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How to Inflate your Legal Costs

Accountants and business consultants love to advise on how to reduce outside legal fees. Most of their advice is garbage and only applies, if at all, to insurance defence or other commodity legal services carried out by large law firms for large corporate clients. Those concepts do not translate well to business law services delivered by small firms to small business clients.

Here, I’m going to give you a few sure-fire, personally guaranteed tips on how to greatly inflate your legal fees, garnered from my 37 years of experience. I think most people assume that attorneys that charge by the hour react directly to the incentive to maximize their time = higher bills = happier life? Believe it or not, this is not always true. Good business lawyers are busy. And some of us have short attention spans: we like deals to rock’n’roll from start to an early finish, and then bill the file. We have other deals, other clients requiring our attention. So, good, busy lawyers actually(!) don’t want to pound the living heck out of their deals, they want to get it done, get it finished and move on to the next one, or go to a warm beach with a rum cocktail.

Clients want to minimize their legal costs and get the best value for their money – also a given. Unfortunately, they don’t always act in their own best interests.

Is my title facetious? Of course it is. One of my many shortcomings is that I sometimes seem to care more about the efficient handling of matters than do my clients. I abhor waste and inefficiency (I’m 3/4 Scottish), so I implore clients to follow my advice on the best way to do things. Well, here goes, a listing of the best ways to inflate your business legal costs:

  1.  Don’t give your attorney all the facts: This makes it much more fun for the lawyer, as we then have to guess, search, assume and deal with irrelevant scenarios until we hit upon the right one, hopefully. It’s a mystery! And paid by the hour.
  2.  Don’t ever take notes or reply in writing (email or letter): That way, you will forget the advice given and requests made, and the attorney can bill you lots more time to repeat it, over and over. Also, you will forget to do some or all of the things your lawyer asked you to do to save his/her time – provide info, copies of documents, discuss business terms with the other side, etc. That is sure to delay things, and to cause more duplication of effort – follow-ups, reminders, nagging emails. Besides the extra time=costs incurred from this, it often leads to the attorney, in abject frustration, to do those things instead of the client doing it = more legal expense. Yay!
  3.  Don’t trust your lawyer’s advice: I find, invariably, the less experienced or knowledgable that a client is, the more they second guess my advice. When I act for CFOs and CEOs that are CAs, MBAs or otherwise sophisticated clients on larger transactions, they ask for my advice, we discuss it, and then they follow it. Not so the newbies. While declaring that they don’t want to run up fees, they frequently argue – not just discuss – with everything. I understand that there is a learning curve and that professionals must be patient and prepared to explain the ropes to some clients. But, at some point, the client should recognize that the attorney just might have this area covered off.

After all, the main reasons for getting legal advice are: a) to obtain expertise you don’t have; b) to shift legal risk to the advisor; and c) to delegate time so that  you can focus on business issues. If you are often not following your lawyer’s advice, so that you get a nice CYA email or letter back from the lawyer, you might reconsider what you are paying for. To be clear: no one should unthinkingly accept their lawyer’s legal advice or documents, but there is a happy medium. Otherwise, you’re sure to run up lots of extra (unproductive) time and damage the solicitor/client relationship in the process.

  1. Go like Hell, the Go Quiet, then Go like Hell, Lex Interruptus: Giving sporadic attention to a legal matter, where you rev things up, then disappear, then come back all of sudden, and so on, costs a lot more in legal costs. Why? Because lawyers, dare I say this? – have OTHER clients. Being almost human, attorneys must take extra time to review and catch-up on the file if there are long hiatus periods. At any one time, I have dozens of active matters and I don’t even try to rely on my recollection of details or status. On again, off again multiplies the time spent, and increases the risk of something falling between the cracks. Bigger bills, hurray!
  2. Don’t Properly Read Drafts until the Eve of Closing: Lawyers can be guilty of this sin, too, especially lawyers in big firms doing small deals. The problem is that each draft is built upon the previous one. So, concepts in the earlier draft are assumed to be satisfactory in the next draft; it’s like building blocks or JENGA. Some clients don’t read early drafts carefully or at all, and then at the 11th hour, they come back with crucial comments and questions on things that were in the earlier or first draft. Sure, it can happen and until signed, it’s not a deal. But if that earlier draft is given to the other side, it may be hard or impossible to boot-strap back to another position. Also, a basic issue can cascade thru many provisions of a document, so going back to change one aspect can echo thru many provisions causing extra time. Mission accomplished – more fees!

A list of the five big legal time-wasters is more than enough for now. Stay tuned for more. Please forgive me this indulgence: I have this fervent desire to help small business clients get more value for their legal dollars, even if it means being just a tad pedantic about it.

Your comments and criticisms are most welcome.

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