By Catherine Wilson
The buzz about alternative fee arrangements has gotten louder in recent years, and many midsize law firms in South Florida have carved out space for something other than the straight billable hour.
“It’s becoming more and more of a topic, especially in big commercial cases, where it really wasn’t before,” said Miami commercial litigator Alan Kluger, co-founder of the 32-attorney Kluger Kaplan. “Clients are more receptive than they used to be.
The field of possibilities is open on the client side.
“Every single client, with the exception of maybe the Fortune 50, are potential clients to do alternative fee agreements, and the main thing they tell you is the shifting of the risk solely from the client to the client and the lawyers makes them happy,” he said.
But opinion is split on the willingness of clients to switch away from billable hours to AFAs.
Gary Rosen, managing shareholder of the 92-attorney Becker & Poliakoff, said he attends a lot of professional conferences, and “there’s been a lot of talk about AFAs in the past 10 years generally.”
“In reality, AFAs have not grown as dramatically and have not become as significant a component of the overall legal landscape as many have predicted, and the reason is it’s not that lawyers are uncomfortable with it. For the most part, it’s clients who are uncomfortable with it,” he said. “Clients have shown a reticence to move much more significantly into the AFA environment.”
Clients like the idea of predictable legal fees, and alternative arrangements are keyed more to specific clients than practice areas, said real estate litigator Ryan Gesten of the 21-attorney Shapiro, Blasi, Wasserman & Hermann in Boca Raton.
“I’ve been practicing 17 years. I’ve handled 1,000 matters on contingency,” he said. When considering a request for alternative fees, “it’s almost like we know it when we see it.”
Attorneys at South Florida midsize firms said alternative fees represent as little as 10 percent of total revenue and as high as 80 percent of cases, with litigation being a common practice area for AFAs.
The types of cases most likely to foster alternative fees at Kluger’s litigation firm are third-party and bad faith insurance claims, legal malpractice claims and breach of warranty claims.
“Those cases get resolved because it’s money. It’s just money,” he said.
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