bertrand by hedongchenchen

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									Alternative Fee Arrangements:
    Pros, Cons and Ethical
        Considerations
                  Jean L. Bertrand
Perils and Pitfalls:
Ethical Concerns
Conflict in Every Fee Deal
There is an inherent conflict in
 every fee deal
•   If you win  the client was right all
    along so why should they have to pay
    lawyers?
•   If you lose  you messed up and you
    charged too much.
           Solution
• Give value to the client as
  defined by the client
• Let the client set the level of
  risk it is willing to take
• Build on a relationship based
  on trust
• Incorporate escape clauses for
  both client and firm
• Align the interests of firm and
 client
        Selecting an AFA
Match the AFA to the client’s
 driving need
• If the client’s biggest concern is
    the end result  contingency fee
•   If cost is the driver  blended fee
•   If predictability is key  flat fee
•   If the client cares most about
    access to top legal talent 
    retainer/bonus structure
Selected Ethical
Considerations
   Our duty to zealously
   represent our clients
 Tension with firm’s economic
 interests
 • Fixed fees
 • Capped fees
 • Blended rate deals

 A different tension if flat fee is
 too low
         Solutions
• Disclosure, discussion,
 write it down

• Motivate lawyers and legal
 assistants

• Reward results
 Our duty not to impair the
client’s absolute right to fire
             us

 Tension with firm’s
 economic interests
 • Contingency fees
 • Bonus deals
 • Other back-loaded
   arrangements
          Solutions
• Disclosure, discussion, write
  it down
• Motivate lawyers et al.
• Use a guaranteed reduced
  hourly-rate set-off against
  contingency fee recovery
 • Be aware of special rules
   applicable here
             Our fees
        must be reasonable
• Tension with firm’s economic
    interests
    •   contingency fees
    •   fixed fees
    •   partner-only deals
    •   bonus deals
• Reasonableness will be
    evaluated at the beginning
•   And at the end
         Solutions
• Disclosure, discussion, write
  it down
• Motivate lawyers et al.
• Quantum meruit conversion
  clause
• Escape clause
• Make bonus discretionary
Hourly billing raises ethical
        issues too


• Reasonable fees duty
• Obligation to be efficient
Ethical rules govern the way
we handle the client’s money


Tension with
 • flat fees
 • bonus deals
         Solutions
• Disclosure, discussion,
 write it down

• Agree in advance on
 “milestones”

• Use Trust account

								
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