How to get the most out of your lawyers

Whether you are a lawyer or client, we have heard the client complaints.  Why are the legal fees so high?  Why am I paying to train new lawyers?  Why are the lawyers spending all their time identifying problems and not on solutions? 

Well, you’re not alone, and there are solutions.  Here are some ideas on how you can get the most out of your lawyers, if you are a client, or how you can make your clients happier and attract new clients, if you are a lawyer.

1. Tell your lawyers that you will not blame them if things go wrong.  One of the biggest reasons lawyers run up your bill, is that they are risk averse by nature, i.e. they are afraid of getting sued.  This leads to unintended and adverse consequences.  If there is legal risk, or business risk, the client is so advised, and things go wrong, the lawyer should not be liable.  However, if nothing is said, and the lawyer feels the risk, he or she will do a lot of work to mitigate the risk at the client’s expense, and possibly at a much greater extent than the client’s risk tolerance would dictate. 

To avoid excessive charges, give your lawyers comfort that you will not blame them if things go wrong, especially if you want to live in the gray area of the law or legal terms.  I recall that, in one large high-profile transaction, the client instructed the lawyers not to bother him with any liability issues less than $25 million.  Telling his lawyers that he will not blame them for such liabilities is exactly what he was doing to get what he wanted from his lawyers.  Even without a specific dollar amount, you can convey to your lawyer the level of risk you are willing to take, which will enhance the value your receive for your legal dollars.

If you are a lawyer, you should inquire with your client about the level of risk that they are willing to take.  These conversations do not happen all too often, and can align the client and lawyer and avoid misunderstandings, unhappy results, and unpaid legal bills.

2. Select your lawyers who are aligned with your risk profile.  Most lawyers can’t be all things to all people.  Lawyers run the spectrum.  They can be very conservative, very risky, or in between.  If you want value for your money, select lawyers than line up with your risk tolerance.  This should be on your agenda for discussion before engaging your lawyers.  This happens in other industries.  You may not want select a general contractor who builds office buildings or luxury homes, to design and build your home.  You will likely get much more than you want, and have to pay for it.  This applies to lawyers as well.  For a small business, you want to engage lawyers who specialize in helping small business, and can help you make the judgment calls that you need to make when resources are not unlimited.

3. Do not pay for training, and approve your lawyers.  All too often, when you engage a law firm, you will be assigned lawyers who may not be experienced.  As a result, your legal fees may include time that these inexperienced lawyers spend on your matter.  Although their rates may be lower than those for more experienced lawyers, they may not be productive and may waste your money.  At many law firms, young lawyers learn on the job, but bill this learning time to clients.  The law firm justifies this by reducing their rates, but this does not completely resolve the wasted time and effort. 

How can you deal with this?  Well, you can ask your firm not to assign you inexperienced lawyers.  This is much more common today.  You should make it clear to the law firm that you do not want to pay for training time, and will review the invoices accordingly.  You may also want the right to approve and to remove lawyers who are assigned to work on our project.  Clients do not want to pay for training, understandably, but often do because they do not control who does their work.  When you review a new team member, ask for his or her resume and review just as you would for any new lawyer engagement.  If you until you are billed to complain about paying for training, you may meet much more resistance.

If you are a lawyer, you should be proactive with the client to discuss these issues, and not just wait to see if the client complains about your bill.  A wise man told me a long time ago, that it is better to negotiate your fees up front, than on the back end.  It makes for a much better relationship and, if the client does not want to pay you, I would like to know that up front so that I can decide whether to undertake the work, or go sit on the beach.

4. Seek alternate fee arrangements.  One of the big reasons for disagreements around billing is the billable hour system.  The billable hour system is not optimal in many, if not most, cases.  It might not align the lawyer’s interest with the interests of the client.  It can incentivize the lawyer to spend too much time on legal work.  The longer it takes to do the work, the more the lawyer gets paid.  Thus, clients experience endless issue spotting and not so much creative solutions that can reduce legal fees and enhance results.  And, it’s not even good for the lawyer, because time becomes his or her only commodity.  As a client, you can be proactive to explore legal arrangements that make more sense. 

But, what can be done about this?  The challenge is that most lawyers only bill by the hour.  Not all matters can be billed on an alternate basis.  For example, if the scope of the work is unknown or not certain, then I would be difficult to work on a fixed fee basis.  On the other hand, many matters are a good fit for an alternate arrangement.  Initially, a client can raise the question with the lawyer.  If nothing is said, nothing can happen, right?  The client can share it’s budgetary needs and restrictions, and the lawyer can suggest how best to address the client needs.  Possible approaches include fixed fees, success fees, estimates, caps, monthly retainers, and discounted hourly rates. 

For lawyers, it is important to realize that, even if you do not make your full hourly rate, you are still making money and keeping the client happy.  And, if you do it right, and align your fees with value add, you can actually yield a much higher hourly rate than you would normally charge.

5. Actively manage legal work and invoices.  It is not the best approach to manage your legal invoices from the rear, but it is better than nothing.  A better approach is to manage the legal work on an ongoing basis, before you are billed.  That way, you can spot issues and adjust the legal services to meet your needs.  And, yes, you do need to review your bills carefully and ask questions if something does not make sense to you.  Focusing on these touch points can significantly enhance the value you receive for your hard-earned money.  Lawyers, left unchecked, can spend endless hours worrying about endless issues that may or may not be pertinent or consistent with your risk profile.  Here are a few suggestions:

  • Clearly communicate to your lawyers how careful you want them to be.  I can’t tell you how many times I have seen lawyers spend countless hours on work in the name of “thoroughness.”  They never bothered to ask their clients about cost-benefit, and whether the client wanted to pay for additional mitigation of the client’s risk.  (Let’s remember, it’s the client’s risk, not the lawyer’s risk.)  This is why I say that “thoroughness is overrated.”  The question is, at what cost, and to what end?  These questions are asked all to infrequently.
  • Spend some time and effort on supervising and monitoring the legal work as it is performed, and reviewing and questioning legal invoices when appropriate. Schedule regular check ins with your lawyer. This effort will pay off.  If you don’t monitor their behavior, then you will get what you pay for. 
  • For larger jobs, you may want to consider engaging counsel to monitor your outside counsel and invoices.  There is nothing like someone speaking from experience to keep your lawyers in check.  A few hours of time may save your many more hours of legal fees.