"There is a great hue and cry these days heralding the replacement of the billable hour model with alternative fee arrangements (AFAs). The notion seems to be that using AI won't change much about the practice of law and how we bill for services: we can just switch from the billable hour to flat fees and nothing will be all that different."
"AFAs AFAs can take the form of flat fees for the handling of a legal matter in whole or in part, subscription fees where a client pays one amount for a defined set of legal services over a specific time period, value-based fees, and similar arrangements. AFAs are designed to get away from paying for legal services purely based on the time spent handling the matter."
"But some lawyers and law firms are fearful that AI will replace many of the jobs that they have traditionally been able to bill for. Worse yet, they see AI as a threat to the economically lucrative leverage model that has powered unfathomable riches particularly among Biglaw. Instead of thinking through what AI could mean for the handling of legal services they jump to the conclusion that AFAs will enable them to somehow continue what they do and how they do it"
Alternative fee arrangements (AFAs) include flat fees, subscription fees, value-based fees, and other models that separate payment from time spent. AFAs can foster innovation, efficiency, and predictability in delivering legal services. Practical experience with flat fees in serial litigation revealed both advantages and risks that require careful implementation. A growing push to adopt AFAs is driven in part by fear that AI will displace billable work or erode leverage-based economics. Simply switching to AFAs will not preserve existing practices; meaningful adaptation requires rethinking how legal services are organized, priced, and delivered.
Read at Above the Law
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