---

name: prompt-pack-alternative-fee-arrangement-template
description: Use when drafting an alternative fee arrangement (AFA) proposal or agreement between a law firm and a client, covering fixed fee, capped fee, success fee, blended rate, and subscription/retainer structures. Legal ops and billing practice area. Note: success/conditional fees are prohibited in certain MENA jurisdictions — this skill flags those restrictions.
license: MIT
metadata:
id: prompt-pack.alternative-fee-arrangement-template
category: prompt-pack
practice_area: legal-ops-billing
priority: P2
intent: [drafting, alternative-fee-arrangement-template]
related: [persona-partner, prompt-pack-board-resolution, heuristic-always-state-jurisdiction-first, efirm-time-recovery, prompt-pack-agreement-legal-draft-review]
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Alternative Fee Arrangement Template

When to use this

Use this skill when a law firm or in-house legal team needs to:

• Propose an alternative fee arrangement to a client for a defined legal matter
• Formalize the terms of a non-hourly billing structure in writing
• Respond to a client's request for pricing certainty
• Evaluate which AFA structure fits a particular matter type

Alternative fee arrangements are increasingly expected in competitive client relationships — particularly for corporate clients with legal operations functions. This skill produces a proposal document that can be shared with the client and, once accepted, serve as the billing terms for the engagement.

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Prompt template

Draft an alternative fee arrangement proposal for [type of legal matter] between [Client] and [Law Firm]. Cover fee structure options (fixed fee, capped fee, success fee, blended rate), scope definition, change management, and performance metrics.

Use [[conversation-clarifying-questions]] to elicit [bracketed] inputs before drafting.

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Required inputs

Input	Why it matters
Matter type	Determines which AFA structures are feasible (e.g., fixed fee works for defined transactions; success fee is inappropriate for advisory)
Client name	Party to the agreement
Law firm name	Party to the agreement
Proposed fee structure	The specific AFA type selected — or request all options for client to choose
Scope definition	Without a precise scope, fixed-fee and capped-fee structures are unworkable
Jurisdiction	Determines whether success fees are permitted and what regulatory disclosures apply

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AFA structure options

1. Fixed fee

A single agreed price for a defined scope of work.

Best for: well-defined, repeatable matters (NDA review, standard contract drafting, routine company secretarial, immigration applications)

Key terms to include:

• Precise scope definition (what is included)
• Exclusions (what is not included — out-of-scope triggers a change order)
• Change order process: how scope changes are identified, priced, and approved
• Disbursements: included or in addition?
• Payment milestones (e.g., 50% on engagement, 50% on completion; or monthly)

Risk allocation: the firm bears scope risk. The client bears the risk that the work is more complex than assumed, which triggers a change order. A well-drafted scope definition protects both parties.

2. Capped fee

Hourly billing with a maximum cap. Client pays actual hours up to the cap; hours beyond the cap are at the firm's risk.

Best for: matters with significant uncertainty in scope but where the client needs a cost ceiling (litigation, regulatory investigations, complex M&A)

Key terms:

• Cap amount
• Billing rate(s)
• Reporting obligation: firm must notify client when 75% of cap is reached
• Process if cap is likely to be exceeded: client approval required before cap is lifted
• Whether unused portion of cap is refunded or forfeited (usually forfeited — the cap is a ceiling, not a budget)

3. Success fee / conditional fee

A fee contingent on outcome — either entirely contingent or a base fee plus a success uplift.

Jurisdictional restriction — critical:

Jurisdiction	Success fee rules
UAE (onshore)	Conditional fee arrangements generally prohibited under UAE Bar/Advocacy Law. Base + success uplift models are used by non-bar members in some advisory contexts, but UAE-licensed advocates must take care.
KSA	Prohibited for Saudi lawyers under Ministry of Justice regulations
Lebanon	Prohibited by the Bar Association of Beirut and Tripoli
Egypt	Prohibited by Egyptian Bar Association rules
DIFC / ADGM	Permitted; regulated by DIFC/ADGM Courts and DFSA (for financial matters)
UK	Conditional fee agreements permitted; Damages-Based Agreements regulated by CFA Order
France	"Honoraires de résultat" permitted as a supplement to a base fee only; pure contingency prohibited

Where permitted:

• Define "success" precisely (judgment, settlement above threshold, regulatory clearance)
• Base fee amount (minimum regardless of outcome)
• Success uplift (percentage of damages, fixed amount, or multiplier on base fee)
• Cap on total fee
• Payment timing on success event

4. Blended rate

A single hourly rate regardless of seniority of lawyer working on the matter.

Best for: matters with mixed seniority levels where client wants simplicity in billing

Key terms:

• Blended rate per hour
• Team composition assumptions (rate is set based on expected mix; if mix changes materially, rate may be renegotiated)
• Disbursements separate
• Monthly invoicing with time narratives

5. Subscription / retainer

Fixed monthly fee for a defined portfolio of recurring services.

Best for: in-house legal departments outsourcing a function; clients with ongoing volume of routine matters

Key terms:

• Monthly fee
• Scope of services included (matter types, volume limits, response time SLAs)
• Roll-over: do unused "hours" or "matters" roll over or expire?
• Overage: what happens if volume exceeds the subscription scope?
• Term and termination (typically 12 months minimum; 90-day notice)

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Document structure

1. Parties and matter description — full names; matter reference; brief description of the legal work
2. Selected fee structure — the chosen AFA type; amount or rate; basis for calculation
3. Scope of services — detailed description; explicit exclusions; change management process
4. Disbursements — which disbursements are covered (if any) vs. billed separately; cap on disbursements if agreed
5. Payment terms — invoicing frequency; payment due date; late-payment consequences (note riba prohibition in KSA)
6. Performance metrics — if agreed (matter budget adherence, response time SLAs, outcome metrics for success-fee arrangements)
7. Reporting — billing narrative requirements; budget-to-actual reporting frequency
8. Term and termination — commencement; completion; early termination by either party; effect on fee obligation
9. Governing terms — relationship to engagement letter; dispute resolution; jurisdiction
10. Signature blocks

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Jurisdictional notes

In addition to success-fee restrictions above:

• UAE: legal services are regulated by the Ministry of Justice for onshore courts; legal consultancy (non-advocacy) is separately regulated by the Department of Economic Development. AFA structures for consultancy work are more flexible.
• KSA: lawyers are regulated by the Ministry of Justice; written fee agreements are mandatory for legal services.
• Lebanon: fee agreements should be in writing; the Bar Association sets minimum fee schedules for certain types of work.
• DIFC/ADGM: freedom to agree on any fee structure; regulatory transparency obligations apply for financial sector clients.

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Common mistakes

• Scope defined too broadly: "all legal advice" is not a fixed-fee scope
• No change-order mechanism: when scope creeps, disputes follow
• Proposing success fees in a prohibited jurisdiction
• No milestone invoicing: waiting until completion to invoice large fixed fees creates cash-flow risk for the firm
• No disbursements cap or clarity: unexpected disbursements (expert fees, travel) can blow up the economics

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Related skills

• [[persona-partner]] — partner context for BD and pricing decisions
• [[efirm-time-recovery]] — time narrative drafting and billing entry optimization
• [[prompt-pack-agreement-legal-draft-review]] — review an existing engagement letter or AFA
• [[heuristic-always-state-jurisdiction-first]] — jurisdiction impacts fee structure permissibility