Alternative Fees

We at Haynes and Boone are acutely aware that the current economic environment and its stresses on our clients require us to be flexible in how we price and deliver legal services. Haynes and Boone has always been there for its clients—in good times and bad. We view these challenging times as an opportunity for us to demonstrate we can be part of our clients’ solutions.

Our Hourly Rates Are Reasonable. Haynes and Boone occupies an enviable position among business law firms when our firm is compared to others on a value-to-price ratio basis. Our billing rates have always been and continue to be lower than many fine firms with which we compete. For example, among business law firms based in Texas, our rates rank a full quartile below those of the largest firms in the state. Likewise, our rates are lower than those of most of our competitors on the East and West Coasts. But because of the quality of our lawyers and the winning team culture we have built at Haynes and Boone, we compete very successfully with those more expensive firms in the court room and at the negotiating table and when vying to represent business and industry leaders.

Blended Hourly Rates. For some matters, Haynes and Boone may agree to bill the same rate for all lawyers and every class (partner, associate, of counsel, etc.) who work a client’s matters, regardless of each lawyer’s individual billing rate. Blended rates are determined on the basis of work we expect to be provided for a matter and the billing rates of those lawyers we anticipate will work on the matter.

Volume Discounts. In situations where a client prefers traditional hourly rates, we may consider volume discounts in return for that client guaranteeing a set level or volume of legal work.

Other Alternative Pricing Arrangements

Haynes and Boone prides itself on not only its enthusiasm for alternative fee arrangements, but also its ingenuity and creativity in developing alternative fee arrangements that suit the particular needs of a specific client or matter. We work with our clients to develop fee plans that maximize the value we can bring.

The first step in any discussion about alternative fees is to understand the client’s key goals:

• To incentivize particular types of success
• To predict legal fees
• To time fees
• To reduce the overall level of fees
• To encourage particular staffing models

These different considerations may lead us to develop more than one fee arrangement with the client. We understand there is no single fee arrangement that fits all situations. Our overall relationship with the client is also an important element of our discussion about fees. Many of our client relationships involve many matters, and we can often develop creative arrangements that reflect and support the long-term, broad scope of those relationships and that give us a chance to grow our relationships further or into new areas. For some clients, all the work we do is subject to a single alternative fee arrangement. For others, alternative fees are developed and agreed on a case-by-case basis. Many clients prefer a mix of standard hourly rates and alternative fee plans, depending on their varying goals for individual matters.

Below are some examples of the alternative fee plans our clients have found attractive. We develop new alternative fee plans all the time and would like to hear our client’s own ideas about how to maximize Haynes and Boone’s value through our fee plan.

Fixed or Flat Fees. Haynes and Boone can provide some services for a set fee. This fee could cover a particular matter, e.g., a fixed fee for all work provided on an internal investigation or a particular service, e.g., a flat fee for consulting services provided on a monthly basis. Fixed fees typically are set:

• For individual matters or for an entire portfolio of matters;
• For the life of a matter or for a determined length of time; or
• As a monthly retainer for access and advice

Fixed Fee or Pre-agreed Budget with Collar. Some fixed fee arrangements (and matters with pre-agreed budgets) will warrant a “collaring” arrangement. This fee arrangement anticipates engagements in which the amount of effort needed to fulfill our obligation as responsible legal counsel is greater or less than what both we and our client initially thought the effort would require.

Under such a collaring arrangement, Haynes and Boone and the client would agree that if the hourly value of our firm’s lawyer time expended on a matter falls considerably outside the fixed fee (or pre-agreed budget), we will share the fee upsides and downsides with each other.

Monthly Access and Advice Retainers. Although this is a variation of the fixed fee approach described above, an advice and access retainer has benefits that warrant further explanation. This approach makes sense in situations where a client wishes to be proactive in seeking legal advice to avoid legal exposure, but does not want to pay for expensive legal research every time a potential legal issue arises. This arrangement offers clients ready access to relatively inexpensive legal advice and offers Haynes and Boone the chance to add value to the client because we can help to distinguish early on between those situations that are easily dealt with and others that, unaddressed, might expose the company to significant liability.

Fee Holdbacks. In situations that may apply to a client’s matters, Haynes and Boone can hold back an agreed-upon percentage from its monthly billings. In return, we will have the opportunity to earn and be paid the full holdback amount at the client’s discretion. Whether we earn back all or some of the holdback amount will be based on the client’s assessment of our performance against certain criteria, e.g., work quality, results, creativity, efficiency, cost-consciousness, collaboration with other outside counsel, and effective utilization of the client’s own resources. In these situations, the criteria are established up front. The client’s holdback determinations could be made annually or when the matter concludes.

Success Fees. Under this arrangement, Haynes and Boone would be eligible for a success fee or premium in addition to its prior billings, in the form of a performance bonus at the client’s discretion. A success fee can be a set fee, a graduated fee according to a mutually developed schedule, or a percentage of our billings. As with a holdback, whether we earn a success fee will be based upon the client’s evaluation of our performance against predetermined criteria.

Phase-Based Fees. On many matters, it will make sense for Haynes and Boone to estimate a specific fee for each phase of a matter based on the work anticipated for each phase. In litigation, for example, this arrangement might result in a separate fee for each of the following phases:

• Motion to dismiss
• Discovery
• Dispositive motions
• Trial preparation
• Trial

In transactional matters, phases of work might include due diligence, drafting of specific agreements, negotiating the terms and amount of the purchase/sale price, closing activities, etc.

This approach could be implemented in a variety of ways. For example, the arrangement may be based on fixed fees, where Haynes and Boone charges a fixed fee for each matter phase. Another approach might be taken that would require the client to pay an estimated (budgeted) fee for each phase with a rationalization against actual billings at agreed-upon times, e.g., quarterly, annually, or when the matter is concluded.

Contingency Fees. Clients are familiar with traditional contingency fees for plaintiff matters, and Haynes and Boone routinely enters into such arrangements. We also are willing to use reverse contingency fee arrangements for defense cases. Unlike a regular contingency fee, which is based on how much the client recovers as a plaintiff, a reverse contingency fee is based on how much we save the client as a defendant. If we can resolve a matter for less than the exposure attributed to it by the client (or reduce the client’s reasonable exposure through dispositive motions), then our fee would include an agreed-upon percentage of that savings to the client. With both traditional and reverse contingency fees, we often use graduated rates based upon the phase of the matter. For example, the closer a matter progresses to trial, the greater the percentage we would be paid for a favorable result.

Hybrid Fee Arrangements by Matter Phase. In most situations, the billing arrangement that makes the greatest sense is a combination of several arrangements described above. For example, Haynes and Boone could estimate fixed fees for some matter phases, holdbacks on hourly rates for other phases, and success fees for other phases.

Fee Caps. For some matters about which the scope is well understood beforehand, Haynes and Boone may agree to cap its fees. Fee caps are determined based upon anticipated fees for a matter, and they can be set for the entirety of the matter or for each phase.

“Frequent-Flyer” Credits Toward New Legal Services. Haynes and Boone may agree to provide a significant reduction in fees for one matter in exchange for the client’s commitment to assign other matters to us in different areas of the law where we have not yet served the client. This could take the form of a discount on the instant matter, a credit against future billings for the new area, or some combination.