Hiring outside counsel to handle urgent, time-sensitive work (or even ongoing, non-sensitive projects) can be heartburn-inducing, particularly if you must keep your team’s financials in line and reduce costs. Here are five battle-tested tips for ensuring that the money you spend on outside counsel gets spent wisely and that you get an appropriate return on any investment.
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 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 rather than for the greater good of the company or customer. When everyone involved internally and externally understands billing expectations, 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? Examine metrics related to your relationship and conduct interviews with your team to gauge your process’s strengths and weaknesses. 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 to what is working well, so you can do more of that.
3. MONITOR TO ENSURE QUALITY CONTROL.
After establishing a billing policy, defining how much you want to spend and for what, measuring your deliverables, and determining how to handle noncompliance, you still have work to do! Next, you must 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 you pay other outside counsel, you want to understand why. Why are you 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 THE BEST ALTERNATIVE TO NEGOTIATED ARRANGEMENT (OR BATNA).
Maybe outside counsel has been delivering good work but charging a relatively high rate. Before you dive into negotiations, determine in advance what you will accept in terms of a rate and your best alternative if you cannot get that rate. For instance, you might end the relationship, seek new partners, terminate the contract in question, and still do other business.
To control outside counsel costs and manage your business more efficiently and effectively, leverage Onit’s European legal management solution BusyLamp.space unique software. Explore our website for more details or call or email our team with any questions.
Request a demo of BusyLamp eBilling.space.