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Managing Legal Fees in the Recession: A Top Ten List

Client Advisory

March 6, 2009

Robert Louis Stevenson once observed that everyone, sooner or later, eventually sits down to a banquet of consequences. Some of these inevitable feasts are very disappointing, like our present economy, while others are entirely satisfying, the reward for our own efforts and those who preceded us.

In the current accelerating economic collapse, there are enormous opportunities for companies, general counsel, and individual clients to reassess their legal requirements, as they are doing with virtually every other service and expense, to make sure that they are achieving the very best value for their dollars. The ancillary benefit of this exercise will be that once the economy eventually returns to health, this essential part of the service requirements of every business will be operating as leanly and meanly as possible, with the result that more of the eventual profits will flow through quickly to the bottom line.

1. Horses for Courses.

Every significant requirement for legal services should be re-analyzed to ensure that the best and most economical solution is found. This may well be traditional inside or outside counsel, but maybe not. Legal services worldwide have become a buyer’s market, and it’s important and often very efficient to take advantage of the ever-increasing competition among law firms to represent your interests.

2. Demand Efficiency.

Even more than ever before, discuss staffing of every project with the lawyers, to ensure that every matter is handled at the best (usually lowest) level required to get the job done. You usually don’t need a lawyer to fill in a form, and often not even to review it. Demand efficiency, and don’t pay for more. Never forget the goal, but take the most economical road to get there. In general, you need one team captain, and probably one more -- everyone else on that team is a questionable addition, to be justified before they are paid for.

3. Have Reputation, Will Travel.

Remember always that you may need a “merchantable” name law firm for a particular matter. But once you identify that universe of qualified prospects, all the usual rules apply. Some matters obviously require depth within the law firm. Make sure that the firms seeking your business have the required resources, then return to 1. above.

4. Fees, Fees, Fees. 

The pure hourly rate for legal services is quickly passing into the history books. Discuss “Value Billing” with your lawyers. And Premiums versus Discounts. And Flat Fees for specific projects. And agreed Discounts from normal time billing or normal rates. The legal world is open to negotiation, so negotiate!

5. Planes, Trains and Automobiles.

All ancillary expenses are negotiable. The easiest way to enforce that is simply not to pay them except for those specifically authorized in advance. Many companies have stopped all travel without a very senior OK in advance. That should apply to the lawyers as well. Video meetings are getting better every day, and substantial deals are being done routinely without the lawyers ever meeting face-to-face. You’re paying the team -- they can pay for dinner.

6. Litigation Lite.

First negotiate, then mediate, then arbitrate, even if you preferred going straight to the courthouse before. And every arbitration forum has expedited procedures to simplify and hasten the process even more than before. Every good settlement makes both sides a little unhappy, but in this economy they are a little happier. And if you do litigate, approach every significant step with an eye on costs versus reward. Value billing or fixed fees or caps for specific motions or discovery procedures are becoming common.

7. An Ounce of Prevention.

Is often worth many pounds of cure. If you have repetitive business or regulatory issues, make sure that your procedures are perfect, and then hire the lowest level possible to fill in the blanks. The expensive part is now over. The paralegals will take it from here.

8. Billing -- Efficient and Automatic.

At the outset, agree on the automated billing format that you need, and then once a month, push the button. You need detail, but not obsessively so. And remember some of those deal expenses can be deducted currently even if the deal closes.

9. Don’t Reinvent the Wheel.

Odds are that you have had this type of transaction, or dispute, or agreement, before. If you like a particular model, insist that it be used to cut down time on all sides. And talk before you let the lawyers write -- often if you talk through the transaction first then it avoids a hopelessly one-sided first draft that will delay and complicate the entire process.

10. Sign Here.

Once you agree on all the guidelines with your lawyers, write them down, agree on a Plan, a Schedule, and a Budget, and then stick to them, unless the truly unexpected disaster strikes. If you have pet peeves, put them on the list. But all you need are bullet points, provided you have picked the right lawyers to begin with.

Finally, once every significant project or step is completed, have a post-mortem, and ask the lawyers specifically for ways that the next deal or debate can be accomplished even more efficiently, at even lower cost, than this one. You can learn from this.


Questions regarding this advisory should be addressed to Robert A. McTamaney (212-238-8711, mctamaney@clm.com) or to Richard G. Pierson (212-238-8872, pierson@clm.com).

Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2017 Carter Ledyard & Milburn LLP.
© Copyright 2009

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