The 10th Annual Norton Rose Fulbright Litigation Trends Survey Report (WEBSITE) was released last month. It always contains a few ‘pricing’ take-aways. Here are four items worth noting. (N.B. This year, the report does not distinguished between U.S. and U.K. results.)
First, alternative fee arrangements (AFAs) are back on the rise. After a 10 percentage-point slip last year, companies recovered 9 percentage points in 2013: 60% of companies surveyed reported using AFAs. This is the second-highest usage rate recorded (’11 was the highest at 61%). The industry appears to be warming up to pricing strategy.
Second, the number of companies using alternative fee arrangements for more than 20% of their outside legal spend continues to grow. In 2012, the rate was 33%; in 2013, the number is 44%. It sems AFA experimenting leads to greater adoption of nonhourly fee arrangements.
Third, contingent fees made a strong showing in 2013. Although fixed fee once again was ranked highest in “very effective,” contingent fee soared to the #1 effective (“very effective” + “somewhat effective”) type of AFA. Other options — blended rate, capped fees, success fees – are familiar to U.S. companies, but success fees are nearly twice as effective for U.K. companies (60% v. 35%).
Fourth, expecations for AFAs are rising dramatically. Following 2012′s 39% vote for increased use of AFAs, the 2o13 vote jumped more than 20% to 47%.
For a review of the 2013 survey results, see BLOG POST.