Maximising Client Value in the Fragmented Pricing Landscape: The LPM Advantage

Alternative fee arrangements (AFAs) are increasing in popularity. A 2024 Bloomberg Legal Operations survey found that AFAs account for 23% of external legal spend, with this number being set to grow in upcoming years. For many in-house teams, AFAs offer the promise of predictable costs and better value for money. However, without sufficient guardrails to ensure the correct tools, oversight, and communication methods, AFAs can suffer from scope changes and inefficiencies, leading to budget overruns and mismatched expectations. Transparency, trust, and high-quality outputs are non-negotiable. In this context, legal project management (LPM) emerges as a critical framework to ensure maximum value is delivered to stakeholders within AFAs. Equipping lawyers with the right tools enables a proactive approach. This ensures transparency in budgets and matter status.

There are several hurdles to overcome in order to maximise value delivered to in-house teams, including:

The effective management of AFAs ultimately comes down to maintaining control, which is shared between in-house teams and their external counsel. LPM supports this balance by prioritising clarity and certainty. In-house teams are put in the driver’s seat alongside external counsel, with regular matter reporting tailored for their specific needs as well as those of their internal stakeholders. Therefore, ensuring active involvement in decision-making and the mitigation of project risks ahead of time . This partnership is where the true value lies when working within an AFA.

At CMS, self-service matter reporting tools powered by PowerBI, empower lawyers with direct access to client-focused finance reporting at their fingertips. These tools allow teams to: 

• Adjust fee structures dynamically to reflect the realities of work
• Allocate resources effectively to match deliverables
• Track spending in real-time to mitigate risks and scope creep

For in-house teams, this level of visibility is key to demonstrating return on investment to stakeholders, ensuring strategic alignment and having certainty over spend. 

In recent times, data has emerged as a strategic asset, guiding resource allocation and helping to refine fee structures. However, the Bloomberg survey also found that 50% of in-house teams do not currently participate in data-focused work.

LPM plays a pivotal role in bridging this gap in leveraging data effectively, furthering transparency by breaking work down into stages. Data analysts are able to review large data sets to understand working practices and validate project management assumptions. This helps to promote consistency of delivery and manage client expectations. Lawyers can track progress and time spent at each stage in more detail, enabling data-driven decisions informed by an understanding of what’s working, where adjustments are needed and where budgets may be at risk. 

AI takes data analytics a step further. An AI enabled workplace can turn this data into predictions anticipating what’s to come, providing a more accurate scope of work from the outset. Data and AI maximise value delivered from AFAs by:

• Predicting and detecting risks and the impact on budget overruns before disruption occurs
• Providing stakeholders with a clear picture of how external spend supports efficiency and strategic outcomes
• Refining fee structures by harnessing data insights to ensure arrangements align with the complexity of the work

In today’s legal environment, value is defined not only by outputs, but by how efficiently and transparently those outcomes are achieved. As AFAs continue to increase in popularity, the future of legal service delivery will be marked by the integration of LPM into these - ensuring alignment, accountability and measurable impact. As a result, pricing models will transform into dynamic frameworks that anticipate client needs and foster deeper collaboration.