hour paradigm.

There is also a hidden fear that I might be ‘paying too much’ under an AFA.

Shadow billing seems like a way to answer the question:

“How can I know that AFAs are working — that I’m really getting the best price for value?” 

In practice, the companies we’ve seen be most successful with AFAs are the ones who incentivize results — not time.

It requires a shift in thinking about what “good” looks like, and realizing that the process and pricing for engaging firms should be a win-win for both parties.

 
If this is something your team struggles with, you won’t want to miss our upcoming fireside chat with Shane O’Connor, General Manager of Strategy and Operations at Commonwealth Bank of Australia.

Shane has helped his team move to value-based pricing models for many of their outside counsel engagements. 

He also has a tremendous story about how his in-house team developed the change management muscles to navigate this transition.

I look forward to joining you at the event!

In the meantime, our Legal Advisory experts have also published an excellent piece that answers the question: Should you ask firms to shadow bill their time in tandem with an AFA?  

Until next week.

Cheers,

Jim Delkousis

Founder & CEO

PERSUIT

Jim Delkousis

Founder and CEO  

PERSUIT

LEGAL INNOVATION

Should You Ask Firms to Shadow Bill Time in Tandem with an AFA?

When attorneys transition to using alternative fee arrangements (AFAs), they often defer to shadow billing — having their outside counsel pencil a ledger of billable hours alongside the AFA arrangement — as a means for determining whether or not they got a good price compared to traditional billing structures.

But trying to determine whether you “won or lost” on a deal is the wrong lens to evaluate the success of an AFA. To get the most out of your AFAs requires a shift in thinking about what “good” looks like.

That’s why we usually discourage in-house teams who are new to using AFAs from using shadow billing to evaluate the success of their AFAs. 

Here’s why...

Continue Reading: Should You Ask Firms to Shadow Bill Time in Tandem with an AFA?

Laura Spalding

Director, Legal Advisory

PERSUIT

WEBINAR

Kickstart Your AFA Program: How Australia’s Largest Bank Modernized Its Outside Counsel Management

How do you move in-house teams from the traditional paradigm of sourcing outside counsel to achieving cost predictability, transparency in decision making, and buy-in from change-averse stakeholders?

Join us on Wednesday, November 8 at 3:30 p.m. EST, as Shane O’Connor, Commonwealth Bank of Australia’s General Manager Strategy and Operations, shares his story of how CBA:

• Created buy-in with stakeholders — firms, executive management, and importantly, the lawyers at the crux of the in-house/firm relationship — for adopting a new approach to managing in-house/outside counsel relationships
• Used a data-backed, structured approach for achieving new transparency, predictability, and decision-making rigor in the outside counsel management process
• Transitioned much of their outside legal matters to value-based pricing arrangements

CBA's journey is instructive for legal teams at any stage looking to modernize their operations, deliver more value to the business, and chart a strategic course for long term success.

Register for the Webinar: Kickstart Your AFA Program

UPCOMING EVENTS

Where's PERSUIT? 

Here's where you can find us this month:

• Economist General Counsel Summit: London, UK, November 1 — Registration details here