tion before the opposition has upped their own commitment
by incurring large costs is preferable to a broader more diffuse
approach that doesn’t result in early, successful resolution.
Making Choices
Every case involves making choices. If each oval in the diagram — facts from documents, facts from witnesses, forensics (experts) and legal principles (the law) — represents the
range of possibly pertinent information to a case, do you
give your counsel authorization to explore the full oval? If
so, with what intensity of resources — which oval sectors
should be allotted pebble, rock or boulder treatment compared to hill, mountain or asteroid treatment?
OPTIMAL INTERSECTION
THAT BEST PRESENTS
THE CASE
With 20/20 hindsight, looking at a moderately complex
case, what percentage of the legal activities would fit within
the following categories?
u Essential to creating verdict risk.
u Wouldn’t be used at trial, but may make it into a mediation statement as a talking point.
u Intellectually relevant to the issues, but only a small piece
of puzzle that doesn’t change the big picture.
u Pursuit of a dead end that bore no fruit.
The underlying potential and attraction of AFAs is whether
the fundamental paradigm shift that all AFAs at their root
share — a focus on what projected resources are necessary
to resolve the matter — can become the reality. How to select
and sequence discovery for maximum impact requires being
able to see the big picture, a perspective not afforded by uninspired perfunctory early case assessments and budgets, nor
necessarily emphasized by checking tasks off a list.
Setting Course
AFAs are a two-step process. First is the early case assess-
ment and litigation management plan that projects a bud-
get, timeline and targeted result. Second are the financial
arrangements. Companies looking to broaden their toolbox
beyond flat fees versus hourly rates can take the plunge by
requiring that counsel submit a plan and budget that would
allow negotiation of an AFA, even if that next step were not
taken for administrative and other considerations.
In fact, companies looking to critique the rigor and performance of their current litigation management guidelines
might ask themselves, “In what percentage of our matters
are the early case assessments and budgets received from
counsel of sufficient quality that we could evaluate an AFA
if we chose to do so?”
Established confidence in proof of the underlying process
could eventually pave the way towards adoption of AFAs in
appropriate matters. In the interim, companies could benefit
from more of what has attracted them to flat fee AFAs in the
first place, a focus on a more predictable budget for legal
activities that will generate a preferred resolution.
Case Options
In considering the budget-challenged case, rather than think
in terms of business lines, practice areas or severity levels,
perhaps fertile ground for consideration of an AFA would
be when this thought occurs, “I know from experience that
this is one of those cases where potentially we could spend a
lot on fees and where we wind up on indemnity and getting
any bang for our buck is going to depend on a smart well-executed game plan.”
If counsel is engaged on a risk collar where an estimated
budget to resolution is projected and counsel shares in
absorbing legal expense over that budget (and also shares
to some degree in savings generated under that budget), the
key is what are the probable resources that will best position
the matter for resolution?
If counsel is engaged on a holdback bonus arrangement
(where the client withholds a fixed percentage of the hourly
rate billings during the case, and at case end may refund to
the law firm some, none or all of the holdback and consider
a bonus for extraordinary results), a key part of the arrangement is evaluating the projection of required legal resources
and the return on that investment — the result. Many holdback bonus arrangements are also done with a hard cap on
total fees, a feature that emphasizes a budget.
Creating a successful AFA requires a strong early case
assessment, a solid fee strategy and excellent communication between the law firm and client. With those points in
mind, AFAs can help manage litigation expenses.
John F. Brown Jr. is a principal at Brown Law LLC. Thomas M. Clark is
the Senior Vice President, Claims General Counsel at Selective Insurance
Company of America, where he has responsibility for all claims legal
operations for the organization.
