Managing Business Litigation Costs

Most San Diego businesses, regardless of their size, try not to think about the potential for litigation.  They cross their fingers and move forward concentrating on day to day operations and marketing.  They are aware of possible contract disputes and potential liabilities but put their faith in the good nature of their customers, clients and business associates.  The prospect of litigation scares them and for good reason.  Past experience has taught them that anything involving an attorney is excessively expensive, and inevitably leaves them feeling frustrated and dissatisfied.  Attorneys have proven unresponsive to their needs, difficult to communicate with and often apathetic leaving them with little confidence that they are being billed fairly or that their case is being handled economically.  Instead, they walk away believing, without really understanding why, that attorney hours and costs are inflated and that their case has probably been drawn out longer than necessary with little or no effort towards early resolution.

Billable 2.jpgToday, skyrocketing legal costs have even the largest corporate executives second guessing themselves.  While the billable hour has been under attack as of late, it is still pervasive.  This is because in a large number of scenarios it seems the only practical way to bill clients for attorney time.  Yet the practice is fraught with inefficiencies and disincentives (see our article on the “billable hour” setting forth just some of the reasons why this is so).  The solution for those faced with the inevitable hourly billing that comes with litigation is twofold.  First, a frank and open discussion with your attorney about the firm’s billing practices (including how costs are incurred) minimizes any misunderstandings and ensures that your expectations are realistic.  If a law firm is resistant to this type of discussion, it’s a clue that the firm is likely wedded to the “billable hour” freight train.  This article distinguishes between the typical “billable hour” mentality and a litigation attorney‘s practical need to charge by the hour.  The former is part of a firm culture that rates attorney performance by the number of hours billed while the later looks to client satisfaction.  Second, once a clear understanding regarding billing is reached, monitor your attorney’s bills with close scrutiny.  While it is almost impossible to recognize every inefficiency, close scrutiny of billing provides a general impression that is valuable to you as the client.  This includes looking at costs.  Your law firm will recognize your attentiveness, and will be forced to pay better attention to attorney hours and costs incurred (i.e. consider reducing attorney hours charged for a new associate’s work on a motion that could have been finished faster by a more experienced lawyer or consider three or four star accommodations the next time they travel for a deposition).

This may be second nature to smaller businesses concerned with escalating legal costs.  It should be of greater concern to larger businesses and corporations who seem to accept skyrocketing legal costs as the cost of doing business.   Businesses of all sizes should not be afraid to put their current law firm on notice that it expects efficient and cost effective representation.  Nor should they be afraid to take their business elsewhere should closer scrutiny of billing evidence a pattern of inefficiencies and excessive costs.  Your power rests in your ability to hire another litigation firm if you are unsatisfied.

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