PERSUIT's Pricing Items and fee types

What are Pricing Items and why should I use them?

• PERSUIT’s Pricing Item options provide flexible customization when building out any request, as you choose the most appropriate fee type for your matter.
• This gives you control over which fee types firms use in their proposal, which in due course provides cost assurance.
• Beyond the total price, adding individual pricing items (and sub-items) allows you to break out the overall scope of work and understand the cost drivers. This facilitates an apples to apples comparison, as well as any negotiations. Often highly recommended!

Pricing Item options available on PERSUIT:

Alternative Fee Arrangements:

Alternative Fee Arrangements (AFAs) are pricing structures that do not rely solely on hourly rates and the number of hours billed to determine the overall cost to the client. 

• Capped Fee: used in conjunction with the hourly billing rate. The client and firm agree to an established cap such that the firm is unable to bill for any work beyond the capped amount. The fees under the cap will accrue and be paid based on the agreed upon hourly rates. 
  
  
• Collared Fee: used in conjunction with hourly rates. The client and firm agree to establish a collar targets for the accrued fees. The firm will bill using the previously agreed upon hourly within the collar(s). If the fees exceed the upper collar, an additional concession is provided by the firm for any overages and is typically in the form of additional discounts. If the accrued fees are below the lower collar, the client may reward the firm for this efficiency gain by providing a bonus, typically in the form of a discount reduction or success fee. 
  
  
• Contingency Fee: establishes a triggering event and an associated fee that is contingent on meeting the requirements of the triggering event.  Contingency agreements can be either full or partial contingencies. In a full contingency fee arrangement, the firm will receive a specific fee payment based on the outcome of the matter. In a litigation for example, they may receive a specified percentage of the damages recovered or value at risk for a successful outcome but a much lower fixed price for an unsuccessful outcome. In a partial contingency fee arrangement, the firm agrees to a contingency fee on a distinct and specific piece of the work. This rest of the matter may operate on a separate billing arrangement. In a litigation example, the motion to dismiss may have a contingency fee component on a successful MTD but the rest of the matter may be on a fixed or capped basis.
  
  
• Fixed Fee: where the law firm agrees to bill the client a predefined amount regardless of actual hours accrued on the matter.
  
  
• Success Fee: similar to the contingency fee but is typically a more defined fee amount and not tied to any values at risk or possible recoveries. 

Non Alternative Fee Arrangements:

• Budgeting Estimate: an estimate quote for the potential cost of a specific matter or project. Typically used only as a guiding mechanism and to receive an indication of the potential costs. These are often not enforceable. Therefore they are less reliable when it comes to accuracy of spend and savings reporting.
  
  
• Discount %: the most common pricing concession from law firms. Clients will often request a % discount on the standard hourly billing rates. 
  
  
• Hourly Billing Rate: the predominant pricing structure for legal work. The hourly billing rate is the amount of money that is charged by the firm to a client for each hour of work for a particular timekeeper. Most firms have various billing rates that differ by title, location, practice, years of experience, and matter type. 
  
  
• Hourly Rate: for a single rate option. Typically used for a single blended rate or project specific billable rate.
  
  
• Rate Card: allows for more flexibility and customization the rate card's structure, such as a separate line item entry for each timekeeper, which facilitates a better apples to apples comparison.
  
  
• Other (see instructions): allows the client and firm to structure any other type of creative fee structures that are not captured in the items above. Can also be used to capture any quantitative data or information from law firms that may be related to pricing. You may also wish to use this as its own question in the Questions section.
  
  
• No Charge: removes the fee from the service making the service “free of charge” while still being able to provide the service.  Note: this is different from the “Exclude from Scope” option. See this article for more information about excluding a phase or item from scope.

If you have any questions regarding pricing structures related to a matter, please reach out to your designated CSM, who will also be happy to help with AFA training and further resources.