Perhaps Law.com was just fishing for traffic by choosing a controversial headline (something we at 3 Geeks would never condone!) but yesterday’s article, misleadingly entitled AFAs Trending Down in U.S. and U.K., got a lot of attention. To be fair, the data gathered in the 9th Annual Litigation Trends Survey Report, does indeed show a decrease in AFAs from 2011 to 2012.  And it gives some indication that those numbers MAY go lower again this year.  However, there is one big problem with the headline, the second word.  The appropriate headline would have been AFAs Down in U.S. and U.K. There is no trending about it.

The survey has been asking “Does your company use Alternative Fee Arrangements?” since 2009.  If we add 2009’s survey results to the data published in this year’s report, we see a different story emerge. Plotting the percentage of positive responses to the AFA question over the last 4 years (solid lines), and then using handy dandy Excel to plot linear trend lines (dotted) over that time, you’ll see that even with last year’s drop in AFA usage, the trends are still pointing up.

Now, a relatively small drop in use of AFAs in the U.S. – from the current 51% to less than the 48% reported in 2009 – would turn the US trend line down over the five year period from 2009 to 2013. But, to do the same in the U.K. would require AFA usage to be cut nearly in half to only 32% this year. A very unlikely occurrence.  
The Law.com article correctly points out:

“…in 2011, some 52 percent of U.S. respondents said they intended to increase their use of alternative fee arrangements. But only 39 percent this year said they expect increased use over the next 12 months…”

But from this they conclude:

“…indicating the downward shift will continue.”

This is an example of statistics that seem meaningful until you tease them apart.  In 2011, at a time when AFA usage had just gone up 17% in the previous year, 52% of respondents said they would be doing more AFAs.  In 2012, when AFA usage had diminished by about that same amount, only 39% said they would be using more AFAs. This does not indicate that the downward shift will continue, it indicates that people tend to assume this year will be pretty much like last year.  Sometimes they’re right, often they’re wrong.

It will be very interesting to see the 10th Annual Litigation Trends Survey to see how the trends actually play out in 2013, but a single Year-Over-Year drop in usage, does not a trend make.

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Photo of Ryan McClead Ryan McClead

Ryan is an executive at a small, but well-known legal technology company. Prior to his jump to the vendor side, he served for 3 years as Legal Technology Innovation Architect at Norton Rose Fulbright, running Technology Innovation projects around the world. His sense of humor and remarkable tolerance for verbal and psychological abuse has gotten him through more than 15 years in Legal Technology. In 2015, McClead was named a FastCase 50 recipient, and in 2018, he was elected a Fellow in the College of Law Practice Management. In past lives, he was a Knowledge Manager, a Systems Analyst, an “IT Guy”, a Fashion Merchandiser and Theater Composer.

  • Tom Kane

    123 neForExcellent post. Not many in the know believe that AFA is really in decline. Thanks again for succinctly challenging Law.com's analysis!