The Ninth Annual Law Department Operation Survey was published late last month (Nov 2016). A survey of – a record number of – 133 law department professional, one of the questions asked in this year’s survey was:
‘What percentage of legal spend is via alternative fee arrangement?’
Unlike other legal market surveys undertaken during the course of the year, the results here are telling in that they are from those running the legal department, as opposed to those practising, and therefore, arguably, are more reflective of the market’s aptitude to Alternative Fee Arrangements (AFAs).
Overwhelmingly – at 87 percent – US in-house law departments make some use of AFAs with their private practice suppliers. Tellingly though, only 14.1% of this is over 50% of spend and more than a third – 34.4% – is in the one to 10 percent space (making me wonder if this is just discounts disguised as AFAs).