Avoid Surprises When Hiring Outside Legal Counsel

Issue: While perusing your company’s latest legal bill, you conclude that the amounts charged for certain services—like writing form letters—seem excessive. You call the law firm, but the managing attorney is uncompromising, claiming that the fees charged are the same for all of their clients. And besides, the rates are set out in detail in the signed fee agreement. You don’t want to wrangle over legal fees, so you back off. But the experience convinces you that the next time you hire a law firm, you want to handle things differently. What can you do?

Answer: To avoid any surprises on your legal bills, you can take several precautions when hiring outside legal counsel.

1. Establish a good retention (fee) agreement. A good agreement can do wonders. The agreement doesn’t have to be formal, either; it can be as simple as a letter to the prospective firm detailing your expectations as an employer, especially in terms of budget and communications. Don’t accept the law firm’s standard fee agreement without checking to make sure that your company’s interests are adequately safeguarded and your company’s legal rights are not unnecessarily waived.
2. Select a firm that makes a good fit. Some attorneys occasionally represent themselves as having experience in a certain area of law—when in fact they don’t. These attorneys waste time and often obtain poor results. By the time the client realizes there’s a problem, it’s too late. The solution is to question the attorney before hiring, the same way you would any prospective new hire. Ask pertinent questions about the attorney’s experience, litigation style, and the kinds of cases he or has tried.
3. Examine legal bills before payment. Once the bill is paid, it may be too late to question it. The firm may claim that a pattern has been established—that the client accepted the way the lawyer was litigating the case or the way that certain items were billed. Besides, it’s always difficult recovering fees that have been paid. You have a lot less leverage. The down side is that if you withhold fees, the lawyer may withdraw from the case. Therefore, you should be prepared for that contingency by having backup counsel ready to step in.
4. Consider alternative billing arrangements. Find a billing arrangement that works best for your situation. While most employers are aware of the basic options, such as flat-fee arrangements or sliding-scale agreements, employers should remain flexible and consider other creative approaches.

Cite: CCH interview with John Toothman, President, The Devil’s Advocate. Presentation by Burton F. Boltuch, Esq., Gordon & Rees, San Francisco, California.

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