Looking Inward to Control Outside Legal Counsel Costs

Hiring outside counsel to handle urgent, time-sensitive work (or even ongoing, non-sensitive projects) can be heartburn inducing, particularly if you’re tasked with keeping your team’s financials in line and reducing costs. Here are five battle-tested tips for making sure that the money that you do spend on outside counsel is spent wisely and that you get an appropriate return on any investment.

5 Principles for Controlling Outside Counsel Costs


1.   Set guidelines for the spend, and enforce them.

Be specific and detailed when you create guidelines. Download ‘Getting Started with Billing Guidelines’ for examples. Conduct record keeping, invoicing and tracking of attorney time and expenses according to strict formulas. This “by the book” approach may seem bureaucratic and even lead to accusations of micromanaging. But budget processes left unmanaged tend to evolve for the convenience of those involved in the process and not necessary for the greater good of the company or customer. When everyone involved internally and externally understands what’s expected when it comes to billing, there will be fewer surprises and less room for overinflated numbers.


2. Examine past spending and billing habits and learn your lessons.

What’s gone wrong when you’ve worked with outside counsel in the past? Examine metrics related to your relationship, and conduct interviews with your team to gauge the strengths and weaknesses of your process. Map out how you spend money now (your “as is” budget), and then identify where you want to go. Don’t just harp on the problems; pay attention also to what’s currently working well, so you can do more of that.


3. Monitor to ensure quality control.

Once you’ve establishing a billing policy, clearly defined how much you want to spend and for what, measured your deliverables, and determined how noncompliance will be handled, you still have work to do! Next, you need to follow up on your process and identify slack and unnecessary constraints. When analyzing, look for duplicated steps, task waste, redundant research done on projects, poor communication, and billing at abnormally high rates for administrative tasks, like proofreading or document filing.


4.Identify benchmarks to measure outside counsel’s output.

For instance, if one firm is billing you at 1.5 times the rate of what you pay other outside counsel, you want to understand the reason. Why you are paying this extra amount? Is the spend worth it or not? By benchmarking across your relationships with various firms, you can clarify best practices and enforce expectations.


5. When negotiating with outside counsel, first look inward to develop a Best Alternative to Negotiated Arrangement (or BATNA).

Maybe outside counsel has been delivering good work but has also been charging a relatively high rate for the work. Before you dive into negotiations, determine in advance what you will accept in terms of a rate and what your best alternative will be if you can’t get that rate. For instance, you might end the relationship and seek new partners, or you may terminate the particular contract in question and still do other business.

To control outside counsel costs and manage your business more efficiently and effectively, leverage BusyLamp’s unique software. Explore our website for more details, or call or email our team with any questions.


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