Hourly billing is something most lawyers knows well. And the stress and confusion that often comes with it…they know that, too. If your firm relies on the billable hour for everything, studies show that money is most certainly being left on the table. This is why many attorneys are moving towards alternative models. For some, that looks like offering certain services as flat fees, for others, it’s utilizing a hybrid fee structure.

Your clients live in a fast-paced, digital world. They expect quicker service and pricing that reflects how the work gets done. They also want transparency—fees that are clear, predictable, and fair. That’s where Alternative Fee Arrangements (“AFAs) come in.

An AFA is simply any pricing model outside of hourly billing. Used well, AFAs can drastically improve the client experience, as well as the law firm’s efficiency and profits.  

But, AFAs aren’t a magic switch you just flip. They’re a pricing system you build, based on good data, clear communication, and a real understanding of how your matters run. And they won’t make sense for every practice area or every type of case. In this article, we’ll outline the benefits, various types, and key factors for adopting AFAs in your firm.  

AFA Readiness: What to Evaluate First

Before you put AFAs on the table, you need to get real about what your firm actually does day to day. Because if you don’t understand your typical scope, effort, and workflow, it’s incredibly easy to price a matter too low, overpromise on what’s included, or end up stuck doing “just one more thing” for free.

And remember: not every practice area (or every case) is a great fit for AFAs. Some matters are simply too unpredictable, such as litigation. But when boundaries are clear, alternative pricing is a complete game changer.  

To make AFAs work, it really starts with data. Firms need to get a read on:

• Time spent by task and role (not just total hours)

• Staffing patterns and bottlenecks

• Common scope changes that creep in mid-matter

• Complexity drivers and outcomes that change the workload

• Patterns across similar matters so pricing isn’t a guess

The firms that succeed with alternative pricing are the ones that treat AFAs as part of a broader billing strategy, not just a new way to send invoices. If you’ve got solid processes and good visibility into how your matters run, AFAs can be one of the smartest moves you make, offering potential for greater efficiency and sustainability. The good news is this doesn’t have to become a whole new “initiative.” With the right case management software, a lot of the reporting and visibility is already there.

Common Types of Alternative Fee Arrangements

Once you’ve got a handle on how your firm is currently operating (and what your matters typically look like), the next step is choosing the right pricing model.

Not all AFAs are built the same. The best option depends on the type of work you do and how predictable it is. Here are the most common approaches firms are using today:

• Flat fees: One fixed price for a clearly defined service

• Capped fees: Hourly billing, but with a ceiling

• Blended rates: One average hourly rate across timekeepers

• Stage-based fees: Fees tied to phases of a matter

• Value-based pricing: Fees based on outcomes or impact, not hours

• Subscriptions (or retainers): Recurring fees for ongoing access to legal support

• Payment plans: Fees spread out over time

• Success or performance incentives: Fees partially tied to agreed results

Example: a family law attorney wants to start utilizing a flat fee structure instead of hourly. This would normally be difficult for a family lawyer to do, because the litigation portion of that area of law can be unpredictable in the best of times. But the attorney can offer certain services for a flat fee, such as drafting and serving a Petition for Divorce. Some jurisdictions call this “unbundled legal services.” You are essentially limiting the scope of what you would normally do on a typical family law matter.  

If you want a deeper breakdown of how each structure works in practice, check out our guide to alternative billing structures.

Considering Your Clients Is Non-Negotiable

AFAs only work when clients understand what they’re paying for. Transparency isn’t optional; it’s the entire point.

Clear communication should cover:

• What the fee includes

• What could cause the fee to change

• How progress and milestones are tracked

• When and how conversations will happen if scope shifts

AFAs don’t eliminate billing conversations. They move them upfront, where trust is built instead of tested. Clients who feel informed are less likely to question invoices and more likely to view pricing as fair.

Internal Reviews During Your AFA Rollout

Moving away from hourly billing can be the change that improves revenue for your firm, but it’s still a transition. The first few matters are where you learn what works and what needs tightening up. It’s worth building in an internal review process as you go.  

Because most AFA hiccups aren’t dramatic… they’re small and avoidable. For instance, a scope detail doesn’t get communicated, a task takes longer than expected, someone assumes something is included when it’s not, all of which would mean you spent more energy (and potential billing time) than you should have when this is now a flat fee case.  

A simple internal check-in during your rollout helps prevent those surprises. It keeps everyone aligned, catches issues early, and makes sure your pricing model stays profitable and fair.

Here’s what to review while AFAs are in motion:

• Fee vs. actual effort: Are matters tracking close to what you expected, or are you consistently underestimating? If you are properly tracking your time on this, getting answers is as simple as running a report in your practice management software.

• Scope clarity: Are clients (and your own team) clear on what’s included at each stage?

• Scope creep trends: What “extra” work keeps sneaking in, and where is it coming from?

• Staffing and handoffs: Are the right people doing the right work and are transitions between team members smooth?

• Client communication: Are you flagging changes early, or letting things pile up until the end?

• Adjustments for next time: What needs to be refined in the template, the fee, or the assumptions?

What AFAs Come Down to for Law Firms

AFAs aren’t about abandoning hourly billing just to be “modern.” They’re about pricing in a way that makes sense for how your firm actually works and what your clients expect today. Start small, use real data, communicate clearly, and keep refining as you go. When you get it right, AFAs make billing smoother for clients and more sustainable for your firm.

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