Another sign that AFAs are truly catching on.

• Position: Dicta - Alternative fee arrangements

To paraphrase Mark Twain, for years now, the billable hour has been like the weather--everyone talks about it, but no one does anything about it. That may finally be changing. According to several new surveys, alternative fee arrangements (AFA) are truly catching on.

The Hildebrandt 2009 Law Department Survey, which focused on in-house counsel, and The LegalBizDev Survey of Alternative Fees, which looked at the AmLaw 100, found that AFAs are beginning to replace billable hours in significant ways.

"The perpetual focus of inside lawyers on outside counsel costs, services and value has jumped to a new level," says Jonathan Bellis, vice president and chair of Hildebrandt's Law Department Consulting practice, in a statement. "There is an unprecedented amount of discourse about the fundamental law firm business model, because law departments are demanding more cost-effective alternatives to current arrangements."

According to the 2009 Hildebrandt survey, more than half of the respondents said they have implemented or will implement the use of alternative fee arrangements with their outside counsel, and 27 percent are considering such arrangements. Only 18 percent of the respondents said they have no plans to use AFAs.

The LegalBizDev survey found that all its participating firms agreed that there will be significant growth in the use of AFAs. Within the law firms that were surveyed, though, individual projections varied from 20 to 900 percent growth over the next five years. More than three-quarters of the respondents, 78 percent, reported that they are proactively using alternative fees to develop new business.

But while such arrangements are becoming increasingly popular among legal departments, the Hildebrandt survey found that rate freezes are even more popular. Among respondents, 64 percent have implemented or will implement rate freezes with outside counsel and only 14 percent have no plans for rate freezes. Slightly less than half of the respondents--46 percent--indicated that they have implemented or...