AFAs only represent about 23% of external spend across the legal industry (according to a Bloomberg Law survey).
How does this compare to PERSUIT’s data?
After our recent milestone of $10B in law firm proposals, we’ve been looking back across our data set to see what insights we could find.
Here's an interactive chart that shows AFA usage over time in PERSUIT. You can take your own guess at how AFA usage has trended since 2019 by drawing a line, then clicking "I'm done" to reveal the real results.
Fun, right? So now you know.
AFAs Have Been Used for 71% of All Legal Matters on PERSUIT
In the early days of PERSUIT (2016 – 2017) only 30-40% of matters used an AFA.
But over the last few years, more and more companies have begun using our platform for something other than hourly rates. In total, corporate legal teams have used AFAs for 71% of all matters on PERSUIT.
AFA adoption rose throughout 2018 and 2019 and has leveled off at around 70% since then.
We consider 70% AFA adoption on PERSUIT to be a big step in the right direction, showing that the growing number of companies using PERSUIT are committed to changing the way they partner with their law firms.
We still support companies using hourly rates of course — with one out of three RFPs on PERSUIT still being managed on an hourly basis. In fact, we are right now finishing work on a new rate review module to help in-house teams manage the annual rate negotiation process even more effectively on PERSUIT.
Even so, for those using PERSUIT, it’s clear that AFAs are no longer the “alternative” way of doing business.
Which is why I have mixed feelings about the term “AFA” (alternative fee arrangement), since it carries the implication that fixed-fee agreements in legal are still the “alternative” to the standard way firms usually operate. The standard way being hourly rates.
One of our best customers prefers the term “EFA,” which stands for “effective fee arrangements,” a term I like much better.
Whatever you call them, the data is clear that AFAs are on the rise and are increasingly becoming the “standard” for top in-house legal teams.
Note: Want to learn more about AFAs on PERSUIT? Schedule a demo for your team.