New FinServ and AFA Legal Spending Data Will Surprise you
Jordan Weinstein, VP of Data & Growth at PERSUIT, shares insights around legal pricing trends for FinServ clients and AFAs.
For decades, annual rate negotiations have defined law firm–client relationships, often frustrating both sides. Law firms want the prestige of major bank clients but balk at being locked into low rates. Meanwhile, financial institutions question escalating hourly fees, sometimes paying $1,000 for a first-year associate. Weinstein believes Alternative Fee Arrangements (AFAs) can break this cycle by offering predictability for clients and profitability for firms.
Drawing on more than 12,000 matters and 30,000 proposals in the PERSUIT database, Weinstein highlights a surprising trend: while hourly rates in Finserv continue to rise, AFA pricing for key cost drivers—like depositions or motions—has plateaued or even declined. Between 2021 and 2023, AFA pricing nearly doubled but has since stabilized, suggesting a maturing market.
As firms move beyond simply multiplying hours by rates, they can leverage benchmarks and technology—including AI—to deliver outcomes efficiently while maintaining margins.
The implications are clear: law firms should view AFAs as a genuine path to sustainable profitability, while clients should push harder for them to gain cost certainty. As Weinstein notes, the time may finally be right for AFAs to move beyond the long-promised “10–30%” share of legal work and reshape the industry.
