🤑 5 Key Takeaways: Mitigating Litigation Costs of Outside Counsel
Litigation has a funny way of sneaking in fast. It also has a funny way of sneaking up on your legal budget — fast.
Don’t sweat it, we’ve got some tips for you. We were joined by Andowah Newton, VP of Legal Affairs at LVMH, Zac Henderson, Head of Legal and DPO at Levels, and Greg McLaughlin, VP and Head of Litigation at Kyndryl, who shared practical, cost-saving strategies so you can reign in that cash-hungry litigation beast before it gets out of control.
👫 Assemble the (affordable) dream team
Okay, you have a litigation matter. Not necessarily the news you’re looking for. You’re going to need a kick-ass team to deal with it. At the same time, you know the execs are going to want you to explain every penny. So where do you start? There are a few ways to find your dream team.
The usual suspects: If there are existing vendor relationships that were established before you even started in your role, you might want to stick with them, but if you don’t think they’re right for the matter, (in the words of Jay Z) on to the next one.
Study buddies: Hit up your law school classmates. If they can’t do the job themselves, they might have some five-star recommendations.
Window shopping: You can speak to a few different firms and send out an RFP to get an idea of what they can offer. You might want to present your CEO or CFO with a cheaper option (like an ALSP) and a pricier option and let them make the call.
Get strategic. Trial counsel is your most important decision. They are the person who will run the show and set the narrative. Here quality should take precedence over price, as far as possible. With other vendors, it will be all about price. Most will be a balance between the two. Remember to look at the individual people who would be dealing with your matter. Even within a firm, different people can have very different approaches. If you opt to work with freelance legal pros, you’ll always know exactly which individuals you’re working with.
🏈 Get in the game
Even a teeny tiny litigation matter can be super time-consuming. We all have our Boston Legal fantasies, but most of the time it’s not a great use of your time to handle litigation internally, even if it seems thrifty. Plus, bringing on outside counsel sends a message to the counterparty that you mean business. Nonetheless, you’re going to want to be as actively involved in the matter as your schedule will allow so you can:
Guide the strategy and make sure it’s on-brand
Set expectations (both for outside counsel and your own exec team)
Keep your hands on the purse strings
Hold outside counsel accountable
Justify and explain things to your executive team
Make sure outside counsel gets access to the relevant facts and documents as efficiently as possible
Learn more about litigation (if it’s not your specialty)
All of this will ensure you’re getting the most bang for your buck.
🗃️ Go full Marie Kondo on your billing
Being disorganized is a huge cost. We’re not suggesting you hold your contracts in your hands to check if they spark joy (unless that’s what gets you going in the morning) but we do recommend taking a leaf out of Kondo’s book when it comes to getting organized. You should be able to say to your outside counsel, “All documents relating to x live here.” And if you’re a big company with a slew of litigation matters, you should have the data to say, “Matters like this usually cost x and last y.” You also need to be able to warn your CFO, “Hey, this is how much we need to fork out at the end of the quarter.”
Luckily there is tech that can help you out. Workflow software like Notion and billing systems like Bill.com can be game changers. If you’re not into tech, a good Excel spreadsheet will get you along just fine. Or you can get your outside counsel to run the numbers – after all, you’re paying them enough.
🌤️ Get a forecast (or two)
Budgeting for litigation is a bit like budgeting for a child – they might be born sideways and no one knows how much orthodontics will be necessary. You should, however, ask your outside counsel to:
Give some indication of what they think things will cost
Flag where things might veer off course
Lay out how they will try to economize if costs start stacking up
That way you’ll have something to work off and something to hold them accountable to. You can even ask for two budgets: a best-case scenario budget and a worst-case scenario budget. That way you can give your exec team a heads-up that each strategic decision comes with a cost.
🔎 Inspector Bill, on the case
As any pro wrestler will tell you, laying down ground rules saves everyone a lot of pain. Provide billing guidelines that let outside counsel know in advance if you won’t pay for business class travel or if you expect a phone call regarding costs above a certain threshold.
Once the bill is in front of you, take a good hard look. You don’t want to see:
Names of associates that you’ve never heard of
Partners working on things that are paralegal territory
Paralegals working on things that are partner territory
Billing for time spent emailing to set up a meeting
Any obvious cheeky add-ons
Good systems will save you time and money with this too. An electronic billing system will let you approve who can bill hours and, if you’re bold, edit items e.g. swap a first-class flight for the cost of an economy ticket.
The bill is never set in stone but you have to balance cost-saving with managing your relationship. Taking a red pen and crossing stuff out could make you unpopular. Sometimes a hard ball approach is necessary. Other times, a phone call and a few polite queries will do the trick. It could be strategic to say nothing at all.
Of course, you can always cut your bills and get more control over your spending by using ALSPs instead of a law firm.
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👋 The team at Lawtrades