Alternative Fees

Today more than ever, clients require creative, flexible, and predictable approaches to the delivery and pricing of legal services. Haynes and Boone works closely with our clients to develop budgeting and pricing models that deliver focused legal services that are both effective and efficient. We are prepared to offer fee structures and billing arrangements that deviate from the standard hourly rate arrangement.

At Haynes and Boone, we collaborate with our clients to jointly develop customized alternative fee arrangements for a specific engagement or group of matters. Such arrangements provide greater predictability in budgeting for legal costs, promote risk sharing, and better align the interests of the client and our firm.

If implemented successfully, alternative fee arrangements provide substantial value and are mutually beneficial for the firm and the client. To ensure alternative fee arrangements are successful, at the initiation of a new engagement, we will invest significant time and effort to better understand the client’s ultimate objectives and preferred approach and legal strategy, as well as agree on the scope and parameters of the project. Because details of the matter are disclosed and discussed at the outset, the resulting fee arrangements typically provide the optimal balance between risk and reward for both parties.

Haynes and Boone prides itself on not only its enthusiasm for alternative fee arrangements, but also its ingenuity and creativity in developing alternative fee arrangements that suit the particular needs of a specific client or matter.

Below are some examples of the alternative fee plans our clients have found attractive.

Alternative Hourly Rates

Blended Hourly Rates – For some matters, Haynes and Boone may agree to bill the same rate for all lawyers who work on a client’s matters, regardless of each lawyer’s level or individual billing rate. Blended rates are determined on the basis of work we expect to be provided for a matter and the billing rates of those lawyers we anticipate will work on the matter.

Volume Discounts – In situations where a client prefers traditional hourly rates, we may consider providing hourly rate discounts on a sliding scale in return for that client guaranteeing a set level or volume of legal work.

Hybrid Fee Arrangements

Hybrid Fee Arrangements by Matter Phase – In certain situations, the billing arrangement that makes the greatest sense is a combination of several arrangements described above. For example, Haynes and Boone could estimate fixed fees for some matter phases, holdbacks on hourly rates for other phases, and success fees for other phases.

“Frequent-Flyer” Credits toward New Legal Services – Haynes and Boone may agree to provide a significant reduction in fees for one matter in exchange for the client’s commitment to assign other matters to us in different areas of the law where we have not yet served the client. This could take the form of a discount on the instant matter, a credit against future billings for the new area, or some combination.

Fixed or Flat Fees

Straight Fixed or Flat Fees – Haynes and Boone is willing to provide some services for a set fee. This fee could cover a particular matter (e.g., a fixed fee for all work provided on an internal investigation) or a particular service (e.g., a flat fee for consulting services provided on a monthly basis). Fixed fees typically are set for individual matters or for an entire portfolio of matters, and may cover the entire life of a matter or be limited to a specific period of time or a particular task.

Fixed Fee or Pre-Agreed Upon Budget with Collar – Some fixed fee arrangements (and matters with pre-agreed upon budgets) will warrant a “collaring” arrangement. This fee arrangement anticipates engagements in which the amount of effort needed to fulfill our obligation as responsible legal counsel is greater or less than what both we and our client initially thought the effort would require.

Under such a collaring arrangement, Haynes and Boone and the client would agree that if the hourly value of our firm’s lawyer time expended on a matter falls considerably outside the fixed fee (or pre-agreed upon budget), we will share the fee upsides and downsides with each other.

Monthly Access and Advice Retainers – Although this is a variation of the straight fixed fee approach described above, an advice and access retainer has benefits that warrant further explanation. This approach makes sense in situations where a client wishes to be proactive in seeking legal advice to avoid legal exposure, but does not want to pay for expensive legal research every time a potential legal issue arises. This arrangement offers clients ready access to relatively inexpensive legal advice and offers Haynes and Boone the chance to add value to the client. We are able to help distinguish early on between those situations that are easily dealt with and others that, unaddressed, might expose the company to significant liability.

Phase-Based Fees – The firm will estimate a specific fee for each phase of a matter based on the work anticipated for each phase. In litigation, for example, this arrangement might result in a separate fee for each of the following phases:

Motion to dismiss
Discovery
Dispositive motions
Trial preparation
Trial

In transactional matters, phases of work might include due diligence, drafting of specific agreements, negotiating the terms and amount of the purchase/sale price, closing activities, etc.

This approach could be implemented in a variety of ways. For example, the arrangement may be based on fixed fees, where Haynes and Boone charges a fixed fee for each matter phase. Another approach that might be taken would require the client to pay an estimated (budgeted) fee for each phase with a rationalization against actual billings at agreed-upon times, e.g., quarterly, annually, or when the matter is concluded.

Fee Caps – For matters in which the scope is understood and well defined beforehand, the firm may agree to cap its fees. Fee caps are determined based upon anticipated fees for the scope of work, and they can be set for the entirety of the matter or for each phase.

Risk Sharing Arrangements

Fee Holdbacks – In certain situations, Haynes and Boone can hold back an agreed-upon percentage from its monthly billings. In return, we will have the opportunity to earn and be paid the full holdback amount at the client’s discretion. Whether we earn back all or some of the holdback amount will be based on the client’s assessment of our performance against certain predetermined criteria, e.g., work quality, results, creativity, efficiency, cost-consciousness, collaboration with other outside counsel, and effective utilization of the client’s own resources. In these situations, the criteria are established up front. The client’s holdback determinations could be made annually or when the matter concludes. A fee holdback arrangement could be applied to a litigation or transactional matter.

Success Fees – Under this arrangement, Haynes and Boone would be eligible for a success fee or premium in addition to its prior billings, in the form of a performance bonus at the client’s discretion. A success fee can be a set fee, a graduated fee according to a mutually developed schedule, or a percentage of our billings. As with a holdback, whether we earn a success fee will be based upon the client’s evaluation of our performance against predetermined criteria.

Broken Deal Discounts – The firm would consider a discount off of its fees in the event that a project did not proceed beyond a certain stage of the transaction. For example, there would be an agreed upon substantial discount if the client chose not to proceed after completing its due diligence, followed by separate discounts should the client elect to proceed with documentation after completing due diligence, but then failed to reach a financial closing of the project.

Contingency Fees

Traditional Contingency – Under a traditional or full contingency arrangement, Haynes and Boone will defer its fees entirely in exchange for receiving an agreed upon portion of the client’s ultimate recovery. Typically, the client pays the expenses of the litigation.

Partial Contingency – In a partial contingency arrangement, the firm handles a matter at a reduced hourly rate and shares in a favorable recovery or resolution at a smaller percentage. Partial contingency arrangements reduce legal expenses during the course of a matter, and provide a mechanism for the firm to share litigation risk with the client. Defense cases can also be structured as partial contingency fees with success contingent on specific predetermined results or milestones being achieved.

For transactional matters, the firm may conduct the work at reduced hourly rates in exchange for a percentage of the value the client receives upon liquidation or sale.

Reverse Contingency – A reverse contingency fee is based on how much the firm saves the client as a defendant. If we are able to resolve a matter for less than the exposure attributed to it by the client (or reduce the client's reasonable exposure through dispositive motions), then the fee would include an agreed-upon percentage of that savings to the client.

With both traditional and reverse contingency fees, we often use graduated rates based upon the phase of the matter. For example, the closer a matter progresses to trial, the greater the percentage we would be paid for a favorable result.