Legal services procurement—fee arrangements

The following In-house Advisor practice note provides comprehensive and up to date legal information covering:

  • Legal services procurement—fee arrangements
  • Hourly rates
  • How does it work?
  • Pros and cons
  • Blended rates
  • How does it work?
  • Pros and cons
  • Capped Fees
  • How does it work?
  • Pros and cons
  • More...

Legal services procurement—fee arrangements

For the in-house legal team running to a budget, legal fees are a critical issue. In the worst cases, fee arrangements that have not been properly negotiated or agreed may result in a complete breakdown of the lawyer–client relationship.

This Practice Note provides guidance on the various types of legal fee structures and fee models available to in-house legal teams when negotiating the purchase of legal services with a panel of law firms or other legal services suppliers. It also explains the added value options, such as secondments and training, which are sometimes offered by legal services suppliers to in-house legal teams when negotiating fee structures, as part of a procurement process. For a generic example of an invitation to tender (ITT) see Precedent: Invitation to tender—template. See also Precedent: ITT schedule—criteria—legal services, which is intended to be annexed to an ITT for the procurement of legal services and which provides an example of the criteria which the legal service provider tenderer will need to show it is capable of meeting in responding to the ITT, including proposed fee structures.

The growth of more sophisticated purchasing by in-house counsel together with ever-present financial pressures, have led to some significant developments and changes in how legal fees are structured.

There are now several options and combinations available including:

  1. hourly rates

  2. blended rates

  3. capped fees

  4. fixed

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