Controlling Legal Bills Without Sacrificing Lawyer Quality

Legal fees can be a large expense for small and medium-sized businesses.  While expenses such as rent and payroll are predictable, many companies have difficulty projecting their expenses for legal services, especially where litigation is involved.  Moreover, otherwise similar companies can vary dramatically in the amount of money they spend on outside legal counsel.  The key is to reduce fees without sacrificing quality or results.

There are four stages which determine the amount of money a business will spend on legal fees.  The first stage is before the issue or problem requiring legal representation develops.  The second stage is attorney selection.  The third stage is during the course of the representation, and the final stage is after receipt of the bill.  The wise client will take proactive steps at each of these four stages.

Preventing Large Fees By Limiting Legal Problems
It is always easier (and cheaper) to prevent a legal problem from arising than to deal with a problem through litigation.  Saving money on legal fees does not mean ignoring problems or handling matters yourself when you need legal expertise.  Be proactive when storm clouds are on the horizon.  For example:

• If somebody threatens to sue you do not wait for the lawsuit -   hire a lawyer immediately.  I once represented a corporate client who ignored repeated threats of a patent infringement lawsuit and later was surprised to find itself in an extremely expensive litigation.  Early settlement talks can clarify positions and save substantial money in the form of both legal fees and damagess.
• If you have a problem employee, do not fire him or her without consulting an employment lawyer who can tell you how to conduct the firing in a way that minimizes your exposure to a lawsuit.
• Get everything in writing.  Too many silly litigations arise out of “he said/she said” disputes that can be avoided by simple documentation.  By the way, this rule applies to dealings with your lawyers as well.
• Consider inserting a “loser pays” rule into your commercial contracts.  This means that if a lawsuit is brought concerning the scope of the contract, the loser in the lawsuit will have to pay the legal fees of the winner.  This discourages frivolous litigation.
• If you are about to be sued, check your insurance policies.  Businesses occasionally pay their lawyers for defending a lawsuit without recognizing that the litigation expenses are covered by insurance.

Attorney Selection

First, the good news: there are more lawyers in this country than ever before.  The U.S. has over a million attorneys with roughly 175,000 in New York State alone.  You should recognize your leverage.  Moreover, every day more and more legal services are getting automated thanks to technology.  Proper use of technology makes delivery of legal services easier and more cost-effective.  Computers now generate standard legal forms, with secretaries and paralegals entering basic information so that pre-existing forms can be customized for use by a particular client.

Unfortunately, many clients hire the wrong lawyer for their problem and end up overpaying and sometimes cripling their business.  Choosing the right lawyer is therefore a key business decision.  Here are some tips on attorney selection: