By Kevin Boyle, senior vice president, general counsel and secretary, Vangent

I employ a variety of billing models, but I have a strong preference for the flat rate or fixed-price billing structure because it affords the greatest predictability and control over the legal costs for individual matters, as well as the annual budget planning process. The fixed-price-billing model is also the easiest way to explain legal costs to the CEO and board of directors because it tends to benchmark the “value” of legal services or work product received, while eliminating the need to justify such variables as the prevailing hourly or regional rates of a given firm.

I have found the fixed-price model can be employed for all but the most complex and unique legal matters, yet some law firms are still reluctant to embrace it, or only agree to it for their largest clients. I understand that reluctance because the company I work for, Vangent, does a fair amount of fixed price work for our customers and we face the risks of a project unexpectedly going off the rails and thus, potentially not getting paid a fair price for work performed and delivered. We manage those risks through disciplined planning and risk modeling based on our experience doing similar work. We then support our planning with a strong and sustained focus on quality and delivery. Our customers appreciate we have more skin in the game and on the rare occasion something goes wrong, I’ve found that the goodwill we’ve established with our customers will ensure a fair outcome.

One potential risk for GCs in using the fixed-price model is that it could create a perverse incentive for a law firm to use lower-priced or lesser-experienced attorneys in an attempt to increase the bottom line. I don’t think most lawyers operate this way and a good GC should be able to ensure that services are being performed at a high level of quality. Nevertheless, it is probably best to employ this model with firms you are confident share your commitment to delivery of high-quality services.

A variant on the straight fixed-price model, which I’ve used to good effect is a “not to exceed” total cost model. I’ve used this approach on EEOC matters for years with Jason Branciforte of Littler Mendelson and it has been great for Vangent and has also resulted in all sorts of adjacent legal work for Jason and Littler. Our arrangement allows me to forecast my annual legal spend in this area much more accurately and also outsource work that would be very time consuming for me and my in-house staff. The combination of high-quality work and predictable and reasonable costs means that this is the last area I would want to bring in-house.

-As told to GovConExec’s John R. Adams