Top Tips for Managing External Lawyers

Does the thought of picking up the phone to your external lawyer fill you with dread as a huge bill may follow?

Do you worry that your external lawyers don’t understand enough about your business, but you don’t want to pay them for time spent finding out?

Do you feel your legal budget is unmanageable, with poor visibility on spend and uncertainty about what will be billed and when?

All in-house lawyers have had these feelings at some point, as engaging external lawyers can be very challenging. It’s also common to blame the external lawyers – with complaints like their fees are too high, they don’t understand your business, or their advice is too detailed.

In reality, it’s not so cut and dried. A skilled in-house counsel who knows how to manage their lawyers efficiently will get the best from their external lawyers and in turn deliver an improved service to their internal clients.

So how can I achieve this, you ask? Read on for some Top Tips for managing your external counsel and take back control for yourself.

Engaging new lawyers

• Use lawyers you trust, who listen to you and who fit with your business. If your lawyer doesn’t do these things, then try someone else; there are plenty of options out there.
• If the relationship is to be ongoing, on-boarding is crucial. If you jump straight into the detail, key information may be missed and the advice you receive may feel unsuitable for your business.
• Spend some time explaining the business to the lawyer, where the pressure points are and the business’s appetite for risk.
• Ask the lawyer to invest in the relationship (i.e. not charge for this on-boarding time). Provided you genuinely intend to give ongoing instructions, most Keystone lawyers will be happy to devote some time to getting to know you and the business.

When instructing

• Think carefully about what is required and gather relevant information before contacting your lawyer.
• If instructions are unclear or fragmented, cost will increase and work quality may be impacted.
• Be clear about your business’ objectives, particularly if they are not the obvious ones.

An example of this might be a dispute with a key customer. You’re keen to resolve this amicably (even at some cost to you) in order to preserve the relationship. If you aren’t clear about this, your litigation lawyer may assume you wish to aggressively pursue the claim.

Fees

• Ask your lawyer for an estimate/fixed fee for the proposed scope of work. If you are not clear as to what scope of work is covered by the proposal, ask them to be specific.
• If the fee is too high, discuss the scope and the expected output.

For example, your lawyer may have costed the project on the assumption you want detailed written advice on a contract. If in fact you are happy to receive advice verbally and need input into only some of the clauses, let them know as this could bring the fee down.

• Expect a fair approach when it comes to fees. Ask your lawyer to take on fee risk for matters within their control. Don’t expect them to take on fee risk for matters outside their control.

For example, if a lawyer spends twice as long preparing a first draft of the contract, this should be at his risk. He knew the scope initially and costed it wrong. But if – due to your business colleagues or the other side’s lawyers – your lawyer has to spend 10 hours negotiating a contract instead of 1 as estimated, it’s not fair to expect this fee exposure to sit with your lawyer.

During the project

• Place the onus on the lawyer to update if the scope changes.
• Request regular fee updates and ask the lawyer to explain any variation from the original estimate.
• If lawyers are added to the file (e.g. from other teams), check how their fees fit within the estimate.

Invoicing

• While it may be tempting to let billing slide to delay having to pay, this practice can cause serious difficulties for in-house teams. If time passes or there is turnover in your team, you will struggle to recall what was agreed and hence to assess invoices in detail.
• At the conclusion of the project (or at regular intervals if ongoing) ask your lawyer to tell you what time has been recorded on the file and to provide time narratives. Check the amounts and the narratives and raise any concerns promptly.
• Once you have agreed the fee with your lawyer, ask them to invoice promptly.
• Consider introducing a written Billing Protocol for your firms. This can clearly set out your expectations regarding estimates, reporting on fees and invoicing processes. Put the onus on the firm to adhere to the protocol.

Budget and law firm panel management

• If your team spends significant sums on lawyers, consider using legal costs management software to keep track of the spend.
• Using these types of systems can help you identify what type of work you are spending your budget on.
• Understanding spend in detail and by work type can help you re-skill your in-house team, adjust workloads and quantify the value of your in-house team.
• Leverage relationships if you can. If you are a member of a group of companies, ensure your legal teams are linked up and see if you can combine volumes to leverage rates with your law firms.
• Consider alternative law firm providers such as Keystone Law for new projects. By obtaining alternative quotes rather than returning to your default firm you will get a better picture of the market rate for the work involved. You may also be pleasantly surprised by the skills and service offered by a different firm.
• Ask for complimentary add-on services such as free training, materials and guidance notes. These are underutilised and can be hugely beneficial.

Client satisfaction

• Don’t be afraid to complain if you aren’t happy with the time recorded or the quality of what was done by your lawyer. Any decent lawyer will welcome the feedback and will do what they can to remedy the situation.
• If your concerns aren’t adequately addressed, escalate your complaint within the firm. In the case of Keystone’s clients, contact details for this purpose are included in your Engagement Letter with the firm.
• If you are happy with your lawyer, tell them. They are human, after all.

Suzy Schmitz is an experienced commercial and disputes lawyer at Keystone Law with a strong background in Intellectual Property, Retail and Technology. She also has significant senior in-house experience, having spent the past six months as Acting Regional Legal Director, Northern Europe, for consumer goods manufacturer Reckitt Benckiser. In this role Suzy was responsible for managing the legal budget and the engagement of various external law firms, so understands first-hand the experiences faced by in-house counsel.