Archive for the 'Legal Project Management' Category

AFAs – A Win-Lose or a Win-Win?

November 22, 2010

I came across Law.com’s article “Project Management with SharePoint Task Lists” when looking for task management solution for one of my clients. Its main story line was Fenwick & West’s use of SharePoint as a project and task management tool for their attorneys.
It’s a very good article with practical advice from a seasoned SharePoint professional. What caught my eye however, was this statement:
“While AFAs can take many forms, they share one thing in common — they transfer the risk of cost overruns from the client to the firm”. This gave me a pause. Is this the emerging perception of AFAs? Should law firms be treated just as Wallmart treats their suppliers?

I hope not. The trend towards alternatives to the venerable hourly billing model (see my previous post on the topic), is not, to put it bluntly,  screwing one side so the other will benefit. The idea is to restore some balance. It’s about improved risk management and cost controls as well as a reasonable measure of predictability for the client. Is the pendulum swinging too far to the other side?

Cost overruns can happen for many reasons. AFAs combined with better matter (project) management can and should provide a framework for decreasing and managing risks. Not simply shifting the risk from one side to the other. You don’t need to be a GC or a managing partner with an MBA to know that having one side carry all the risk is simply not a sustainable business model. It could be that some firms will feel pressured to take on all the risk – maybe facing competitive pressures and demanding RFP situations. But I would suggest that firms resist such un-reasonable demands. In the long run, this is a lose-lose proposition. They won’t be able to afford such arrangements and their clients will end up either paying un-necessary risk premium or risk getting substandard services. Everyone’s focus should be on a  balanced model.

Making AFAs work is in the clients’ interest – but it’s also a change issue and therefore a burden for most of them. Law firms – as the suppliers who’re motivated to acquire and retain clients – have an opportunity (and an obligation) to take clients along for the AFA learning curve. It will then become a Win-Win proposition.

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