Litigation is expensive and legal bills can and often do skyrocket beyond the original projected litigation budget. This is especially true if the litigation is particularly complex or involving a unique legal question. Effective outside legal counsel management is essential to limiting your unexpected budget-busting legal bills.
Abraham Lincoln once said, “A lawyer’s time and advice is his stock and trade.” In order to control your legal bills, you must first understand how outside legal counsel generally bill for their services. When you retain a lawyer, you are retaining not just a person, but his or her services. Those services may include the work of law clerks, paralegals, investigators, and administrative personnel as well as any associate lawyers and partners. The hourly fees for lawyers’ services are based on many factors including:
—-Time & Effort Required for the matter—the more complex and time consuming the case, the more effort will be required and the higher the fee will likely be.
—-Geographical Location of the law firm or lawyer—firms and lawyers located in large cities generally have higher hourly rates than those in suburban or rural areas.
—-Experience of the lawyer– Lawyers with more experience have higher hourly rates, but a lawyer with more experience may also require less time to work on a claim than someone with less experience.
—-Reputation of the Lawyer – The hourly rate will usually be higher if the lawyer is well known to be an expert a particular field of law.
—-Overhead – The costs associated with the lawyer’s secretary, books, office space, utilities, equipment, supplies, and other items are included as part of the hourly fee.
—-Discounts – If you are a preferred client or frequently use a particular lawyer or firm for your legal services, you may be able to negotiate a discounted fee.
In addition to the lawyers’ fee, you may be billed for paralegal work, travel expenses, copy charges and other expenses that are incurred in the defense or prosecution of your claim.
Determining what charges and fees will be billed and how they will be billed should be addressed as part of the retention agreement. Many of our clients develop standard “Outside Counsel Guidelines” that are incorporated into each retainer agreement. The guidelines set the general expectations and requirements for all outside counsel and can be modified as necessary given the specific engagement. With respect to billing practices, we recommend that the retainer agreement specifically address the following issues:
—-Hourly Fee Amount: For each person or category of professional (i.e., Partner rate, Associate rate, paralegal rate, etc.)
—-Hourly Fee Billing—whether billed in .10/hour increments or .25/hour increments.
—-Reimbursement of Overhead Items: What types of overhead items will be paid or excluded as part of the agreement ie. Copies, bates stamping/document numbering, local travel, file opening/closing charges, facsimile charges, temporary or contract assistance, overtime etc.
—-Reimbursement for Advances or Disbursements: What advances or disbursements will be reimbursed by you and when. (ie., court filing fees, deposition transcript fees, court reporter fees, expert witness fees, etc.)
—-Reimbursement for Travel Expenses: What travel will be reimbursed and at what rate. i.e., Airfare type (economy vs. business class), Mileage vs. taxicab fare, approved rental car vendors and type of rental car (economy, mid-sized, etc.), lodging type, meals and beverages, etc.
—-Invoices: The manner in which invoices are generated (paper or electronic) and transmitted to you (mail, electronic, etc.), whether receipts are required for reimbursement, the manner in which services will be billed (block billing vs. task-based billing), the amount of specificity required for each entry, whether you impose caps on daily time per professional, and any other information you require to be included in the invoices.
—-Payment terms: When payment of the invoices will be due.
—-Invoice Tender Address: Where the bills should be tendered.
—-Record Retention Requirements: How long and in what format the lawyer or firm will be required to retain records and invoices pertaining to the engagement.
—Dispute Handling: How any disputes between you and outside counsel as to accuracy, reasonableness, or necessity of any charge for fees or costs, the dispute should be handled in the event they cannot be amicably resolved.
-By addressing all of the above issues at the outset of the outside counsel’s engagement, you will have a strong foundation to manage your legal bills.
Foris Law Offices is an Illinois law firm specializing in Outside General Counsel Services, Workers’ Compensation, Tort Liability and Risk Management. For more information regarding this topic, please visit our website at www.forislaw.com or contact Carrie Foris at firstname.lastname@example.org.