Imagine walking into a restaurant and after being seated you are presented with a menu…that has no prices. After asking the waiter how much your dish of choice costs, you’re told “I can’t tell you until after you finish eating.” Odds are you wouldn’t eat there.
Imagine pulling a stunt like that with one of your clients after being asked to present a firm price quote. It just wouldn’t fly. Yet for some reason, many small business owners accept (grudgingly or otherwise) this type of response from none other than their lawyers.
You should Keep Your Legal Budget In Check
Why do owners accept the status quo?
There are many reasons why companies continue to accept ambiguous pricing from the legal industry. When faced with a legal matter, most people just want the problem to go away and are willing to pay for that. There is also a lack of transparency when it comes to understanding the level of effort required to execute specific legal tasks. Finally, the complexity of the legal system in the United States makes it difficult for non-lawyers to understand what is really going on in many cases.
Given this situation, is it possible to control your legal expenditures? Yes.
Controlling your legal costs
I recently had the opportunity to speak with Diana Kander, President of KR Legal Management. KR is revolutionizing the way medium-sized companies engage legal services providers—eliminating clients’ uncertainty associated with legal budgets by identifying legal needs, selecting expert providers, negotiating costs in advance and providing analytics to owners regarding their legal spend.
Diana provided four valuable recommendations for ensuring that your company’s legal bills stay within budget and within reason:
1. Don’t take no for an answer
Requesting a budget for the legal expenditures associated with a given project is a completely reasonable request. Ask for one. Many business owners who request a cost estimate are satisfied receiving the hourly rate in response. That’s just not enough. Request a detailed budget which calculates rate per hour and total number of expected hours plus fixed fees that may also be required. Like any project cost, there is a good chance that the total cost may incur overruns, but without that initial budget to serve as a starting point, it will be difficult to determine if the additional costs are justified. If an attorney isn’t willing to give you a budget, it could be a sign that they haven’t performed the type of legal work you need and therefore aren’t sure how much it will cost.
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2. Break it down
Managing the costs of a large legal project is a daunting task—all projects, however, can be divided into manageable pieces. Each one of these pieces consists of their own cost drivers. For example, if your company is involved in litigation, the process can be broken down into different stages:
- Initial demand
- Lawyer’s letter
- Pre-litigation settlement discussions
- Filing of formal suit
- Answer to formal suit
- Discovery
- Motions
- Pre-trial conference
- Trial
- Judgment
- Post-trial motions and appeals
- Collecting on judgment
Manage each stage as a mini-project.
3. Work with specialists
Many small and medium-sized businesses work with a single attorney or firm to satisfy all of their legal needs. This isn’t always the most cost-effective scenario. Since attorneys charge for their time, as a client you want to use only the amount of time necessary to achieve your goal. Working with a specialist ensures that.
Continue to the article: Keep Your Legal Budget In Check
