Working Effectively with Your Lawyer: What can a client do to keep legal bills low?

One of the things that business people find most objectionable about the legal industry is the high cost of legal services. Bills often exceeds estimates, sometimes by many multiples. However, while many clients think that the size of the legal bill is something that is completely outside their control, the fact is it’s not. There are ways for clients to effectively work with their attorneys in a manner that can help keep the legal bill low. Recently, I came across an article by Tim Greene, founder of the site, that has some great suggestions on ways clients can keep legal bills low. Here’s a link to his article: Below are the five suggestions Tim had in his article. (The sentences after each suggestion are my own thoughts; you should read the original article to get Tim’s):

1. Avoid paying for a learning curve. While your brother-in-law may be a great wills and estates attorney, he’s probably not the best choice for the Series A stock offering of a startup. Sometimes lawyers will take matters that they are not qualified to do and learn along the way. This can get expensive. Therefore, clients should use an attorney who has experience in the kind of law and transaction that the client will be hiring him for.

2. Ask for a flat-fee arrangement (at least for a portion of the work). I have mixed feelings about this one. Sometimes flat fee arrangements can save a client money, and sometimes they don’t. In any case, it’s always worth exploring, but realize that both the attorney and the client will need to make sure that the engagement letter includes precisely what is and is not included in the price. This can get complicated and is sometimes not worth the time spent. In my own practice, I’m always willing to discuss flat-fee arrangement, but I always let clients know that such arrangements do not necessarily save the client money, but are useful when a client is on a budget and needs certainty.

3. Establish a budget up front, and stick to it. It’s important for both the attorney and the client to regularly keep in touch regarding how quickly hourly charges are racking up. Monthly invoices are strongly suggested, but if the matter is short and moves very quickly, more frequent communication is sometimes necessary.

4. Do as much as prep work as possible. Many clients initially go in thinking that because they have a high-priced firm doing their work, they can leave all of the little tasks like organizing the documents and compiling information to the attorneys. After all, what are they paying them for? It just seems like good customer service, until the client realizes that they paid hundreds of dollars per hour to get that grunt work done. I always offer my clients the ability to work on parts of the matter that don’t require an attorney if they are on a tight budget.

5. Communicate efficiently (especially when being billed by the hour). Some clients tend to be a bit talkative with their attorneys at first. Then the first invoice arrives and that comes to an end. But this suggestion goes beyond merely not being too chatty. It’s also important for clients to organize their thoughts and documents in advance of a meeting to keep it as short and efficient as possible.

In addition to Tim Green’s five suggestions, I have one additional suggestion of my own: a client should have a clear detailed plan for the transaction from the outset, often developed with the assistance of the attorney. This crucial stage is not the time to avoid talking to the attorney to save money, because the end result will invariably be a higher bill. Nailing down a specific and detailed structure from the beginning with the help of your attorney will help avoid having to change the deal multiple times over the course of getting the it done. Each time a deal changes, the lawyers must revise the documents sometimes significantly (and sometimes have to scrap their existing work entirely). This greatly increases legal expenses because a lawyer ends up writing and rewriting documents multiple times, obviously driving the bill up. Therefore, get a term sheet worked out at the beginning that is sufficiently thorough, so that the deal will not go through multiple incarnations.


© 2011 Alexander J. Davie — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

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Alexander J. Davie

Alexander J. Davie

Alexander Davie is a corporate and securities attorney based in Nashville, Tennessee. Businesses of many varieties rely on his counsel and judgment throughout all stages of their growth. In particular, fund managers and investment management professionals seek the expertise Alex gained when he served as general counsel to a private investment fund. Alex also has significant experience and enjoys working with companies and entrepreneurial ventures, especially within the technology industry. As a believer in technology's ability to enrich people's lives and allowing people to connect with each other in new ways, he is passionate about helping tech startups achieve success. He is active in Nashville's startup community as a mentor at the Nashville Entrepreneur Center and participates in numerous other events geared towards making Nashville a nationally ranked location for starting a business.

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