One of the most challenging aspects of running a law practice is keeping clients happy – to the extent possible – with the legal fees they’re being charged. My goal (easier said than done) is to accurately predict in advance for the client the cost of a particular matter. Of course, if a matter is being done on a fixed fee basis, then there’s no chance of the client being surprised by the invoice, but setting the fee involves accounting for uncertainty in the amount of time to be spent. I have found over my years of practice that efforts by clients to save on legal fees often have the counterintuitive effect of raising them in the long run. Some common examples:
- “Let me take a crack at it first and send it to you” — Clients often think they will save on legal time by taking a DIY approach and sending me a contract that they’ve drafted for my review, rather than just asking me to draft it in the first place after informally discussing the terms with me. With very, very few exceptions (and ethical obligations preclude me from specifically naming them here), my clients, while they may be very talented at running their respective businesses, are terrible at drafting contracts. Often, it takes me longer to clean up the resulting mess than it would be for me to start from scratch.
“I won’t use a lawyer on this one” — Sometimes, clients that do multiple deals that are structured in a similar manner will take the forms from a previous deal and, again, take a DIY approach by trying to revise the agreements themselves and do the deal without involving a lawyer at all. Name and number substitution isn’t rocket science, but on the other hand if you don’t have the informal training of having drafted dozens of contracts, you’re likely to miss something. Furthermore, clients often neglect some of the smaller details to be attended to, such as getting a board or third party consent.- “I’ll use my regular lawyer” — This is a problem caused not by my clients but by those on the other side of the transaction, who want to use their regular attorney, who does not specialize in corporate or securities law and yet attempts to play one in my transaction. Lawyers in this position are often nervous (with reason) about not spotting an important issue, and this manifests itself as reflexive skepticism about every proposal I make, no matter how routine. The resulting debates drive up costs for all parties.
- “We have to close by Friday!” — Clients will often set arbitrary deadlines for closing a deal, I suspect because they think that the longer a transaction drags on, the more time the attorneys will spend. I can’t speak for all attorneys and their billing practices, but I spend only the time needed to get done what needs to get done, regardless of whether it’s compressed into a couple of days. And the use of arbitrary deadlines makes mistakes and bad judgment by all parties more likely.