When I have the opportunity to speak, I ask participants and co-presenters about their experiences with alternative fees. Better than half the time, I am told “my clients don’t want alternative fees.” I always ask whether the firm has developed different work methods or whether the work methods are the same for both hourly and AFA work. Always–100% of the time–the answer is that the work methods are the same.
The firms just don’t get it. AFAs are not simply a different form of billing. They are the billing format for a different way of working. Without changing the way you work, you are simply putting a different suit of clothes on hourly billing.
Clients should always ask, and firms must be ready to answer, how the firm’s workflows are different for their AFA and hourly work. And it is not as simple as saying you staff with fewer people or do less work. Sometimes, if the fee is structured as a success fee, you use a far more senior staff than you otherwise would. The fee structure should be designed to drive behaviors and outputs, so consideration must be given to objectives to formulate a proper answer.
The moral of the story is this: firms that offer their clients a choice of hourly billing or the same work and fee amount under a different name, are not offering their clients a useful choice. The clients know this. AFAs are not for the weak of heart, and they require significant thought to make them work well.
So clients don’t want AFAs? When done right, they most certainly do.