Managing Legal
So wrote English lawyer David Allen Green in the Financial Times the other day to conclude his op-ed on how to cut legal costs:
“The best way for a business to manage legal costs is to be clear about what it wants from lawyers and to force them to be clear about what they offer ….
“… Technology can only help so much. To manage costs directly needs a change in attitude as well as new hardware or software ….
“Legal technology is not primitive magic. It can have a beneficial effect on legal costs only if the will is there. Precision, plainness and purpose are more important ….”
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My goal for my readers and my clients is the same as Mr. Allen’s for his readers and clients: Clarity of thought on exactly what business owners and managers need from their lawyers — and specific guidance on how they can get it.
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This English commercial lawyer urges business people to get control over their legal costs by getting clarity of thought about what they actually need from their attorneys. To make this point he underscores what’s unclear to most business clients about their lawyers.
First, most business clients don’t know why a business needs attorneys in the first place:
“To help understand how legal costs can best be managed, it is worth posing a couple of fundamental questions. First, what is the purpose to a business of having lawyers? And second, are they necessary?
“Many would be surprised by how vague the answers to these questions can be. The value of some external advisers to a business are obvious. The roles of an accountant and the auditor are essential, if expensive. It is clear why they are there and what they are expected to produce.
“But the need for lawyers can often be less clear. Also, it can be less apparent exactly what the lawyers are being paid to do.”
Second, those business clients lack clarity of mind on what a lawyer’s work product is truly worth to them:
“What is known, however, is that they can be expensive and a business can be confronted with a big legal bill and not quite understand how it came to be. The tangible outputs of business lawyers can seem slight. There can be a … contract for a specific transaction of only a few dozen pages. This document could cost more than £10,000, compared with a paperback 10 times the size that would cost only £10. Or there could be advice of only a few paragraphs, which could also cost more than five figures.”
Third, without management having decided for itself the result it wants from engagement of its lawyers, those business clients abdicate to their law firm attorneys or in-house counsel the right to define what that outcome should be:
“Businesses that are particularly unlucky could pay lawyers huge amounts and, at the end, not get anything in final form, either as a contract or as advice.”
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In Part 2 I recount some of Mr. Green’s thoughts on how to increase the effectiveness of the lawyers your business hires while reducing your company’s legal costs.