The Big Mistake organisations make…with AFAs’

Getting straight to the point… the one big mistake is often:

POOR SCOPING

You don’t really need to read on if you don’t want to – however, work on your scoping and you’ll go a long way to achieving a more successful Alternative Fee Arrangement (AFA) programme.  If you want a little more detail, read on:

Here’s an example of a ‘scope’ a law firm might receive to provide a fixed price for the matter:

  • We are outsourcing our finance and accounting function and we need legal support with this process as it’s the first time we have outsourced this function and we do not have the requisite internal skills to be able to support the business with this process. 
  • Please can we get a fixed fee quote
  • Please provide your quote by [DATE AND TIME]

Just some of the, frankly quite reasonable, questions from the law firm to quote effectively might include:

  • Do you need support on the Tender process?
  • Do you need support on contracting?
    • How many rounds of document drafting are you prepared to pay for?
  • Do you need support on contract negotiations?
    • Do you want us to attend in person or via telephone/video conference?
    • If in-person where are meetings to be held and is travel included in the fixed fee? 
    • If included, how many in-person meetings are required?
    • How many rounds of negotiations do you want us to quote for?
  • Do you have a project plan that gives us an idea of the timeline from start to finish?
    • Is there a cut-off point we can agree for the fixed fee e.g. if not done in six months can we re-look at the price?
  • Is this advice to cover just one jurisdiction or multi jurisdiction?
    • If multi-jurisdictional advice is required, which jurisdictions?
  • Assuming it is the UK – do you need advice on TUPE? 
  • Do you need other general Employment advice?
  • Do you need Tax advice?
  • Are there data transfer implications i.e. are you outsourcing to India or keeping onshore?
  • Do you want the lawyer/s to be a London based lawyer/s or are you OK with a regional lawyer/s?
  • What level of lawyer/s do you want involved?
  • Do you want a partner involved in negotiations for example or are you OK with a more junior lawyer?

As you can see there is a huge difference between the scope sent and the information a law firm would need to accurately price the work. So, when it comes to effectively comparing quotes from competing firms, how can you possibly make an accurate comparison when each firm is making significant assumptions on the work involved? It leads to frustration on both sides later down the line when, predictably, the independent assumptions made by each side are proven wrong.  

If you can get an effective scoping process in place, you’ll find you get much more accurate pricing and project planning from the outset and can truly compare your firms at the point of instruction. Without this, an AFA is almost worthless as inevitably the pricing will change due to “variations” to the “agreed” scope. 

If you would like to learn more about how we can help you manage your external law firm spend please get in touch at info@cooteogrady.com