Canadian Lawyer InHouse

AFAs, the misunderstood member of the billing family A report from the United States reveals that while the use of alternative fee arrangements is increas- ing, few understand how they work or are very satisfied with them. Despite this, AFAs are ousting the billable hour regime, making way for new billing arrangements. The report was the result of data, interviews, and an online survey conducted by American Lawyer Media Legal Intelligence. The survey was conducted from March 6 to April 6, and included participants from 194 U.S. large law firms and 141 corporate legal departments of U.S. compa- nies. rocketed in 2008, when the economic crisis hit. The report confirmed AFAs have increasingly been used in the U.S. over the past two years, with roughly one-third of survey respondents predicting AFA billing will increase in the next five years. But while use of AFAs is increasing, few are truly happy AFAs have been used for many years, but their use sky- senior legal counsel at Hydro One Networks Inc. and president of the Association of Corporate Counsel Ontario Chapter. "I think there's still quite a bit of resistance. If you maintain that resistance, clients will find other ways of deal- ing with it." The report revealed the two greatest obstacles to increas- ing the use of alternative fee arrangements are that law firms are more comfortable with the billable-hour system and firms have insufficient experience to define or manage work on an AFA basis. "Even when we talk about billable hours and alternative fee arrangements, if your internal structure doesn't change, in the long run it's doomed to fail, with them — only 26 per cent of legal department respon- dents and 11 per cent of law firm participants indicated they were "very satisfied" with AFAs. This dissatisfaction isn't limited to the U.S.; the same trends are occurring in Canada. "I think we have a way to go, " says Sanjeev Dhawan, tance in some firms to switching systems. It's not just law firms who are resistant to change. "For corporate counsel, the easiest route is to have an Failing to understand AFAs is also a hurdle. "Especially for corporate counsel, they need to take time to understand it," he says. —Siobhan McClelland hourly rate and to get into an AFA takes effort at the begin- ning, " says Dhawan. at a major banking institution cited in the report. AFAs challenge the billable-hour system, causing resis- " said an in-house counsel THE COMPLEX MINEFIELD OF IP AND TECHNOLOGY LAW REQUIRES EXPERT NAVIGATION. IP SMART & BIGGAR'S internationally recognized professionals have the technical and legal experience to help you navigate the complex, high-stakes world of IP & technology law. With offices across the country, we are able to work with you to provide and leverage the right skills, knowledge and resources to create unparalleled IP solutions tailored to your unique needs. smart-biggar.ca | Ottawa | Toronto | Montreal | Vancouver CANADIANLAWYERMAG.COM/INHOUSE OCTOBER/NOVEMBER 2012 • 9 UNPARALLELED

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