Detailed Excel-Based Budgeting Tool
Summit generates a budget via spreadsheet (using ABA Task Codes) to estimate the cost of litigation. Once the budget is reviewed and adjusted with our customer, Summit commits not to bill any exceeded budgeted costs without prior consent from customer.
Detailed Excel-Based Budgeting Tool and Decision Tree
Summit generates a detailed decision tree that sets forth what decisions will be made by the judge/arbitrator and jury, and how those decisions relate. Used in conjunction with a budget, the decision tree helps the business decision-maker decide whether it makes sense for the company to invest the budget amount, given the probabilities and likely outcomes in the case.
Summit provides services based on an agreed-upon fixed fee. This works best for repetitive matters where the firm and the customer have sufficient experience to price accurately. The risk that Summit or customer will end up on the short end is reduced because this risk balances out over multiple matters.
Fixed Fee with Bonus for Success
This is the same as the "fixed fee,” above, but with a success bonus. The bonus should be tied to customer’s interest – such as a bonus fee for resolving a matter before a certain date. The bonus can also be used to ensure that the customer and Summit share in any "windfall” through a 50/50 bonus (i.e., the fixed fee for the matter is $150,000 and the law firm successfully completes the matter for $100,000 in time value at normal hourly rates; the law firm receives $125,000 and the customer saves $25,000).
Summit provides services in which it is only compensated if the customer successfully secures a contract. Summit is then compensated similar to a commission or contingency fee – a percentage of the value of the contract(s) for which we provided services to our customer.
Fee Paid in Stock
Summit has accepted stock as part of its fee arrangement with a customer. Usually, this form of payment is combined with some other form of payment, such as an incentive bonus or a reduced hourly rate.
Monthly or Annual Fixed-Fee Retainer
This works best for customers that require "preventative” legal advice on a consistent basis. The retainer amount is established by determining the amount of advice a customer is likely to need on an annual basis, and by pricing Summit’s time at a discount. The customer can consult Summit as frequently as needed to obtain advice on how to handle employee (or other) issues to help manage risk.
FMC ACES Product
Under this approach, Summit and the customer develop a budget for each phase of a matter. Summit bills the customer at its normal hourly rates, but until the budget target for a phase is reached, the customer pays a percentage (normally 75% to 80%) of the billed fees. The unpaid fees are placed in a success "bucket.” If Summit exceeds the approved budget for a phase, the percentage paid Summit reverses. For example, if Summit is paid 80% of fees up to the approved budget amount, after the target budget is exceeded, Summit is paid 20% and the balance of the fees for that phase (80% of the billed fees) are placed in the success bucket. If success is achieved in the matter (which the firm and customer have previously defined), a bonus is paid. The bonus consists of the amount in the success bucket plus a multiplier. The amount of the multiplier depends upon the point in time when success is achieved, and normally is: 100% – if success is achieved at an early stage before substantial expenses are incurred; or 50% – at dispositive motions phase or settlement by mediation; or 25% – at trial or on appeal. A second-level bonus is paid by adding one percent (1%) to the bucket multiplier for each 1% that the total fees billed in the matter are less than the total case target budget. In other words, if the law firm has expended only 40% of the total matter target, there would be an additional 60 percentage points added to the applicable bonus multiplier.
Straight Contingent Fee
Summit receives a percentage of the settlement or judgment amount, typically 25% to 40%. The percentage is agreed upon by the law firm and customer depending on risk, whether the customer will pay out-of-pocket costs, and other factors.
Reduced Hourly Rate + Contingent Fee
Summit bills monthly on a reduced hourly rate basis (typically 66% to 80% of normal hourly rates). If the law firm is successful, as defined by agreement of the law firm and the customer, the law firm receives a low percentage bonus fee (typically 1% to 5%), based on the amount of the settlement or judgment. For example, Summit has handled cases for both corporate plaintiffs and defendants priced at a percentage (66% to 80%) of normal hourly rates, with or without a monthly cap on fees. The unpaid percentage of fees incurred at normal hourly rates and any fees over the monthly cap amount (if a cap is established) are placed in a "bonus bucket.” If the settlement or judgment amount exceeds an agreed-upon amount, the law firm receives all the fees in the bonus bucket, plus 1% to 5% of the settlement or judgment amount on a sliding scale, e.g., 5% of the first X million dollars, 3% of the next XX million dollars, and 1% of any amount over XXX million dollars.
Reduced Hourly Rate with Bonus
Summit bills monthly on a reduced hourly rate basis (typically 66% to 80% of normal hourly rates). If the law firm is successful, as defined by agreement of the law firm and customer, the law firm receives a bonus based on the amount of fees incurred at normal hourly rates. For example, the customer might pay 80% of normal hourly rates. The 20% of fees that are not paid monthly are placed in the "bonus bucket.” If the law firm is successful, the customer would pay the full amount in the bonus bucket, plus an additional percentage of the amount in the bonus bucket (typically 25% to 100%, depending on the risk in the case, the bonus budget amount, and other factors agreed in advance by the law firm and the customer).
Reduced Hourly Rate with Discretionary Bonus
Summit bills monthly on a reduced hourly rate basis, up to a monthly fee cap set in advance by agreement of the law firm and customer. If the law firm is successful, as defined by agreement of the law firm and customer, the law firm receives a bonus fee that is discretionary with the customer.
Reduced Hourly Rate + Cap on Hourly Fees + Plus Percentage of Recovery
A hybrid of some of the other fee arrangements described above.
Hourly Rate Fee + Value Adjustment Line
It is not possible in every matter for the customer and Summit to create an alternative pricing arrangement that both have a high degree of confidence will serve their respective business goals. In those situations, it is necessary and appropriate to use traditional hourly rate pricing. That does not mean, however, that a value-based component cannot be part of the pricing arrangement. For all matters billed on an hourly rate basis, Summit proposes a fee each month based on the time incurred. The customer is asked to pay the proposed monthly fee or adjust that fee – up or down – for the value, as perceived by the customer.
Summit’s billing statement:
Proposed Fee: $10,000 (for example)
Value Adjustment: $______
Amount Due: $______
We believe our customers are excellent judges of the value of legal services. That’s why we encourage them to adjust our fees to match the value they believe they have received. Whatever amount the customer places in the "Amount Due” blank is the amount owed. No questions asked.