Cost-Saving Strategies to Keep Down Legal Costs
COST-SAVING STRATEGIES TO KEEP DOWN LEGAL COSTS
For many new business owners, the very concept of
consulting with a lawyer stirs up terrifying visions of sky-high legal costs
and crazy hourly rates. That shouldn’t be the case. While lawyers are
definitely not cheap, there are a number of ways to control your legal costs.
First, you’ll need to familiarize yourself with the different ways in which
lawyers bill you for their time.
1. Hourly rate – this is how most lawyers’
bill (by the hour). If they have to travel for your matter, they may also bill
you by the day.
2. Flat/Block fee – some lawyers will charge
you a flat rate, usually for routine matters, like drafting a contract, or
reviewing a lease. Make sure to carefully review the work that’s included as
part of the flat rate.
3. Monthly retainer – this arrangement is
useful when you’re first starting out and have a lot of questions pertaining to
the setup of your business. It may make sense to employ this fee arrangement
for the first few months until things are settled. Again, make sure to
carefully review what work is and is not included as part of this retainer.
4. Contingency fee – this arrangement isn’t
available for all types of matters, but as a general rule, civil actions, like
contractual disputes or injury claims, will be eligible for this fee
arrangement. Put simply, a contingency fee arrangement means that if the lawyer
succeeds on your behalf, they’ll receive a percentage of the proceeds. If they
fail, they’ll only be entitled to their out-of-pocket expenses, like
disbursements, expert fees and court costs.
5. Value billing – this is a fairly new
type of fee arrangement. Basically, the lawyer will bill you at a higher rate
if they obtain a good/favourable result on your behalf. For example, if they
negotiated a contract on your behalf and saved you tens of thousands of
dollars.
Armed with this information, you should negotiate the fee
arrangement that works best with you with your lawyer. That’s one of the
services we provide our clients here at LawyerSelect Lawyer Referral Service:
we help you identify what type of arrangement suits you best, and connect you
with a lawyer who will accept that. After you’ve negotiated the fee arrangement
structure with your lawyer, make sure to document it. You can do this by
drafting a letter of engagement, where you detail the work to be undertaken,
the fees to be paid and the structure of payment. Also, if you know beforehand
that more than one lawyer will be working on your file, make sure to specify
the hourly rate for each individual.
Steps You Can Take to Control Legal Costs –
1. Have
the lawyer give you a written estimate for the cost of each matter. This will
allow you to see the projected cost beforehand so you can decide if it’s worth
it. If, upon receiving your bill, it exceeds the estimate, inquire with the
lawyer as to why. Ask for a detailed breakdown of the billing on your file.
2. Find
out what increments of time the lawyer is using to calculate the bill. Lawyers
who bill by the hour keep track of their time in increments, like 5 minutes or
30 minutes. Inquire with the lawyer whether a quick 5 minute phone call will
cost you $150, or will they pro rate their hourly fee.
3. Ask
your lawyer to provide you with a detailed monthly bill that itemizes all the
work done on your matter. Make sure to specifically request this from your
lawyer, since most lawyers wait until a bill gets large enough before sending
you their account. Insist that they bill you monthly. Review that bill for any
obvious anomalies or exorbitant fees. If you suspect the fees are too high,
this may be a sign that too many individuals are working on your file. It’s
also possible that they (mistakenly) billed you for work done for another client.
4. Lawyers
love to be paid quickly. Use that to your advantage by negotiating a discount
for quick prompt payment. For example, if you pay your bill within 30 days, you’ll
receive a 5% reduction to your bill. You’d be surprised how much this can add
to your bottom-line.
5. Always
make sure you’re prepared in your dealings with your lawyer. If you’re
scheduled to meet to discuss certain matters, make sure that you provide them
the documents ahead of time so that the meeting is spent furthering your
matter. When you speak with your lawyer over the telephone, make sure to use
your time efficiently by getting your message across expeditiously. And don’t
call your lawyer any more than is needed.
6. Meet
with your lawyer on a regular basis. This may seem counterintuitive, but it
actually helps reduce the back and forth phone calls where very little is achieved.
A brief 10 minute meeting once a month can go a long way in saving you
substantial sums of money, as you’re more likely to identify and fix small
problems before they’ve grown to big ones.
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