October 11, 2012 Articles

Valuing Litigation: Perspectives on AFAs and Collaboration

The economic downturn has changed the way companies look at legal fees.

By Alex Starkovich – October 11, 2012

In 2010, the Association of Corporate Counsel (ACC) and the American Bar Association (ABA) hosted a symposium where in-house and outside counsel met to explore a variety of value-based litigation solutions. The symposium was led by Laurie Miller, chair of Nixon Peabody LLP’s Corporate Integrity Practice, and Barb Dawson, cochair of Snell & Wilmer LLP’s Commercial Litigation Practice. A central theme that emerged from the symposium was that, despite a challenging economic backdrop, high-quality representation; communication; teamwork; and relationships with outside counsel were generally considered more important by corporate counsel than low costs.

Since the symposium in December 2010, the legal-services industry has experienced further pressure from the economic downturn. After an initial upswing, the overall demand for legal services in the U.S. declined considerably in the second half of 2011, according to the Hildebrandt Institute’s 2012 Client Advisory. Two notable casualties of the downturn include the large international law firms of Howrey, LLP, which dissolved in March 2011, and Dewey & Leboeuf, which filed for bankruptcy protection in May 2012.

Despite the difficult economic environment since the 2008 financial crisis, there are signs that the trend going forward may be more positive. According to one report, the average hourly rates for attorneys increased 4.3 percent in 2010 and 5.1 percent in 2011. Shreshta, Bibeka, Law360, “Biggest Rate Hikes Come From Top-Paid Attys, Report Says,” April 16, 2012. The June 2012 Federal Reserve Beige Book likewise indicates a “modest increase” in overall economic growth, a further indication that the economy is gradually improving.

 

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