AFA’s are legal fees based on a fee structure other than the standard hourly bill. While we discuss several common examples below it is important to note that this is not an exhaustive list. AFA’s can be customized and structured to fit your unique, specific dispute and business needs
Pure Contingency Fee:
In this arrangement, we invest 100% of the legal fees in the case, meaning we do not charge you any legal fees. (Expenses outside of legal fees, such as travel, arbitrator fees, and expert fees, are typically paid by the client.) If the outcome of the case is favorable, we receive a fixed fee, or a percentage of any recovery obtained in your case. If the outcome of the case is unfavorable, you pay no fees. Pure contingency fees make sense in situations where you are the Claimant seeking monetary damages (or damages that can be quantified/monetized). This AFA is particularly appropriate for clients with limited resources to finance an arbitration (startups, individuals, etc.). However, a contingency fee arrangement may also make sense for larger businesses who are looking for risk-sharing and business certainty in their litigation budget.
Partial Contingency Fee:
This is a hybrid between an hourly fee structure and a contingency fee structure. We will agree on an hourly rate, but give an agreed discount and thus receive only a portion of the normal fee rate for all legal services rendered. In case of success, we further receive a percentage of any recovery obtained in your case (although less than a pure contingency scenario). Partial contingency fees also work best for clients who are arbitration Claimants seeking monetary damages; however, if you are Respondent in an arbitration dispute, the matter may also be structured as a partial contingency fee, with success defined as an agreed upon result, or certain events (e.g. an award where damages are limited below a certain amount), or certain agreed milestones being achieved (e.g., disposing of a case on jurisdictional grounds).
Holdback Fee (Success Fee):
As with a partial contingency, a Success Fee involves a discount on an agreed hourly rate. Part of the hourly rate is paid, but the discounted portion is withheld contingent upon success. In case of success, we are paid a multiple of the discounted portion. This type of arrangement is well adapted if you are Claimant in an arbitration dispute where the damages sought are not monetary (e.g., you seek specific performance of certain contract obligations). As with Partial contingency fee structures, Holdback fee arrangements also work if you are Respondent in an arbitration dispute.
Fixed Fee (Flat Fee):
In this AFA, we agree to handle one or more of your matters for a specific set price. Fixed fee arrangements are best suited for cases where the time and effort required are highly predictable. They are also attractive for clients who desire budget certainty. Fixed fees can be arranged as up front payments or structured as monthly payments.
This arrangement is a variation on an hourly billable fee structure. Here, we will agree on a budget or a target price for certain legal work and agree on a “collar” around that target price – for example, 10% above or below the target price. If the actual hourly fees are within the collar, no adjustment is necessary. If the actual hourly fees end up above or below the collar, we will agree in advance how to share in the savings or the additional expense.
Tiered Volume Discount:
This AFA is also a variation on an hourly billable fee structure. Under this arrangement, we use an hourly rate fee structure, but agree to reduce these rates as the volume of the fees reaches an agreed-upon level (a “tier”) within a specific time period. The tiered discounts are combined with a success fee that decreases in amount as the higher tiers of hourly fees are reached.