For many law firms and their clients, the traditional hourly billing model is becoming a thing of the past. Enter Alternative Fee Arrangement (AFA) project billing, a flexible and increasingly popular approach that offers predictability and transparency.
What is AFA Project Billing?
AFA project billing means that firms agree to bill specific "projects" within a legal matter for a predetermined, set amount. The client knows upfront what they'll pay for a defined scope of work, regardless of the actual hours spent or costs incurred.
How Does It Differ from Other Billing Methods?
- Multiple Projects vs. Single Retainer: A matter can have numerous AFA projects, each with its own fixed price. A matter can only have one periodic retainer.
- Flexibility in Scope: A single project can encompass multiple task codes and isn't constrained by a fixed timeframe.
- Comprehensive Cost Inclusion: AFA projects include both costs and fees within one "big bucket."
- Independent from Budgets: AFA projects are entirely excluded from a matter's overall budget.
The Mechanics of AFA Project Billing
Even though a project has a fixed price, the actual hours worked and costs incurred are still meticulously tracked. A matter can still have a mix of AFA projects and regular transactions billed at standard rates.
Reporting and Transparency
AFA projects are fully integrated into reporting systems. They can appear alongside regular transactions on the same client statements and are compatible with SSRS. Firms have the flexibility to include or exclude project transactions from SSRS Fee Analysis reports.