Terminology of Lawyer billing
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Alternative fee arrangements have become increasingly popular in recent years. Alternative fee arrangements may come in different forms, but more common forms of alternative billing are listed below with agreement descriptions and common uses.
Portfolio
A lump sum amount is paid for legal services covering a large body of legal work. The fee may be paid in incremental payments (e.g. monthly) or at one time.
Hard Cap
Description
Fees are billed at an hourly negotiated rate, provided that the client will pay up to but not more than the hard budget number. The law firm absorbs the risk
Phased, Budget-Based Billing
Description
For large transactions or litigation, the legal services are divided into phases and the parties agree upon the budget in each phase.
Contingent Fees
Description
Law firm receives a percentage of the client’s recovery.
Blended Rates
Description
Rates are blended between partners and associates and one blended rate is charged to the client for all work performed by the law firm.
Dead Deal Discount
Description
If the transaction is terminated, the client only pays a percentage of the legal fees.
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