Page 133 - 2019 - Leaders in Legal Business (n)
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Fee Type Definition
Hourly – Recurring Client agrees to pay hourly up to a certain amount for the matter or phase
Fee Cap on a recurring basis
Hourly – Collar A pseudo-fixed fee. The client and firm agree on a fixed fee. They also
agree on a percentage above (top collar) and below (bottom collar) the
fixed fee. The client pays a bonus if the matter comes in under the bottom
collar or gets a discount if the matter comes in over the top collar.
Example: Fixed fee element $1,000,0000
Range 10% above or 10% below
If fees are below $900,000, a bonus is provided of 5% or so up to the
fixed fee amount.
Hourly – Partial If fees are $1,100,000, then the matter is billed hourly with a large
Contingency discount.
An hourly contingent fee.
Generally, the concept around any contingency is that the firm accepts
some of the risk. They discount the rate and then the firm will receive a
bonus if the deal succeeds and pays a penalty for failure.
Sometimes only the penalty feature is provided, which is also known as
a “busted deal.” This is typically then done with a rate closer to a standard
rate. This also could be a lower fixed-fee amount.
The reward is either based on fees or an outcome amount. The busted
deal element is just fees.
With a partial contingency arrangement based on outcome, there will be
negotiations over what expenses will be paid by the client and whether
expenses come out before or after calculation of the reward.
Hourly – Partial Holdback is a fee-based success. The client typically agrees to a standard
Contingency rate card. The firm then discounts off standard but can recover the
(Holdback) “discount amount” if the matter is successful. An example would be if
the matter is billed at 80% of standard rates, but if the deal succeeds, the
Non-Hourly Fixed firm recovers the remaining 20%.
Fee A fixed-fee service provides an agreed amount.
Non-Hourly
Recurring Fixed The fixed-fee service will be provided on a scheduled basis, usually
Fee (Retainer) monthly.
Non-Hourly Partial
Contingent Fee The only difference between an hourly versus non-hourly fee is that a
specific set of payments are typically agreed upon based on agreed-upon
milestones or phases.
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Hourly – Recurring Client agrees to pay hourly up to a certain amount for the matter or phase
Fee Cap on a recurring basis
Hourly – Collar A pseudo-fixed fee. The client and firm agree on a fixed fee. They also
agree on a percentage above (top collar) and below (bottom collar) the
fixed fee. The client pays a bonus if the matter comes in under the bottom
collar or gets a discount if the matter comes in over the top collar.
Example: Fixed fee element $1,000,0000
Range 10% above or 10% below
If fees are below $900,000, a bonus is provided of 5% or so up to the
fixed fee amount.
Hourly – Partial If fees are $1,100,000, then the matter is billed hourly with a large
Contingency discount.
An hourly contingent fee.
Generally, the concept around any contingency is that the firm accepts
some of the risk. They discount the rate and then the firm will receive a
bonus if the deal succeeds and pays a penalty for failure.
Sometimes only the penalty feature is provided, which is also known as
a “busted deal.” This is typically then done with a rate closer to a standard
rate. This also could be a lower fixed-fee amount.
The reward is either based on fees or an outcome amount. The busted
deal element is just fees.
With a partial contingency arrangement based on outcome, there will be
negotiations over what expenses will be paid by the client and whether
expenses come out before or after calculation of the reward.
Hourly – Partial Holdback is a fee-based success. The client typically agrees to a standard
Contingency rate card. The firm then discounts off standard but can recover the
(Holdback) “discount amount” if the matter is successful. An example would be if
the matter is billed at 80% of standard rates, but if the deal succeeds, the
Non-Hourly Fixed firm recovers the remaining 20%.
Fee A fixed-fee service provides an agreed amount.
Non-Hourly
Recurring Fixed The fixed-fee service will be provided on a scheduled basis, usually
Fee (Retainer) monthly.
Non-Hourly Partial
Contingent Fee The only difference between an hourly versus non-hourly fee is that a
specific set of payments are typically agreed upon based on agreed-upon
milestones or phases.
118
