By Dr. Yuri Rapoport and Alexander Lapidus, Oracle Legal Case Management
You will consistently hear lawyers insisting that they always put their client’s interests first, but when it comes to billing this is not always the case. Even when working on a ‘No Win No Fee’ basis for HNW individuals, often the underlying truth is that with “no fee, nobody cares.”
However, there are some straightforward steps you can take to reduce your legal costs:
1. Be proactive
Compare seeking legal advice to visiting your dentist. Many of us will wait until a sensitive tooth has exacerbated into torturous toothache before facing a trip to the dentist. By this stage the problem has often become so severe that expensive and complex treatment is required.
Similar to a preventive visit to a dentist, legal advice should be taken prior to problems arising in order to avoid (or at least reduce) the unpleasant side-effects of a legal dispute.
Being proactive at seeking legal advice should be a rule-of-thumb for virtually any business matter and this also applies to many aspects of your private life: hiring staff, purchasing high-value items, transferring or lending money, forming verbal or written agreements or signing any document.
2. Don’t fall for big high-street brands
“A big law firm has big resources; small and medium firms have fewer” is a view we hear from many of our clients. However, this statement is not necessary true. A well-known, widely marketed name will not guarantee you legal success.
Most legal issues can be solved by smaller ‘boutique’ firms that specialise in a particular area of law, and have a proven track record of expertise and satisfied clients. Smaller firms are also likely to have smaller overhead costs, ultimately leading to smaller legal bills.
Don’t expect to find the right lawyer for your legal matter by simply looking through advertisements or recommendations from friends or relatives. Finding the specific lawyer who can best handle your legal matter is a complex process and often requires extensive research through specialised legal directories, media sources, background checks and court databases. Once you have formed a list of suitable legal experts, the next step is to conduct a tender process to identify the most cost-effective advisor.
3. Don’t be passive: negotiate on price
More and more clients insist that legal work falls under a fixed fee or within an agreed budget. In these cases, when the advising firm’s legal bill exceeds an agreed cap, lawyers often have to write-off the excess.
Always negotiate and carefully check your engagement letter with your lawyer, noting the agreed scope of work and proposed charges. Even after agreeing a fixed fee, there may still be provisions in your engagement letter allowing your lawyer to charge for extra work that falls outside the ‘agreed scope’.
In many instances, controlling your costs will be all about defining exactly what the ‘agreed scope’ includes – remember, lawyers are experts at persuasion.
Beware of extensive legal research by junior lawyers and internal conferences that are conducted ‘in your best interests’ with partners from other departments. Likewise, look out for copious emailing containing benign information for updating purposes and time allocated to phone calls.
To ensure your interests are really best served in these instances, you may prefer to have an expert on your side who can identify these and many other pitfalls by supervising proper negotiations before engagement and conducting careful auditing after your legal bill is presented.
4. Consider financing solutions
Unexpected legal costs are extremely common. These often include security for costs orders, sums awarded against you by the court or large retainer requests from solicitors for hiring high profile barristers.
A financing solution acts as a buffer, introducing third-party funding to cover expenses outside your budget. With guaranteed financing for their legal costs a client can focus fully on the legal case in hand. This is particularly relevant when a lawyer produces exorbitant mid-proceeding bills, and will continue work on the case only subject to their immediate payment.
You can apply directly for a financing facility to any retail financial institution that offers customer credit cards or personal loans. Alternatively, more and more people are now using a specialised legal credit broker who will obtain the necessary financing and also assist the client in managing legal costs. The credit broker will review ongoing legal bills as well as negotiating discounts and charge out rates with lawyers to minimise your overall legal costs.
5. Monitor and control your legal costs
Many consumers of legal services will learn from bitter experience that there is an inherent conflict of interest between the lawyer and their client. While most lawyers will claim to put their client’s interests before their own, when the client is suddenly unable to pay this support system completely dissolves. Ironically, it is the lawyers themselves who often drive their clients to spend beyond their expected budgets for legal services.
It is important to constantly monitor your legal costs budget by conducting interim audits to prevent over-billing. This process is time-consuming but it is possible to hire a dedicated person to do this for you or to outsource the task to a legal case manager. A legal case manager can ensure your legal costs remain within your planned budget by installing the necessary mechanisms in your lawyer’s engagement letter; then using those mechanisms to audit the lawyer’s bills and enforce your rights.
A legal case manager will also analyse your legal requirements, prepare professional instructions for your lawyer, and provide you with post-advice support, all designed to reduce the hours your lawyer spends on your file.
Since the legal case manager’s charges are significantly lower than your lawyer’s, you will not only save on legal costs but enjoy safer and better quality services for your money.
