--- name: prompt-pack-alternative-fee-arrangement-template description: Use when drafting an alternative fee arrangement (AFA) proposal or agreement between a law firm and a client, covering fixed fee, capped fee, success fee, blended rate, and subscription/retainer structures. Legal ops and billing practice area. Note: success/conditional fees are prohibited in certain MENA jurisdictions — this skill flags those restrictions. license: MIT metadata: id: prompt-pack.alternative-fee-arrangement-template category: prompt-pack practice_area: legal-ops-billing priority: P2 intent: [drafting, alternative-fee-arrangement-template] related: [persona-partner, prompt-pack-board-resolution, heuristic-always-state-jurisdiction-first, efirm-time-recovery, prompt-pack-agreement-legal-draft-review] source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal) version: "1.0" --- # Alternative Fee Arrangement Template ## When to use this Use this skill when a law firm or in-house legal team needs to: - Propose an alternative fee arrangement to a client for a defined legal matter - Formalize the terms of a non-hourly billing structure in writing - Respond to a client's request for pricing certainty - Evaluate which AFA structure fits a particular matter type Alternative fee arrangements are increasingly expected in competitive client relationships — particularly for corporate clients with legal operations functions. This skill produces a proposal document that can be shared with the client and, once accepted, serve as the billing terms for the engagement. --- ## Prompt template > Draft an alternative fee arrangement proposal for [type of legal matter] between [Client] and [Law Firm]. Cover fee structure options (fixed fee, capped fee, success fee, blended rate), scope definition, change management, and performance metrics. Use [[conversation-clarifying-questions]] to elicit `[bracketed]` inputs before drafting. --- ## Required inputs | Input | Why it matters | |-------|---------------| | Matter type | Determines which AFA structures are feasible (e.g., fixed fee works for defined transactions; success fee is inappropriate for advisory) | | Client name | Party to the agreement | | Law firm name | Party to the agreement | | Proposed fee structure | The specific AFA type selected — or request all options for client to choose | | Scope definition | Without a precise scope, fixed-fee and capped-fee structures are unworkable | | Jurisdiction | Determines whether success fees are permitted and what regulatory disclosures apply | --- ## AFA structure options ### 1. Fixed fee A single agreed price for a defined scope of work. Best for: well-defined, repeatable matters (NDA review, standard contract drafting, routine company secretarial, immigration applications) Key terms to include: - Precise scope definition (what is included) - **Exclusions** (what is not included — out-of-scope triggers a change order) - Change order process: how scope changes are identified, priced, and approved - Disbursements: included or in addition? - Payment milestones (e.g., 50% on engagement, 50% on completion; or monthly) Risk allocation: the firm bears scope risk. The client bears the risk that the work is more complex than assumed, which triggers a change order. A well-drafted scope definition protects both parties. ### 2. Capped fee Hourly billing with a maximum cap. Client pays actual hours up to the cap; hours beyond the cap are at the firm's risk. Best for: matters with significant uncertainty in scope but where the client needs a cost ceiling (litigation, regulatory investigations, complex M&A) Key terms: - Cap amount - Billing rate(s) - Reporting obligation: firm must notify client when 75% of cap is reached - Process if cap is likely to be exceeded: client approval required before cap is lifted - Whether unused portion of cap is refunded or forfeited (usually forfeited — the cap is a ceiling, not a budget) ### 3. Success fee / conditional fee A fee contingent on outcome — either entirely contingent or a base fee plus a success uplift. **Jurisdictional restriction — critical:** | Jurisdiction | Success fee rules | |-------------|-----------------| | UAE (onshore) | Conditional fee arrangements generally prohibited under UAE Bar/Advocacy Law. Base + success uplift models are used by non-bar members in some advisory contexts, but UAE-licensed advocates must take care. | | KSA | Prohibited for Saudi lawyers under Ministry of Justice regulations | | Lebanon | Prohibited by the Bar Association of Beirut and Tripoli | | Egypt | Prohibited by Egyptian Bar Association rules | | DIFC / ADGM | Permitted; regulated by DIFC/ADGM Courts and DFSA (for financial matters) | | UK | Conditional fee agreements permitted; Damages-Based Agreements regulated by CFA Order | | France | "Honoraires de résultat" permitted as a supplement to a base fee only; pure contingency prohibited | Where permitted: - Define "success" precisely (judgment, settlement above threshold, regulatory clearance) - Base fee amount (minimum regardless of outcome) - Success uplift (percentage of damages, fixed amount, or multiplier on base fee) - Cap on total fee - Payment timing on success event ### 4. Blended rate A single hourly rate regardless of seniority of lawyer working on the matter. Best for: matters with mixed seniority levels where client wants simplicity in billing Key terms: - Blended rate per hour - Team composition assumptions (rate is set based on expected mix; if mix changes materially, rate may be renegotiated) - Disbursements separate - Monthly invoicing with time narratives ### 5. Subscription / retainer Fixed monthly fee for a defined portfolio of recurring services. Best for: in-house legal departments outsourcing a function; clients with ongoing volume of routine matters Key terms: - Monthly fee - Scope of services included (matter types, volume limits, response time SLAs) - Roll-over: do unused "hours" or "matters" roll over or expire? - Overage: what happens if volume exceeds the subscription scope? - Term and termination (typically 12 months minimum; 90-day notice) --- ## Document structure 1. **Parties and matter description** — full names; matter reference; brief description of the legal work 2. **Selected fee structure** — the chosen AFA type; amount or rate; basis for calculation 3. **Scope of services** — detailed description; explicit exclusions; change management process 4. **Disbursements** — which disbursements are covered (if any) vs. billed separately; cap on disbursements if agreed 5. **Payment terms** — invoicing frequency; payment due date; late-payment consequences (note riba prohibition in KSA) 6. **Performance metrics** — if agreed (matter budget adherence, response time SLAs, outcome metrics for success-fee arrangements) 7. **Reporting** — billing narrative requirements; budget-to-actual reporting frequency 8. **Term and termination** — commencement; completion; early termination by either party; effect on fee obligation 9. **Governing terms** — relationship to engagement letter; dispute resolution; jurisdiction 10. **Signature blocks** --- ## Jurisdictional notes In addition to success-fee restrictions above: - **UAE**: legal services are regulated by the Ministry of Justice for onshore courts; legal consultancy (non-advocacy) is separately regulated by the Department of Economic Development. AFA structures for consultancy work are more flexible. - **KSA**: lawyers are regulated by the Ministry of Justice; written fee agreements are mandatory for legal services. - **Lebanon**: fee agreements should be in writing; the Bar Association sets minimum fee schedules for certain types of work. - **DIFC/ADGM**: freedom to agree on any fee structure; regulatory transparency obligations apply for financial sector clients. --- ## Common mistakes - Scope defined too broadly: "all legal advice" is not a fixed-fee scope - No change-order mechanism: when scope creeps, disputes follow - Proposing success fees in a prohibited jurisdiction - No milestone invoicing: waiting until completion to invoice large fixed fees creates cash-flow risk for the firm - No disbursements cap or clarity: unexpected disbursements (expert fees, travel) can blow up the economics --- ## Related skills - [[persona-partner]] — partner context for BD and pricing decisions - [[efirm-time-recovery]] — time narrative drafting and billing entry optimization - [[prompt-pack-agreement-legal-draft-review]] — review an existing engagement letter or AFA - [[heuristic-always-state-jurisdiction-first]] — jurisdiction impacts fee structure permissibility