How to Handle Your Lawyer

Negotiate successful deals by making sure the legal aspects are right

As a former City lawyer I would like to see a shake-up in some legal industry charging systems and I would like to offer you some useful tips on how to get the most out of your lawyer.

This follows a number of recently published reports detailing insensitive legal fees hikes, adding to the burden faced by ‘Credit Crunch’ hit businesses.

Recent research into UK firms, undertaken by my business, shows that approximately 1 in 3 businesses ‘make up’ their own legal contracts.

Most of the recent criticism of legal fees has come from larger companies who use city law firms where the charging rates of a partner can be as high as £700 an hour. If the bigger clients are suffering, it is that much worse for smaller businesses, especially start-ups.

Many small firms are simply out-priced by the fees charged by lawyers; preparing a simple contract involves using a precedent and is hardly rocket science, but we had one customer recently who had been quoted £7,000 for two sets of terms and conditions for a start-up business by a small firm of solicitors in the country.This situation is ludicrous!

Businesses need the protection of properly drafted contracts and while most lawyers have a fairer charging system than this example, it is important to price work that takes into account the client’s ability to pay. Give a low cost service to a new business and it could be a client for the next 20 years.

The legal profession need to “get real” with their charging structures.  As a recent report pointed out, hourly charges do not necessarily make for an efficient billing system – associates in law firms are under pressure to bill as many hours as possible and there is always a risk of them putting down too much time, especially when there is less work around for those affected by the coming recession.

Given the sophisticated billing systems used by many firms, it should be quite easy to work out a fixed fee for most routine transactions. And for long-running matters where a team is involved over several weeks, it is questionable whether fees shoyuld be charged on an hourly basis.

Clients need to do their bit to keep fees within reasonable limits. After all, there is nothing to stop them shopping around for a better deal and to organise the work so they do not give their lawyers tasks that they could do in-house – e.g. on a due diligence exercise when buying a company.

How to get the most out of your lawyer

When approaching a law firm for a quote, you need to find out who will be doing the work: the bigger the firm, the more lawyers that are likely to be put on the team and with increasing specialization, this can involve a lot of duplication and overlapping of effort.

The smaller the firm, the smaller the team is a rough rule of thumb. In other words, a 20 partner practice is likely to be more cost effective than one of the law factories and you will also get more partner involvement, especially with a smaller assistant-partner ratio.

Large practices have a lot to offer on mega projects but when it comes to more run-of the mill matters, with three or four lawyers all reading the same documents, more than one clock is ticking and the costs mount up very fast.

Tips for how to handle your lawyer include:

*  Select a firm that handles the type of work you want
*  Be very clear on what you want from your lawyers – write a brief and put together the relevant papers in a sensible order – don’t give them a box of files and then complain if it takes your solicitor a week to review everything
*  If you want a contract drafted, do some preliminary work – websites like offer free checklists and low cost templates: it will be cheaper to have a lawyer tweak a template provided by the client  than draft a contract from scratch (even though the lawyer will be using her own template)
*  Find out how the work is to be handled – the number and skills of lawyers concerned
*  Get a firm price and timetable: a fixed fee can be safer than hourly rates or else get a maximum limit on the hourly charges
*  Don’t feel intimidated by the surroundings – solicitors negotiate just like other trades.

Giles set up to assist businesses to put legally binding, professionally-drafted contracts in place for a fraction of the cost that law firms normally charge.

Giles Dixon
Managing Director 

One response...

Very interesting blog. Very useful information and i have heard of this done many a time. Smaller companies tend to do it more as work may not be as free flowing as those who have many clients. I still think shopping around to find the best price is the safest option and could potentially save you and/or the company a lot of money.

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