Read more: Axiom

New research from Axiom reveals a significant disconnect between the adoption and effectiveness of alternative fee arrangements (AFAs) in UK legal services. While 69% of General Counsel received AFAs from law firms last year, the implementation results expose concerning trends.

The study highlights several critical issues. Every GC surveyed reported challenges with AFA implementation. More troublingly, 46% experienced reduced service quality as firms attempted to maintain profitability under these arrangements. The negotiation process itself proved problematic, with 43% of GCs investing excessive time in establishing mutually beneficial terms.

Perhaps most revealing is the efficiency paradox: 38% of GCs found that AFAs actually decreased incentives for efficiency - directly contradicting their intended purpose. This suggests that simply restructuring pricing without addressing underlying service delivery models may be counterproductive.

These findings point to a broader issue in legal service pricing. While AFAs were meant to align interests and improve value, they often create new complications without solving core pricing challenges. The data suggests that successful pricing innovation requires more than alternative structures - it demands reimagining how legal services are delivered, measured, and valued.

The future likely lies in leveraging technology to create truly transparent, value-based pricing models. Tools for automated benchmarking, real-time value tracking, and data-driven pricing analytics could transform what's currently a cumbersome negotiation process into a dynamic, efficient system.

For firms and legal departments alike, the message is clear: alternative doesn't necessarily mean better. The focus should shift from simply offering different pricing structures to creating intelligent, technology-enabled pricing solutions that actually deliver on the original promise of AFAs.

Source: Axiom