Attorneys are all about money, right?
We’re the ones who cue our families for photographs with, “Everybody smile and say, ‘Fees!'” Go ahead. Insert your own joke here. We can take it. But despite the jokes and our reputation, most of us are businessmen, too. We understand the need to control costs. We don’t like wasting anyone’s time, either.
We’re just like you. We thrive on referrals and return business. If we gouge clients, a lot of people hear about it.
So I’m here, as an attorney, to tell you how to keep your legal costs under control. I’ve enjoyed twenty years in my career with firms ranging in size from more than 500 lawyers to firms with less than five attorneys. It’s this simple: When companies follow these nine keys for hiring and using legal counsel, they crunch their legal costs–and actually increase the quality of their legal representation.
Key #1. Get the right lawyer for the job.
Get the lawyer whose practice focuses on the narrow area of law in which you need assistance. (This almost always means you need more than one law firm doing your legal work, by the way.)
Choosing the right lawyer can save you big money in the long run. The focus of my practice is international dispute resolution. Many times, the best way to collect a debt owed by a foreign company (particularly if that company is based in an emerging market country) is to seize an asset of that company in a foreign country. Suing these companies in the United States is very expensive. Many countries do not fully recognize U.S. judgments. You sue here and take the judgment there, only to learn you essentially need to sue again and win in your debtor company’s home country. Seizing your debtor’s valuable asset in a neutral third country can oftentimes be the best solution.
The problem is that many, if not most, of the contracts my clients or their attorneys ask me to collect on outside of the United States weren’t written with that in mind. Why not? Because they weren’t written by an international lawyer. In these cases, I’m only brought in as the specialist to do damage control long after the agreement is executed. Many of these contracts state very explicitly that the client’s home city is the only jurisdiction in which any lawsuit might be brought. So what happens? Such a provision can preclude action in some foreign countries and make seizure in all of them more problematic.
I had a recent case where I am certain we could have collected a million dollars for the client in an overseas jurisdiction had there not been a provision requiring litigation in an East Coast state. My East Coast client may have saved a few hundred dollars by having his regular lawyer draft the contract, but in the end, it may have cost them a million dollars.
Choosing the specialist usually saves money in the short term as well. My next door neighbor asked me to be her lawyer in purchasing a house from her parents. (A reminder: I do international dispute resolution.) I made clear I had absolutely no real estate background and that this transfer would be far more complicated than she probably realized.
My neighbor needed an attorney with experience in these deals. I knew such a deal should be structured to legally minimize various taxes and I told her that if she used someone without experience in this specific area–like me–she increased the likelihood of missing out on some tax benefit. Still, the clincher was when I told her that it would take someone like me around 30 hours to do such a project, while someone who was familiar with the legal territory would probably get it done in half the time.
I recommended a top-flight real estate lawyer with a tax background and told my neighbor she should expect legal fees of at least $3,500. She mentioned that the lawyer I’d recommended had completed the job, tax benefits intact, for much less.
I was shocked by the low fees and called the real estate lawyer for an explanation (I actually thought he had cut my neighbor a break as a favor to me). The lawyer told me it had taken him only three hours for the job because he does about twenty of these transactions a year. That means there is no need for him to research the tax laws each time so what would take me 30 hours takes him three.
This illustrates an old adage about the best way to find the best lawyer for your particular matter: solicit suggestions from your regular lawyer, or a friend who is an attorney. However, you need to ask for more than, for example, someone who has ever done a trademark registration. In that case, you’ll probably be passed off to another lawyer in his firm that has handled a few trademarks rather than getting the name of a well-respected trademark lawyer outside the firm. Using the in-firm corporate generalist for your trademark work will prove mighty expensive if that generalist misses something in the registration.
Key #2: Stay in constant communication with your lawyer.
It may seem completely counter-intuitive that constantly communicating with your lawyer will save you money, but it almost surely will.
In reality, staying in good communication with your lawyer is the rough equivalent of regularly changing the oil in your car. It costs money each time, but a blown engine or (in the case of legal services) a big lawsuit is going to cost you a lot more in the long run than a few oil changes or phone calls along the way.
This brings me right to the next key:
Key #3: Know your goals and tell your lawyer [WHAT THEY ARE}.
This is surely an “ouch” item. Remember the old Rolling Stones song “You Can’t Always Get What You Want”? With your counsel, “You Won’t Ever Get What You Want” if you can’t know what you intend to achieve through legal representation.
It’s your lawyer’s job to go into detail various possible outcomes of the case or transaction, nevertheless it’s your work to understand what your goals are. You are always going to understand your business greater than your lawyer.
Many in the past, suer came for me about 6 months into some highly contentious litigation together with his business partner. The client had already spent around $50,000 for this case he previously brought, but he were built with a vague feeling of uneasiness about this. His regular corporate counsel had referred him for me for a second opinion with regards to the litigation.
I met together with the client for a number of hours and found out that he wanted me to be sure his lawyers were handling true properly. During this conversation, your client must have informed me at least much that he never wanted to accomplish business along with his partner again. I told him I would assess the entire case file and acquire back to him within a few days.
When we met again a couple of days later, I told him that his lawyers ended up doing a fine job. Again, he kept mentioning how he never wanted to accomplish business together with his partner again.
I then asked him whether he seen that no matter what happened within his lawsuit against his business partner, they’d still be partners at the final. Here’s the “ouch”: it turns out the buyer had believed that victory in their lawsuit would remove his partner in the partnership. The client had fifty grand into this procedure, understanding that goal of dissolving the partnership just wasn’t going to proceed.
I then spoke with litigation counsel who confirmed the lawsuit could never reach that goal objective. The lawsuit only agreed to be to seek compensation from your partner for business he previously allegedly diverted completely to another of his businesses that should have attended the partnership. We met a couple of times along with his partner (who actually wanted out in the partnership). Within a number of weeks, we achieved an arrangement that removed the partner from my client’s business–and ended the litigation that ought to never have been started inside first place.
Key #4: Avoid Litigation.
Being sued or finding yourself in a very position where you haven’t any real choice but court action should typically be avoided. This is easier said than done, but by living approximately your agreements (and receiving them on paper), spending slightly up-front in attorney’s fees and talking to lawyers, you are able to go far while we are avoiding most lawsuits.
However, litigation is frequently necessary and really should even be employed to further broad strategic business objectives. Nonetheless, once litigation has started it is time consuming, challenging to control, and incredibly expensive.
Regular communications together with your lawyer will better enable her to go off issues before litigation becomes really the only solution. It will also enable her to higher position someone to prevail in almost any such litigation, when it cannot be ignored.
I have found which the clients who’re best at talking with me have undergone litigation and truly comprehend the need to avoid it. Concentrate your time and efforts close to home. While fun time and effort are used on protecting against injury lawsuits (hot coffee and so forth), that risk for almost all businesses is actually comparatively small and, more to the point, may be insured against. For most businesses, employee and contract issues present a much better danger to getting out of hand. Ironically, they’re precisely the problems that are easy to avoid up-front with proactive employment policies and clear written contracts.
Key #5: Use a law practice that appropriately outsources.
The big firms are often set up in this type of way which the profits on the partners come in the work of the associates. These associates tend to be recent law graduates who will be likely to get far less efficient compared to a more senior lawyer. Put simply, 20 hours at $200 will cost you over 10 hours at $300.
Associate time is frequently a lousy value. Law firms love having their associates doing legal research. The associate conducts highly profitable legal research and the law office avoids getting an inexperienced lawyer making strategic decisions. In the meantime that you are paying to help you train that associate. In seven years approximately, he’ll expect to become a partner and make use of a new associate to try and do the same thing with a other client.
How could you avoid putting which is not your legal budget into associates? On each matter ask your lawyer whether it can be possible for her to subcontract out some with the research work using a part-time contract lawyer or perhaps an overseas research service.
In Seattle there are lots of lawyers who, i really enjoy seeing, tend not to wish to figure full time so contract out their legal research services for anywhere from around $30 to $70. Though your attorney will justifiably mark up these charges to pay their normal overhead, you’ll still should expect substantial savings. There is perhaps the possibility of using overseas lawyers to assistance with initial research of some matters. With competent lawyers in India charging as small as $7 one hour for computerized legal research, there isn’t a reason to never give them the 1st crack at research your lawyer can have plenty of time to check and supplement.
The outsourcing utilized by your law office should not be confined simply to lawyers, either:
Good Japanese translators are usually in great demand with this country so they are usually expensive. For years were successfully e-mailing Japanese documents to excellent translators in Russia who charge 1/5 just as much.
We realize substantial savings for clients insurance agencies our Chinese documents translated in China, as opposed to here.
We purchased Korean engineers for initial engineering review on cases, saving a minimum of 30%.
We even encourage Vancouver or Toronto, Canada, arbitration provisions in your client’s international contracts because Vancouver arbitrators, though quite competent, generally cost most of those from the locales most often used for international arbitration (London, New York, and Stockholm).
Key #6: Explore alternative fee arrangements.
It usually makes sense to a minimum of discuss along with your lawyer billing arrangements apart from straight hourly fees.
Perhaps you’ll both make use of a fixed fee arrangement. Here, anyone with a lawyer agree on a set fee that covers legal services. The real advantage within this arrangement, for both counsel and the buyer, would be the ability to budget in advance and thus limit billing “surprises” for both people.
Contingent fees are another alternative option. Simply stated, the lawyer is paid contingent upon the outcomes they achieve. Although you have often heard “If for no reason win, you won’t pay” on TV commercials, a lot more common arrangement operating cases should be to use contingent fees together with cost-reduced or limited-number hourly fees.
There may also be a number of hourly billing variations to take into consideration. One common option is usually to negotiate a lower life expectancy hourly rate plus bonus. Here, a binding agreement can put your counsel at a lower life expectancy hourly rate plus bonuses to become paid for meeting or exceeding deadlines you agree upon.
Key #7: Have your lawyer present you with an estimate in the fees and expenses.
It’s within your best interest to get a quotation of your hips.
An estimate is definitely that: a quote. Legal fees are often hard to predict, specifically in litigation in which the opposing party’s tactics greatly influence what your lawyer is required to accomplish. However, you continue to need an idea with the legal costs start to encounter.
From my perspective as counsel, I have learned so it is always smart to give a quotation because sometimes clients truly have no clue exactly what is linked to handling a specific matter. Years ago, complaintant called me planning to seize the assets of any Russian company that owed his company about $350,000. Because this was the 1st time I had worked using the company, I desired to impress your client and I told him that I would use my contacts throughout Asia to ascertain whether this manufacturer had any assets there that is seized. I also told him I could well be working which has a Russian lawyer to explore the possibilities of success as we needed to go to court in Russia. When he opted for that strategy, my firm did all these things, incurring $5,000 in fees and expenses. About half of these went to lawyers/agents in Korea, China, Hong Kong, and Japan and the lawyers in Russia who had written a really good four-page memorandum outlining what might likely happen whenever we were to go to court in Russia.
I reported back to the customer within a week and gave him precise directions on the we needed to try and do to recover the debt. I then delivered the bill for as much as $5,000, believing we’d done an admirable job very quickly and efficiently. I assumed the buyer was thrilled with our work and would gladly pay into your market. (I can assure you that my clients for whom I regularly accomplish this sort of work do not possess batted a close look at the balance.)
My assumption was wrong. The client called and said he’d no idea it would cost a lot. This struck me as curious, since your client was a rather sophisticated entrepreneur whose company uses one on the big firms in the city. Yet he laughed and said that he belief that my seek out assets, and my utilizing Russian lawyers, would basically include things like one afternoon’s worth of cell phone calls. Because the miscommunication regarding fees was more my fault than his, I drastically cut niche. But following that I’ve experimented with always give a quotation up front after which continue to update that estimate because the work progresses.
Key #8: Don’t focus an excessive amount on the attorneys’ hourly rate.
An in-house counsel for one in the largest corporations in America once laughed and said that, whatever the hourly fees were with the various firms utilized by her company, in the final, most in the firms tended to charge similar amounts. According to her, the firm whose partner billed out at $250 hourly simply billed added time than the firm whose partners billed out at $350. At the $350 every hour firm, more work travels to associates.
So here’s the principle behind the true secret: Focus on cutting your total bill, not about the fees charged by individual lawyers.
Key #9: Don’t forget about insurance.
One with the best investments against monumental hips is insurance.
Carry liability insurance and, if feasible, carry directors’ and officers’ liability insurance. Discuss your various insurance options with both your broker and also your lawyer. Then, should you get sued for any reason, have your lawyer look at policy to determine if you have coverage. Too many times, companies have assumed their policy could never cover a selected matter substantially fact it either might or it can do.