Introduction

Part 1: Assessing Your Legal Needs

Introducing “BigCo”

Rather than talking in general terms about how mega-corporations manage legal expenses, I will be describing the operations of an imaginary company that operates in a manner very typical of real-world companies. We’ll call this imaginary company “BigCo”. BigCo is a publicly-traded, Fortune 500 manufacturing company. It has offices all over the world, and it employs dozens of in-house attorneys. BigCo’s general counsel heads its legal department. She has served in that role for over a decade.

The in-house legal staff spends about half of its time doing actual legal work for the company: negotiating contracts, settling disputes, and making sure that BigCo complies with the law. The legal staff spends the rest of its time managing the outside law firms that assist BigCo on special projects (mostly complicated deals and major lawsuits).

BigCo’s legal department has been using sophisticated expense management strategies for many years. At this point, the company’s total legal spend is down to 1 percent of annual revenues.

BigCo has a good sense of its annual legal needs because the people on the business side of the company can rely on their own internal legal staff to anticipate those needs. The legal department is packed with experienced lawyers. Many started their careers at the very same law firms that BigCo hires to handle its most important deals and lawsuits. No matter what the issue, the chances are that some attorney on BigCo’s staff has dealt with something similar earlier in his or her legal career. As a result, BigCo very rarely gets blindsided by a legal problem.

BigCo has some other important advantages in this area:

• The company keeps detailed records of its legal expenses from past years. Relying on those records, BigCo can predict future expenses with a high degree of accuracy.
• BigCo may work hard to lower its legal spending, but it really does not have to. It can afford as many attorneys as it wants to hire and whatever amounts those attorneys decide to charge for their services. When a legitimate legal issue arises, the company does not think twice about hiring an additional staff attorney or bringing in another law firm. For BigCo, the added expense is worth it when protecting valuable business interests.
• As the legal landscape changes, BigCo’s outside law firms provide it with free “client updates” on cutting-edge legal issues important to its business. These updates are really marketing pitches by the law firms, but they do help BigCo to stay ahead of the curve and make better legal and business decisions.

A growing business like yours probably does not enjoy any of these advantages yet. Your legal needs are harder to predict, your resources are somewhat limited, and you do not have an experienced general counsel driving the process. However, you can overcome these challenges.

General counsels may be experienced lawyers, but much of what they do involves common sense and not letting emotion get in the way of making good decisions. In this part of the book, I will show you how to make your own honest, impartial self-assessment of the legal risks facing your business. Then, before you start committing large sums of money to law firms, I will show you how to obtain a low-cost or no-cost second opinion from an attorney or a business planning expert.

Budgeting For Legal Expenses

Before we get to the issue of overpaying for the legal services that you use, I want to talk a bit about underpaying for legal services that you need. Whether your business is still in the planning stages or has been operating for years, it is important to have some basic understanding of the legal issues you are likely to face and what they will cost to resolve. Surveys show that entrepreneurs tend to underestimate their legal needs, and that can be a very dangerous thing. As the saying goes, “an ounce of prevention is worth a pound of cure”. Skimping on your legal spending now can end up costing you much more in the long run.

There are three main categories of legal expenses to consider:

1. Start-Up And Planning Expenses. These include things like incorporation, compliance with regulations, and developing basic form contracts and employment policies.
2. Maintenance Expenses. Over time, the needs of your business change and laws change. An attorney can help you to stay on top of things as you grow.
3. Special Projects. These issues, like major contract negotiations and lawsuits, only arise from time to time, but they can be very costly to resolve.

The amount your business needs to budget for these expenses depends on how much you have invested in it and what industry you are in. Some businesses have little to no start-up capital, no employees, and no physical place of business outside the home. Others may have a million-dollar war chest and significant obligations to employees and vendors. As a rule of thumb, the more you have at stake, the more you should be investing in legal advice to protect it.

More difficult to assess are the unique risks you face based on what line of business you are in. Some industries are riskier or more heavily regulated than others. Worksheet #1 will help you to calculate an “industry risk score” reflecting the common pitfalls facing companies like yours.

To give you an idea of how “industry risk” works, let’s compare a restaurant to an online greeting card business. From a legal standpoint, restaurants are some of the riskiest businesses to run. They are heavily regulated, there are customers and employees on the premises all the time, and food can actually kill someone if it is not prepared properly. At the other end of the spectrum, you cannot play it much safer than selling greeting cards over the Internet. The product is not dangerous, and there is no need for employees or a “bricks and mortar” storefront. Most businesses fall somewhere in between these extremes.

To calculate industry risk, we are going to use a simple thought exercise known as the “parade of horribles”. Lawyers are professional worriers and the parade of horribles is one of the ways we examine worst-case scenarios, their likelihood of coming to pass, and their potential costs. Just for a moment, I would like you to channel your inner worrier and think about what could go really, truly, horribly wrong for your business.

If you are like most entrepreneurs I know, you are already an accomplished worrier. This exercise won’t exactly be fun, but I promise you it will be useful. To get the most out of it, I want you to focus on issues that can destroy business relationships and often lead to the courthouse. For example:

• Consider a wage and hour lawsuit brought by a bunch of disgruntled employees. Without the right policies and procedures in place from the start, you could find yourself in an expensive, drawn-out lawsuit with a real possibility of paying substantial damages.
• Or, let’s say you are a manufacturer devoting a lot of cash flow to raw materials. If your contracts are not worded carefully, you could end up saddled with a shipment of useless, out-of-spec materials that the supplier refuses to take back. Now you have a lawsuit on your hands and no cash flow to fund it.
• What if you develop a new technology without doing a thorough review of relevant patents? An aggressive patent owner might sue you in federal court on the other side of the country and prevent you from selling your product until the lawsuit is over (which could take years). How do you operate for that long if you cannot sell your product?

These are just a few examples, but hopefully you get the idea. Worksheet #1 will guide you through your own “parade of horribles” exercise. It sets out the most common categories of industry risk and will give you a general sense of how much “attorney” a business like yours is likely to need.

Worksheet #1 - Your “Industry Risk Score”

Seeking A Low-Cost (Or No-Cost) Second Opinion

No matter what your final Weighted Industry Score was on Worksheet #1, it is a good idea to seek at least some impartial advice from someone who has experience working with small businesses.

If a few hundred or even a thousand dollars is an affordable amount for your business, then you should have no problem finding a general business attorney to perform a comprehensive risk review. In some cases, attorneys even offer a free, preliminary consultation. Free or not, a preliminary review is an excellent use of your time that will get you on the right track and limit early mistakes that could turn into expensive problems down the line.

If you have no money to budget for hiring an attorney, then there are still some worthwhile resources at your disposal:

• Organizations throughout the country provide free “legal clinics” for small business owners. Commonly, these services are offered by student groups at law schools, as a way of giving back to the surrounding community. State and county governments and local chambers of commerce often sponsor similar programs.
• The federal Small Business Administration has Business Development Centers and local offices in all 50 states.
• If you are involved in the arts or a not-for-profit enterprise, then your local Volunteer Lawyers for the Arts chapter or your state’s bar association may be able to offer you fantastic low- or no-cost legal advice. Even attorneys who charge many hundreds of dollars per hour perform work for these organizations on a pro bono basis.
• Finally, schools with active alumni communities often have industry-specific email lists, including ones for lawyers. Non-lawyers who graduated from the same school often are permitted to post to these email lists seeking advice or referrals. Although the lawyers on these lists will be careful to avoid giving you detailed legal advice over email, they are usually happy to provide general thoughts about the issue you are facing or to recommend suitable attorneys.

Some of these resources are only available to those who meet certain eligibility requirements, based on how long the business has been operating and how much capital it has. Also, certain programs may be geared toward traditionally under-served groups and communities.

These services are most useful when you are seeking general advice about business law and non-litigation matters (forming a corporation, basic contracts, labor issues, and tax planning, for example). However, there is such a wealth of resources out there that you will almost certainly be able to find someone who is an excellent fit for your needs and your stage of development.

Worksheet #2 will help you to summarize and organize the most important information about your business so that you can make the most of your consultation.

Worksheet #2: Preparing For Your Consultation

Part 2: Finding Suitable Attorneys

How “BigCo” Chooses Its Attorneys

Before covering how small but growing companies can find great attorneys, I want to describe how our imaginary Fortune 500 company, BigCo, handles that process.

BigCo does not need to work very hard to identify great outside law firms. Typically, the company will turn to a small group of firms that it has been working with for decades. In such cases, BigCo knows exactly what it will be getting with a particular firm: its strengths and weaknesses, how much the lawyers charge, and how well they conform to BigCo’s way of doing things.

However, from time to time, even BigCo needs to move outside this comfort zone and hire a firm it has never worked with before. Maybe the company is facing an unusual legal problem, or maybe one of its go-to law firms has fallen out of favor. When seeking new blood, BigCo will identify appropriate firms and solicit pitches from them. There may be several rounds to these “beauty contests” (yes, they are really called that), as the company whittles down its options based on cost and expertise.

Law firms salivate over the chance to bag a lucrative client like BigCo. To win the work, they bend over backwards, putting together glitzy presentations worthy of Hollywood and flying teams of attorneys from all over the country to make the sales pitch. For BigCo, this is a big decision, and the company is going to “kick the tires” before buying into what any particular firm is selling.

As a lean enterprise looking to identify suitable attorneys, you will have to work harder than BigCo in some ways and smarter than BigCo in other ways. You will have less information and more limited resources to devote to the search. In addition, attracting suitors will be more challenging, and their pitches will be less informative.

At the same time, take heart in the fact that big, fancy beauty contests often are more about marketing hype and “wining and dining” than they are about legal substance. Your company can achieve very similar results through a much more streamlined approach. In this part of the workbook, I will help you to focus on the most important details, ignore the noise, and give yourself the best possible shot at finding a great attorney.

Traits Of An Effective Attorney

When thinking about what makes a good attorney, it is natural to focus on “resume” traits, such as what law school the person attended or the prestige of the firm where he or she works. However, the credentials highlighted in a website biography do not tell you very much about the quality of service you can expect to receive. A narrow focus on resume traits will cause you to overlook many fantastic attorneys and may actually lead you to hire someone who is not a great fit for your needs.

During this stage of the hiring process, I want you to focus on things less obvious (and more telling) than the diplomas and artwork hanging on a lawyer’s walls: Does the person respond to your questions in a timely manner? Does he or she actually listen to what you are saying? Do you get a sense that this person respects you and sees you as a priority? Will this person handle your project efficiently and in a timely manner?

Even though it is a bit more challenging than counting achievements, you can figure out a lot about an attorney’s personality and approach before you actually start working with that person. The following traits deserve your attention:

• Tech Savvy. In this day and age, the phone book is no way to go about finding a good attorney for your business. Lawyers without websites should not be on your radar at all. This may seem snobbish of me, but it is actually very practical advice. Lawyers’ websites indicate how well they use technology, and technology is the key to efficient lawyering. A lawyer offering Web-based videoconferencing, electronic billing, an online portal for secure document sharing, and automated assembly of contracts and other legal documents is more likely to work efficiently and to save you money. One without a website probably cannot be bothered with these other technological advances either.
• Trustworthiness. Integrity is the single most important quality to look for in an attorney. We lawyers are officers of the court, and with that privilege comes a great deal of responsibility. We are held to a strict code of conduct. If an attorney violates that code, it may leave a permanent mark on his or her record. Before you hire anyone to represent you, you absolutely must do a quick background check to make sure the person has not been disciplined, suspended from practice, or disbarred.
• Professional Knowledge. Now, I just recommended that you not focus too heavily on a lawyer’s educational background. That does not mean you should ignore relevant experience, communication skills, and overall intelligence. Explore the lawyer’s website. Get a sense of how well the person writes. Watch any promotional videos. “Google” him or her. If you are seeking advice on a business dispute, then you should focus your search on people with litigation experience. By contrast, if you are seeking advice on a business deal, you probably want an attorney with experience in contract negotiations. Digging even deeper, many lawyers will get into specifics about the clients they serve. If you are starting up a restaurant, for instance, you should be looking for someone who has advised other restaurants in the town where your establishment is located. If you are a tech startup, then you probably want someone who has advised companies similar to yours. This sort of experience means that you are more likely to get the best advice possible. It also means that your attorney is more likely to know relevant legal information “by heart”, which will save time and minimize your costs.
• Attention To Detail. Is the lawyer’s website polished and well organized, or does it look like it was just thrown together in five minutes? Are there lots of typos or obvious errors in the site content? If so, then that suggests a similar lack of care will pop up in the work product he or she creates for you. Poor attention to detail can mean the difference between winning or losing a lawsuit, and it can determine whether or not a contract will actually accomplish your business goals.
• Attitude. When you are paying someone hundreds of dollars an hour, this should not be an issue but, too often, it is. If a lawyer is accustomed to working on big cases for clients with very deep pockets, then those clients will almost always take priority over a smaller, less lucrative client. It can be incredibly frustrating when your attorney does not respond to phone calls or emails, constantly reschedules meetings, and pushes back due dates. The deeper you get into a project with someone like that, the harder and more expensive it will be to change attorneys. To prevent these problems, try to get a sense of a lawyer’s typical client. If the clients and projects sound enormous, then your business may not end up being a very high priority for that attorney, and you should probably look elsewhere.
• Efficiency. Efficiency is perhaps the most difficult trait to judge before you actually start working with an attorney. The things to focus on are technology and staffing. We have already covered tech savvy. Staffing practices can be very important, too. In the legal industry, the term “leverage” refers to the ratio of junior attorneys to senior attorneys at a given law firm. If you are evaluating a firm with more than a couple of attorneys on staff, note how many are listed as “associates” or “law clerks” (junior staff) and how many are listed as “partners”, “shareholders”, or “counsel” (senior staff). There should be more junior attorneys than senior attorneys. If the firm is leveraged at a 1:1 ratio, or close to that, then that suggests senior attorneys, who charge more per hour, are not delegating very much work to junior staff. This is a red flag that you may end up overpaying for work that could have been done at a lower hourly rate.
• Listening Skills. I mentioned good communication skills earlier, but the ability to listen deserves special attention. An attorney who is not a good listener cannot understand your business needs, will not be an effective negotiator, and may have difficulty working with the attorneys on the other side. Evaluating how well different lawyers listen will have to wait until you actually start communicating directly with the ones that make your short list. When you do, note how well each person responds to your questions and follows instructions. These things speak volumes about the quality of service you can expect to receive.

These are all common-sense recommendations. Book learning will only take an attorney so far. Without good people skills, relevant experience, and the right attitude, you may very well end up getting far less than you are paying for.

How Much Should Your Attorney Cost?

There are alternative fee structures (including flat rates and success fees), but most attorneys charge by the hour. At the extremes, that rate can be less than $200 or more than $1,000 per hour. Even at the lower end of the scale, this may seem excessive to you, but keep in mind that the fee is not pure profit for the attorney, who must cover overhead expenses (office space, staff salaries, technology, and insurance) just like any other business.

An attorney’s hourly rate depends on a variety of factors. The most important ones are the attorney’s seniority, his or her area of expertise, the size of the law firm, and its location. Let’s break down each factor:

• Seniority. Less experienced attorneys will charge less than more experienced attorneys. In theory, a more experienced attorney will provide better quality advice and will work more efficiently. However, this is not always the case. Often, you will find the best value in the middle of the pack.
• Area Of Practice. The more sophisticated the area of law, the more the attorney will charge you. At the high end are things like international taxation, patent law, and mergers and acquisitions. They tend to require special education beyond a law degree. Also, these areas of law usually come into play when the stakes are very high and businesses are willing to pay more for the best possible advice. Lawyers offering more routine business services like entity formation or basic contract-drafting will usually charge lower rates.
• Law Firm Size. The size of the law firm also affects cost. Although there are many small, “boutique” law firms with extremely high-priced attorneys, for the most part smaller firms charge less than larger ones. Much of the difference comes down to overhead. Larger firms may have legions of non-attorney support staff. They also tend to spend more on creature comforts (artwork, fancy catering for meetings, and wood-paneled offices packed with Herman Miller furniture). For example, the first law firm where I practiced once hired a pricey consultant just to design a color – a color – for its new logo. Justified or not, all of these overhead costs impact the rates that firms charge for legal advice.
• Location. Geography accounts for much of the variation in attorney fees. An attorney with offices in midtown Manhattan will charge more than an attorney in rural North Dakota. This is because of differences in cost of living, rates for office space, sophistication of the practice, and what local clients are willing to pay.

Understanding why attorneys charge what they do will help you to maximize value without sacrificing results. Here are some takeaways to keep in mind:

• Do not hire more “lawyer” than you need. Try to avoid firms with over-the-top offices that seem to be catering to “Master Of The Universe” types.
• Taking that advice a step further, look outside of major metropolitan areas, even if your business is in the city. Suburban areas are full of reasonably priced law firms that can hold their own with any of their big city counterparts.
• Make sure that legal work is performed at the appropriate level of seniority. The vast majority of work on any case should be delegated to junior attorneys, with senior attorneys stepping in from time to time to add the value that comes with their experience. Later on, I will get into some techniques to help you encourage proper delegation.
• Similarly, do not put too much emphasis on what law school a person attended. The reality is that all lawyers have to pass the same bar exam. Further, a graduate of a local law school may actually have a better handle on the laws of your home state than someone who went to a school with more of a national reputation.
• Most legal issues are relatively routine. In many cases, high-priced specialists would be adding zeroes to the end of the checks you write for them without providing much added value to your business.

Now you have some idea of what goes into an attorney’s fee. In the next couple of sections, I will outline a simple, two-step process for evaluating a large number of potential attorneys and narrowing the field down to a manageable short list of candidates who are likely to be good fits for your business.

Return to the top.

Round One: Narrowing Down The Field

I suggest dividing your search for an attorney into two rounds. Round One involves Web-based research. Think of it as the “lightning round” or, if you prefer, “speed dating”: you want to look at ten or more attorneys, and pick a few that seem to have the most potential. Then, in Round Two, which I will cover in the following section, you will dig deeper and actually contact the attorneys on your short list. If no one on the short list pans out, then you can always repeat the process.

This approach is worth the effort. Devoting an afternoon or two to your search now can save far more time and money down the line. And, if you choose wisely, you may have found a great attorney for life. Building a long-term relationship with an adviser who really knows your business and how you like to work is an incredibly valuable thing. It is the ultimate “BigCo strategy” and essential to achieving meaningful, long-term cost savings.

I have recommended that you only focus on lawyers with websites because they are more likely to be comfortable with technology, and technology saves time and money. There is another reason for this focus: websites allow you to learn a lot about a variety of lawyers very quickly and from the comfort of your desk.

Just because we are focusing on lawyers with websites does not mean you have to confine yourself to Internet-only research to generate leads. There are many great sources for attorney recommendations, and you should use as many of them as possible, including:

• Friends, family, and former classmates.
• Your local chamber of commerce.
• Networking events.
• Seminars given by small business attorneys.
• Your local office of the federal Small Business Administration.
• Advertisements in local or industry-specific business publications.
• Social networking websites and alumni networking groups.
• State bar association lawyer referral programs.

You want to gather recommendations and business cards whenever you can and, ideally, before you are facing a legal emergency. Even so, this two-step selection process should work whether you are doing a leisurely search for a general business attorney, or if you have a sudden, urgent need for a specialist.

Once you have a list of ten or so potential attorneys, it is time to start researching them in a bit more depth. At this point, we will focus on the things that you can evaluate without actually meeting a person or speaking with him or her on the phone. These data points should be familiar to you from the earlier section on traits of an effective attorney:

• Location. Your attorney’s office should be easy for you to get to. Also, remember that some of your attorney’s hourly rate goes to paying for office space. Try to avoid high-rent neighborhoods and do not rule out the suburbs, even if you are located in a major city.
• Experience. A lawyer with decades of experience and a gilded resume is more likely to charge top-of-the-market rates. This sort of experience isn’t everything. Much more important is experience advising businesses facing legal issues similar to the ones that you are facing.
• Similar Clients. If the lawyer represents a lot of very large companies, then a smaller project may be viewed as a lower priority, and the quality of service you receive may be poor.
• Attention To Detail. A polished, well-written website speaks volumes about the amount of care an attorney will put into contracts, correspondence, and court filings. So does a sloppy one.
• Tech Savvy. Try to figure out what technology the lawyer is comfortable using in his or her practice. Remember, technology is the key to efficient legal project management.

Round Two: Approaching Your Top Candidates

In Round One, the goal was to narrow down a long list of candidates in an efficient manner. Round Two should not take much more time than Round One did, but you will be able to devote more attention to each lawyer due to the smaller number of candidates involved (three to five should be a manageable number). Hopefully, one of these people will stand out, and you can negotiate the terms of an engagement with that person.

After you have assembled your short list, the next step is to make sure that each lawyer has not been disciplined, suspended from practice, or disbarred. Usually this only takes a quick search on a website or, at most, a call to your home state’s bar association. I suggest performing this search during Round Two so that you do not have to go through the process for dozens of attorneys. However, it is a very important step. If one of the candidates on your short list fails this test, then that should be a dealbreaker for you. Remove that person from the list and focus on other candidates.

During Round Two, you will actually reach out to individual lawyers by email. Worksheet #4 is a template for your outreach emails. Feel free to modify the wording to suit your own personal style. However, keep in mind that the goal here is to maximize the information you receive without scaring away good candidates by asking too much of them.

The form letter is what I will call a Request For Information (RFI). It combines the best features of the two most common “request” documents: the Request For Quotation (RFQ) and the Request For Proposal (RFP).

An RFI is the easiest request for a lawyer to fulfill. It briefly describes the legal project and asks the potential attorney to estimate what it would cost to do that work. An RFP asks for much more information and, therefore, means more work for you and for the lawyer. A typical RFP seeks an overall sense of how a lawyer would approach the legal project: how it would be staffed, what each person’s hourly rate would be, strategy, and the timeline for completing the work, along with an estimate of what all of it might cost. An RFP is a very open-ended request and, typically, crafting a response takes as much planning and effort as filling out a college application.

Unless you are going to be spending many tens of thousands of dollars or more on a project, an RFP is overkill. However, an RFQ does not get you much useful information. An RFI falls somewhere in between the two. It includes a short list of simple questions that the lawyer probably can answer without much effort, legal research, or deep understanding of your legal project. At the same time, it will give you plenty of data points so that you can compare the attorneys on your short list. An RFI should request the following information:

• Timeframe And Cost. By comparing your prospective attorneys’ responses on this issue, you can figure out an “average” and see who the outliers are. I suggest asking for a cost range rather than a specific number, as lawyers typically do not like being pinned down to an answer based on such limited information. Asking about timing may also give you a sense of how busy the lawyer is.
• Due Date For Responding To The RFI. Unless it is an absolute emergency, give them at least a week to respond. It shows them that you are reasonable and makes it more likely that you will receive a quality response.
• Staffing. Asking about this gets at efficiency. On one hand, if the lawyer expects to involve five of his or her colleagues, you will be paying for getting them all up to speed and, probably, for duplicated effort. On the other hand, if a lawyer billing $400 per hour will not be delegating any work to junior staff, then you will probably be overpaying for a lot of low-value work.
• Technology. If the lawyer’s website did not provide enough information on this topic, try to get a more complete picture of his or her comfort level with technology.
• Alternative Fees. It can’t hurt to ask, but don’t hold it against lawyers who refuse to use alternative fee structures instead of traditional hourly billing. It is common for lawyers to work on an hourly basis exclusively.
• Budgeting. This is the most important tool for controlling costs during the project. If a lawyer refuses to create a basic budget at the beginning of the project, then view that as a huge red flag.
• Other Information. Worksheet #4 includes one open-ended question. If a lawyer puts some thought and effort into this last question, then that speaks volumes about how eager he or she is to have you as a client. Eagerness is usually a good thing.

When you receive responses to the RFIs, keep score using Worksheet #3. At this stage, you are trying to get a sense for how well each lawyer follows directions, how polished his or her work product will be, and whether the person cares enough about you as a potential client to assemble an impressive proposal.

For example, if a lawyer contacts you by phone rather than emailing, you may get great information from that person, but keep in mind that he or she did not follow your instructions to respond via email. If the lawyer does send an email, but resists the questions or structure of your RFI, then that suggests the person may be arrogant or difficult to deal with. If someone responds after five minutes, then that may suggest the person is a bit too eager or did not put enough thought into his or her response.

After completing the RFI process, hopefully one or two candidates will stand out. In making your final decision, you do not want to rely on emails alone. Try to schedule a phone call or a (free) in-person meeting with each candidate. Approach these conversations in the same way you would conduct a job interview, with a particular focus on the attorney traits outlined in this guide. If something doesn’t feel right to you, then you should probably move on. There are a lot of great lawyers out there and it is important to be as patient as your situation allows when selecting the right one for your business.

Worksheet #3: Comparing Attorneys

Worksheet #4: The “Request For Information”

Part 3: Hiring An Attorney And Setting Expectations

“BigCo” Makes Demands

The beauty contest may be over, but the winning law firm is not done jumping through hoops for BigCo. When the company retains outside attorneys, it asks a lot of them. Many times, a law firm will have to change the way it tracks billable time and will agree to restrictions on travel expenses, the number of attorneys attending meetings, and even the length and quantity of research memos it produces. Law firms are willing to accept BigCo’s tough terms due to the size of the business opportunity.

BigCo is not making these demands just because it can. The company has very good reasons for each one of them, all related to cost control. “Task-based billing” is a good example. Most lawyers at big firms already account for their time in six- or ten-minute increments. BigCo requires them to break down billing records even further, by the amount of time spent on particular functions: research, meetings, communications with opposing attorneys, and so on. Having this data is important to BigCo because it allows the company to track which firms perform which functions best and what the average cost is across firms for different functions and types of work.

Other cost-control measures focus on how attorneys go about their work. A meeting with ten attorneys sitting around a table may cost five times as much as one with only two attorneys, and less progress may be made at the larger meeting. So, BigCo places headcount restrictions on law firms’ internal and external meetings. The company also refuses to cover certain travel and dining expenses, and insists that law firms use less expensive contract attorneys to perform the most time-consuming and low-value tasks.

All of this is fantastic if you are BigCo, but most law firms will not accept the most extreme of these demands from smaller clients, particularly new ones. Your challenge at this stage is to craft reasonable requirements that are easy for any attorney to follow, while achieving many of the same benefits that BigCo enjoys.

Setting The Ground Rules

The first step in this process is negotiating an “engagement letter”, which is a contract between you and your new attorney setting the terms of the relationship. You can expect that your attorney will provide you with his or her standard engagement letter. (And you should not be billed for attorney time spent drafting or revising this letter.) Although this might seem to you like a take-it-or-leave-it document, view it instead as the opening round in a negotiation. Review it carefully and feel free to push back on terms that seem unfair or unreasonable.

An engagement letter will probably include most of the following sections:

• A Description Of The Project. When you hire an attorney, you do so for a particular purpose. A clear “scope of work” clause ensures that everyone understands what the attorney will and will not be doing for you.
• A Disclaimer That Any Services Beyond The Scope Of The Project Will Require A Revised Or New Engagement Letter. This follows from the previous point. If the game changes, you may have to adjust the scope of work.
• Who The Client Is. When a business hires an attorney, that person represents the business entity, not the individual owners or employees. This may seem like a minor distinction, but it can be a very important one.
• What The Client Hopes To Achieve. There is no sense in hiding the ball from your attorney. Setting well-defined and measurable goals will keep everyone focused on business outcomes and will help you to evaluate attorney performance.
• A Disclaimer That A Favorable Outcome Is Not Guaranteed. This term may seem unfair, but it would be odd not to see it included in an engagement letter. There are so many variables in any legal project, and it would not be reasonable to hold your attorney accountable for things beyond his or her control.
• Staffing Details. The letter should include a list of the attorneys and support staff who will bill time on the project, what their hourly rates are, and how they will charge for fractions of an hour.
• A List Of The Categories Of Expenses Other Than Fees That Will Be Billed To The Client. This item is less likely to appear in an attorney’s form engagement letter. Later on, I will show you how to address this in your own billing guidelines.
• The Amount Of Any Deposit Or Retainer Required Before The Firm Begins Work. Many attorneys require an up-front payment. The money is deposited into a special trust account. The attorney can only move that money into his or her operating account after it is actually earned. You may be asked to top off the deposit once it is used up.
• Billing Procedures And Payment Deadlines. The engagement letter should tell you how often you will receive billing statements, how detailed they need to be, and how long you will have to pay them.
• A Disclaimer That The Total Cost Of The Project Is Uncertain. This point also relates to the unpredictable nature of any legal project. Budgets and estimates should be as accurate as possible, but they are not set in stone. (This topic will not be relevant if you are paying a flat rate for the work rather than an hourly rate.)
• How Any Disagreements Between The Attorney And The Client Will Be Resolved. It is important to read this section very carefully. An inconvenient process for resolving disputes can be expensive and can limit your rights.
• A Request That You Countersign The Letter And Return A Copy To The Attorney. Once you and the attorney have both signed off on the engagement letter, the formal attorney-client relationship begins.

Although this is a negotiation, keep in mind that many of these terms are accepted as industry standards. All of the disclaimers about the project scope and the results achieved may seem unfair to you. However, an attorney will view them as essential and non-negotiable.

Instead, focus on the low-hanging fruit. For example, if the attorney fails to list other attorneys and support staff who will bill time on the project, or their hourly rates, then you have every right to ask for another sentence or two spelling out that information. You can also ask whether timekeepers will bill in six-, ten-, or fifteen-minute increments, and whether totals will be rounded up (less favorable to you) or down (more favorable to you).

Another area with room for negotiation is the procedure for dispute resolution. Most states offer an informal mediation process as a first step in resolving an attorney-client fee dispute. After that, an unsatisfied client usually has the right to sue the attorney in court before a jury. Some engagement letters will ask you to waive that right to a jury trial in favor of private arbitration. This is a controversial practice, because the client is giving up such an important right. You should at least have a discussion with the attorney before agreeing to any such waiver.

Often, you will have the most success focusing on what the engagement letter does not say instead of what is already there. This is an area where it helps to take a page from BigCo’s playbook and have your own set of billing guidelines that add to, rather than change, the terms in your attorney’s standard engagement letter. However, while BigCo can make extremely burdensome demands, your goal here will be to create a short set of highly reasonable but useful guidelines.

Your own billing guidelines should be designed to build simple cost controls into the arrangement. This approach will help you to come across as a reasonable client who is not trying to create unnecessary work for the attorney. Instead of making time-consuming revisions to the main engagement letter, he or she will only need to add a sentence or two about your guidelines, “incorporating them by reference” into the agreement.

Many attorneys just want to get on with the billable work, and will be happy to drop in your billing guidelines rather than waste more time arguing over the details. Even if you have to agree to cross out a couple of guidelines that the attorney strongly dislikes, you will still have a lot of levers left to pull if the legal bills get out of hand.

Below are some points that you should consider including in your company’s standard billing guidelines. The list starts with the points that probably will be easiest to win agreement on and progresses to the more difficult points to negotiate:

• Identify One Contact Person In Your Organization. Whether that person is you or a trusted deputy, having a single “point person” ensures that your company speaks with a unified voice. This will help to prevent crossed signals, second-guessing, and duplicate work.
• Prompt Replies To Emails And Phone Calls. This is more about setting expectations than limiting cost overruns. Make clear that you expect that your emails and phone messages will be returned within one business day and, preferably, the same business day.
• Periodic Status Updates. Again, this is about ensuring the lines of communication stay open. It is a good idea for you and your attorney to touch base every week or two. Just a 5-minute phone call every other Friday afternoon can work wonders for keeping everyone on the same page and preventing delays.
• New Staff Approval. Require approval before any new attorney or staff member starts billing time on the project. You want a small team. Each member will build deeper knowledge about the project, and you will waste less money getting newcomers up to speed.
• Limit The Number Of Attorneys At Meetings. One should be enough, and there never should be more than two attorneys at a meeting, whether it is an internal law firm meeting or one that you attend.
• No Charges For Time Spent On Billing. It is unethical for an attorney to charge you for time spent keeping time records, drafting your bill, or resolving billing issues with you.
• Frequency Of Bills. You should be receiving a bill at least every 90 days. If billables are many thousands of dollars a month or higher, more frequent statements are in order. Finally, if you ask for a bill at any time, the attorney should provide you with an up-to-date one in a day or two.
• You Will Receive Copies Of All Attorney Work Product. It would be hard to argue with a request like this one. At the same time, this can be a very easy way to win a write-down where there are “phantom documents”. If your attorney bills time to generate a memo or checklist that you never get to see, then you should not have to pay for the work that went into creating it.
• Your Company Will Own All Attorney Work Product. Similar to the last point, if you ask to see a document you have paid for, your attorney cannot refuse that request. Further, your attorney should not be permitted to reuse work product generated for you when serving (and billing) some other client.
• All-Digital Work Product. Hard copies of documents lead to a lot of inefficiency and cost increases. You should require that all materials your attorney generates exist in a searchable, digital format and, whenever possible, not be printed out at all. This should apply to contracts (including signature pages), court and deposition transcripts, filings, and your attorney’s bills.
• Budgeting. During the selection process, you already confirmed that your attorney is comfortable working within a budget. However, your billing guidelines should make budgeting a formal requirement. You can also include a sample budget template or, at the very least, require that the budget be broken down by the different stages of the project.
• Changes To The Budget. There are many reasons why a project might go over budget. Some may be the attorney’s fault, some may not be. In either case, your guidelines should require the attorney to contact you before billing time or incurring expenses that will take the project significantly over budget. (“Significantly” probably means something more than a 10% or 20% overage.)
• Limitations On Travel, Meals, And Other Expenses. Your attorney’s “expense account” should be very limited. No first-class flights. No $500 hotel rooms. No hourly compensation for long-distance travel. No car services, only taxis or personal cars. A $30 limit on daily meal expenses while travelling. No late-night meals at the office billed to you. No catering or conference room rental fees for meetings. No reimbursement for local travel expenses (for instance, cross-town trips for meetings). You can also limit charges for office expenses like copying and prohibit the use of overnight deliveries and messenger services. Finally, it is a good idea to require your pre-approval of any expenses that exceed a certain amount ($200, $500, $1,000 – whatever you feel comfortable with).
• Early Payment Discount On Fees. See if your attorney will agree to give you a 5% discount if you pay a bill within 7 days of receiving it. Cash flow and collection are huge issues for most attorneys and they appreciate it when clients make life easier by paying bills before they become due.
• Limit The Number Of Hours Billed Per Day. There are only so many hours that anyone can work in a day before losing focus, becoming less efficient, and making mistakes. Further, it is very rare that an attorney can legitimately bill more than 70% of his or her workday. The rest of the time is usually spent on work that cannot be billed to any client. Therefore, you should prohibit your attorneys from billing you for more than 12 hours of work on any given day.
• No Markups On Legal Research Costs Or Contract Staff. If an attorney pays a subscription fee for access to a legal research database, he or she should not be able to charge you hundreds of dollars for each search run in that database. Similarly, if the attorney outsources some work to a contractor at a rate of $100 per hour, you should not have to pay any markup on that rate.

At the end of the day, you will need to decide which of these requirements are most important to you and which ones are unnecessary. It may take some trial and error and you will probably revise your company’s billing guidelines over time.

Later on, this guide will cover reviewing attorney bills. Although that is, for the most part, a time for pinpointing unreasonable expenses and seeking write-downs from your attorney, it is also a time to note surprising and unexpected expenses that you may not be able to avoid paying the first time around. By adding new restrictions to your billing guidelines for future projects, you will at least be able to discourage your attorneys from billing for those things in the future and, if they do, you will have the leverage you need to win write-downs.

Part 4: Keeping Your Own House In Order

How “BigCo” Keeps Chaos At Bay

We have seen how demanding BigCo can be with its outside attorneys at every stage of the hiring process. However, to be fair, the company is just as demanding when setting its own internal policies and procedures. BigCo understands very well that it can be its own worst enemy when it comes to cost overages on legal projects, and that it can minimize outside attorney time by maximizing the work it handles internally.

The point of collecting data on legal expenses and attorney performance is to use that information to keep improving how BigCo responds to legal issues, manages information, and gives all of its attorneys the best shot at achieving successful outcomes without breaking the bank. This drive to improve affects every aspect of BigCo’s operations:

• Knowledge Management. Computers and e-mail have made life easier, but they also have left BigCo drowning in information. Early on, documents and emails were backed up on giant cassette tapes. When BigCo needed to find documents, attorneys would spend hundreds or thousands of hours restoring the tapes and searching through every single document. The company maintained a warehouse full of paper documents, too. Now, BigCo has fast, centralized backup servers and its main law firms have become experts in navigating these digital files. These efforts have saved the company more money than anything their outside law firms have done to lower costs.
• Project Management. Large organizations can be terribly inefficient. In the past, BigCo’s law firms used to get mixed messages from different managers and members of the legal department. Plans would change frequently, sometimes after many hundreds of hours had been wasted on a completely different approach to the project. Now, BigCo enforces “agile” project management techniques. Team members, both attorneys and managers, have clear responsibilities. Decisions are made early on, the lines of communication are clear, and great care is taken to make sure projects stay on track.
• Division Of Labor. BigCo also discovered that it was more cost-effective to expand its legal department and to rely less on outside law firms. To do this, the company used billing data to find the most repetitive tasks that its outside law firms were performing, and figured out which ones it could do more efficiently using its own staff attorneys. For instance, BigCo has dedicated staff whose only job is to develop computer software that generates its most common sales contracts automatically, without any attorney input. This has saved BigCo a fortune in outside attorney time.

These are just a few examples of how BigCo has taken responsibility for its own role in legal project management. Although your company is not going to go out and hire a full-time programmer to build contracting software, or get your entire staff certified in agile or Kaizen project management, there are a lot of simple policies you can put into place to improve how you manage information, legal projects, and your attorneys.

Because you are a leaner organization, you will probably have an easier time than BigCo did with these housekeeping tasks. Not only will they help you to control your legal expenses, they will ensure that all aspects of your operations run as smoothly as possible.

Division Of Labor

When legal fees are excessive, it usually means that outside attorneys are doing work that could be handled just as well (if not better) by the business people themselves. Attorneys deserve to get paid hundreds of dollars an hour because they have specialized expertise built up through three years of graduate-level education, a comprehensive licensing exam, and probably years of sixty- to eighty-hour work weeks honing their skills. However, it is crazy to waste those special skills on clerical tasks and other low-value work that does not require a law license or even a legal education.

And yet, businesses frequently do just that when they hire attorneys. Surprisingly little of the work that lawyers do actually involves legal expertise. Your attorneys end up shuffling paper, gathering facts about your own business that you already know, maximizing effort rather than streamlining projects, and reinventing the wheel instead of giving you the tools to build run-of-the-mill business documents on your own. In the next few sections, we will cover strategies that you can use to take back control of legal projects and focus your attorneys on the high-value tasks that justify their high hourly rates.

The topics covered include:

• Building a basic records management system for your business so that your attorneys do not have to do it for you after the fact.
• Taking control of meetings to ensure they are not wastes of time and money.
• Using self-help and limited representation to cut down drastically on attorney time by performing certain legal tasks on your own.

There are a lot of misconceptions about what tasks lawyers are better at than non-lawyers. And, as in any profession, there are many people with legal training who try to expand the list of tasks that require legal expertise as far as possible in order to maximize billings and protect their profession and livelihood from outsiders. The better you understand where you really do and do not need attorneys, the less likely it will be that you give them more credit than they deserve.

Document Management

It is difficult to imagine a legal project that does not involve documents of some sort: emails, letters, faxes, contracts, written policies and procedures, purchase orders, employee timesheets, financial records – the possibilities are almost endless. And the volume of documents at issue can be overwhelming. Rooms full of Banker’s Boxes. Hundreds of gigabytes of Word documents and PDFs. In some cases, hours of audio and video to be reviewed and transcribed.

Do you really want your attorneys charging you hundreds of dollars per hour just to organize and make sense out of these mountains of information? Of course not. However, to avoid that very expensive fate, you will need to create – and follow – simple but strict document management policies. Setting up such a system is probably the single most important thing that you can do to control your legal expenses. We are talking about trimming meaningful amounts (maybe 20% or more) from your attorneys’ bills.

The strategies outlined here fall into four categories: keeping business documents separate, going paperless, organizing everything, and securing it all.

Keeping Business Documents Separate

Businesses involved in a deal or a dispute usually end up exchanging information with each other. Often, this exchange comes in the form of “document dumps”: each side gathers everything that could possibly be relevant to the legal matter and leaves it to the other side to find whatever needles in the haystack it might be looking for. This is a terrible way to do things. It wastes time and money and, more important, you run the risk of embarrassing your company and its employees or exposing information that could have and should have remained secret.

I have seen this first-hand, when I have been asked to review files for large legal projects. In reviews of corporate email records alone, I have seen extramarital affairs exposed, tasteless images and video attachments used to embarrass the other side in court, and “smoking gun” emails in which people bragged to their friends about their roles in illegal activity. Even setting aside this sensational content, I have often learned more than I could ever want to know about people’s home lives, love lives, and many other things that the individuals wrongly assumed would stay private forever. (And companies were paying me hundreds of dollars an hour for this work.)

Every day, it becomes more difficult to separate our personal and professional lives. We connect with co-workers on social networking sites. Text messages from family members appear next to ones from our bosses and clients. People communicate with their friends and loved ones on company time.

However, you have to assume that, some day, some attorney with an ax to grind is going to read through every single message in your corporate email account, every document on your hard drive, every text message and call record on your company cell phone, and even every website you have ever visited from your workplace computer.

So, it may not be easy to do, but it is so important that you and your employees keep personal communications completely separate from business communications. Your company’s written policies and procedures should prohibit all of the following:

• Sending and receiving personal emails via a company account.
• Sending and receiving work emails via a personal account.
• Using company-issued phones for personal calls or text messages.
• Using personal social networking accounts or instant messaging accounts for business purposes.
• Using official instant messaging programs for non-business purposes.
• Downloading company documents onto personal computers, phones, or tablets.

In addition to written policies prohibiting these practices, it is probably a good idea to block the most common web-based email and social networking clients (Hotmail, Gmail, Facebook, etc.) so that you and your co-workers are not even tempted to mix business with pleasure. (If your company uses Facebook and Twitter for marketing purposes, you can restrict access to a single individual or dedicated computer.) It is truly shocking what people allow themselves to get up to on company time and equipment without realizing that their personal lives may become an open book to complete strangers and pose serious legal problems for their employers.

Making sure these personal materials don’t exist in the first place is easier and better than trying to separate them out after the fact. Once it is there, it is there forever, so it is important to take whatever steps you can to avoid personal information ever appearing in business records.

If your company has been operating for some time, these new policies and procedures cannot change what has happened in the past. In the digital world, with data backups and forensic computing techniques, almost nothing is every truly deleted. However, you can still take steps to separate out personal emails and the like from your document archives. This will make it easier to share only relevant, business-related documents when some outsider needs to see them.

Going Paperless

Once you have put these policies and procedures into place, the next step is to do away with paper to the extent possible. Even in a digital world, it is amazing how many paper files a typical business generates. You probably save “originals” of any signed contracts you have entered into. Perhaps you receive purchase orders or signature pages by fax. People take notes by hand, draw diagrams, and use post-it notes in their workflows. It is unavoidable, there will always be some sort of paper floating around the office. Your goal should be to minimize it.

Why is this so important from a legal standpoint? It has nothing to do with tidiness or saving trees. It is all about cost savings. Shipping boxes of documents to a law firm can be pricey, they take longer to review, they may need to be photocopied multiple times, and there is a greater chance that something will be ignored, misplaced, or shuffled out of order. Also, paper archives aren’t searchable by keyword, meaning your attorneys may have to flip through many thousands of pages, often multiple times, to find whatever it is they are looking for.

Problems with paper documents arise in disputes and in deals. Many courts and arbitrators now require that all materials the parties exchange be in a searchable, digital format. This means that all paper documents not only need to be scanned, but the text needs to be processed in a way that makes it searchable by computer. This can be time-consuming work and typically requires your attorney to waste time hiring and managing an expensive outside vendor.

While it is less likely that you will be required to digitize all information in the context of a business deal, paper will still be a problem in that context. This is particularly true when there are a lot of contracts to be signed.

I have been at deal closings that lasted an entire day because a wide variety of documents needed to be printed out, signed, and initialed by hand – sometimes in triplicate. This is an enormous waste of time and money. Today, electronic signatures almost always have the same legal significance as handwritten ones. In a growing number of states, you can even have documents notarized electronically. There are many applications on the market that make this process easy for everyone, regardless of what type of phone, tablet, or computer they have, and often without them having to jump through any hoops or install additional software. DocuSign, Adobe’s EchoSign, SignNow, and Sign Here are just a few examples. You should maximize the use of digital signatures in your everyday business dealings, and require your outside attorneys to do the same.

Other areas where you can abandon hard copies are:

• Faxes. There are a number of services that will deliver faxes to your email inbox as Pdf files.
• Handwritten Notes. Services like Evernote allow you to photograph and extract searchable text from your handwritten notes. There are apps for tablets and smartphones that change your handwriting to digital text as you write. Finally, there are pens that also save a searchable, digital version of what you write and even preserve drawings and diagrams as you write.
• Voicemail. There are services available that will transcribe the voice messages you receive with decent accuracy and email them to you.
• Meetings And Telephone Conversations. In cases where you want to have a record of what transpired during a meeting or phone call, it is a good idea for one of the participants to circulate a brief email summary to the other participants. To cut down on email traffic, the summary can request a response only if a participant disagrees with the summary of what was discussed.

Once you have made the decision to go paperless, it still remains to decide how you will preserve your digital files. It is always a good idea to have some form of off-site backup for all of your business files. “Cloud” services like Box.com, Google Docs, and Dropbox are probably the most popular options. If you have a lot of highly sensitive materials, you may want to look into a local backup system or a heavily encrypted cloud service like Tresorit. Some companies may prefer to preserve copies of certain high-value materials on a backup tape kept in a fireproof safe or safe deposit box. Whichever approach you choose will give you more confidence in abandoning most of your paper records.

Organizing Your Files

When attorneys review a large document dump, they devote a lot of time and energy to grouping documents into different categories. They do this with their client’s own documents, but also with any documents received from other participants in the legal project (your partner in a deal or your adversary in a dispute).

The first step is to separate out materials that are relevant to the project from those that are not relevant. Typically, a very small number of documents will actually be relevant. The rest is just noise: personal correspondence, junk mail, or other off-topic materials.

Identifying relevant documents can take your attorneys days or even weeks. It is a tedious, slow process. The best thing you can do to minimize the cost of this step is to keep your business files organized by client, vendor, and project, filing things in the right place at the time they are created.

Email systems are the simplest way to do this. Whenever an email related to a topic is sent or received, it should be placed in the appropriate subfolder (or forwarded to an employee in charge of this recordkeeping function). The more subfolders you have, the better, but you will need to find the balance that is appropriate for your company’s resources. At the simple end of the spectrum, you might have a folder for each company you deal with, one for personnel matters, one for customer complaints, and so on. If you are a larger company already drowning in documents, you may have subfolders not only for each customer and client, but also for individual orders or purchases.

An email-based filing system is not necessarily just for emails. You can attach important documents – spreadsheets, manuals, and financial records – to a blank email with a descriptive subject line and move them to the appropriate folder.

If you are interested in a more robust solution, there are document management systems that allow multiple employees not only to store files, but to share them, check them out for editing, and collaborate on multiple drafts or versions of documents. These programs also can be used to restrict access to sensitive information (personnel records, trade secrets) and to track which employees accessed which documents at what times. This sort of tracking information can be very valuable when trying to reconstruct the story of what happened on a particular project.

This brings up another useful tool that can save your attorneys time: timelines and roadmaps. When an attorney reviews documents, he or she is trying to make sense of them as a whole. A good document reviewer will keep notes about documents in a chronological outline that tells the story of who did what when. However, there is no reason you need to be an attorney to do this work. In fact, a businessperson with intimate knowledge of the topics at issue is in an even better position to tell the complete story. Therefore, whenever you provide documents to your attorney, you should also include some sort of summary document.

Before creating that summary – this is very important – make sure that you have your attorney formally authorize the creation of the summary by you and your staff. Further, you will want to label the summary “Confidential And Privileged, Attorney-Client Communication, Prepared At Request Of Counsel”. By having your attorney delegate this work to you, you are more likely to be able to prevent the work product from falling into the hands of the other side. (Typically, communications with your attorney and work product generated for or by the attorney will not have to be revealed to outsiders.)

The attorney will be able to build on that summary rather than starting from scratch. Further, having a good sense of the story before reviewing the documents will improve how well the attorney processes all of that information, leading to better results for you.

Of course, it is very important that any summary you create is as unbiased as possible. Hiding or spinning inconvenient details in your company’s favor can harm you in the long run. You should always trust your own attorneys with the complete truth of the situation.

Having a well-kept filing system will greatly reduce the amount of time your attorneys need to spend reviewing your business documents to find the relevant ones. Without a good system of organization, you might be required to provide your attorneys with every single email your employees sent or received over a period of several weeks, months, or even years. However, if everything is organized in a logical way, you might only need to send a folder containing a few hundred highly relevant documents so that your attorneys will not have to waste any time going through thousands of pages of junk to find what they need. Also, as I mentioned before, a good filing system will also help protect you from unknowingly making embarrassing or secret information public.

Managing Other People’s Documents

Up to this point, we have been talking about your own business’ documents. However, not all companies you deal with are going to be as organized as you are. What can you do to prevent a document dump from the other side that creates a mountain of costly work for your attorneys? There are a number of precautions you can take.

First of all, be sure that you are filing all relevant documents and emails you receive from outsiders (clients or customers, vendors, business partners, and even applicants for employment). Having these documents may make it less necessary for your attorneys to review documents received from the other side. Or, it can give them a good idea of the important individuals, issues, and timeframes so they can better focus their review to save time.

Second, you should take whatever steps you can to force the other side to bear the burden of organizing its own documents. In a business deal, you might come to an agreement like this early on in the negotiations. Also, for major contracts that will involve a lot of correspondence and documents, you should consider including contract terms that place limitations on the exchange of documents in the event a dispute arises.

Third, if all else fails, you should make sure that you hire an attorney with the know-how to manage any legal project that involves a large number of documents. Amazing advances have been made in the area of automated document review. There is relatively inexpensive software that can analyze large archives, cull duplicate files, find patterns and connections between documents, and even generate a timeline of events. These programs can perform the work of a dozen attorneys in a matter of hours and, at times, will develop powerful insights that no human could.

Securing Sensitive Information

Most businesses have intellectual property, client lists, strategic plans, or other secrets that they want to protect. Failure to do so can increase your legal expenses in two important ways. First, it can lead to costly lawsuits over theft of information or unfair trade practices. Second, it can add another layer of complication to deals or disputes of any kind where you are exchanging information with an outsider. Here are some rules of thumb that will help you to shore up valuable and sensitive data about your business:

• Know What You Have. You cannot protect it if you do not know it exists. It is important to perform a baseline review to get your head around the information that you hope to protect.
• Label Everything In A Consistent Way. All sensitive documents and other materials should be marked “Confidential” in bold capital letters, on every page. For truly top secret information, use the phrase “Highly Confidential” instead. Make sure all communications with your attorneys are marked “Confidential And Privileged, Attorney-Client Communication”. Finally, when you create non-disclosure agreements, make sure that documents are identified and protected based on whether they are “Confidential” or “Highly Confidential.” For instance, in a lawsuit, you may want to restrict access to “Highly Confidential” documents to the other side’s attorneys rather than allowing anyone at a rival company to see your top secret files.
• Restrict And Monitor Access. Make sure only people you trust can view the recipe for your company’s “secret sauce”. By tracking access to your most sensitive documents, you will be able to prove whether a departing employee obtained special knowledge from you rather than developing it independently. Many cases of corporate espionage are exposed based on these kinds of records.
• Use Non-Disclosure And Non-Compete Agreements. You can never bank on the loyalty of employees or business partners. NDAs and non-competes will help you to take action against anyone who tries to walk off with or expose your secrets.
• Have Clear Policies And Procedures In Place. You may understand the importance of secrecy, but you cannot assume that all your employees do. It is essential to educate them about the steps they should be taking to protect company secrets. This includes everything we have been talking about in this section: not saving corporate records on personal computers, labelling confidential information, and actually keeping that information confidential.
• Beware Of Metadata. When you create any type of email or document, the software will save certain hidden information about the file. This “metadata” includes information about when a document was created, who has viewed it, and even what revisions have been made to it. At times, metadata can be used against you by adversaries. To limit the potential damage, it is a good idea to have a company policy that all metadata be stripped from documents before they are circulated to outsiders. There are a couple of ways to accomplish this. One is to send documents in Pdf format, which does not preserve the metadata in the original file. Another is to use a program like Workshare Protect, which cleans metadata from Microsoft Office documents, making them safer to circulate.

Summing Up

This has been one of the longest sections in this guide, and for good reason. The bulk of what attorneys do involves dealing with client documents. By minimizing, digitizing, and organizing your business files, you will put yourself in a great position to limit attorney fees and get better results, faster.

Tips For More Effective Meetings

The person paying the bills should always be in the driver’s seat. It is you, the client, who should be dictating how meetings or conference calls with your attorneys run. This includes when and where they take place, who attends them, what is discussed, and how long they last. Here are some suggestions to help keep legal project meetings as productive as possible:

• Consider including ground rules regarding meetings when negotiating the terms of the engagement letter and billing guidelines. It is important to spell these things out at the outset so that your attorney is aware of your expectations.
• Brief, regular team meetings are a hallmark of project management systems like agile and Kaizen. They really can help make a project run more efficiently.
• For other special or emergency meetings, make sure that a meeting is actually necessary. Sometimes a short phone call or a couple of emails can accomplish more at less cost.
• Only invite essential people. Resist the impulse to include every attorney on the team in every meeting. And, if someone at the table or on the call has done what they were invited to do, you have every right to ask that person (politely) to leave the room or sign off.
• Give everyone a reasonable amount of time to prepare for the meeting.
• Circulate your agenda beforehand. You or your representative should draft the agenda. Enforce a rule that any attendee who wants to add to the agenda must submit a brief request beforehand.
• Have a time limit for each meeting and stick to it. You can even set a time limit for individual topics if there are several to be covered.
• Consider teleconferences and videoconferences instead of in-person meetings. In-person meetings should take place at the law firm rather than at your offices to save on the cost of attorney travel time. (Make clear, however, that you will not pay for catering or conference room rental fees.)
• If you will be discussing attorney work product – the draft of a contract or a court filing, for example – make sure your attorney sends you a copy of that document at least one business day before the meeting.
• Make sure your attorney or you are taking notes about what happened at the meeting, that they are labeled “Confidential And Privileged”, and that you receive a copy.
• If your attorney violates your rules, feel free to cancel the meeting. If he or she tries to bill you for time spent preparing for the cancelled meeting, you are within your rights to seek a write-down for those charges.

Some of these guidelines may seem harsh to you, but rigid structure and tough love are the best ways to set clear expectations for your attorneys and to make sure that they are met. Once your attorneys understand that there are consequences for disobeying your rules, they will probably fall into line.

Self-Help And Limited Representation

Up to this point, we have been talking about how to chip away at the list of tasks your attorney performs by taking control of your files, meeting agendas, and the structure of your legal projects. The common thread running through all of those tasks is that they have absolutely nothing to do with legal expertise. In fact, you and any employees you have are probably in a better position than your attorney is to do those things well. By forcing your attorney to focus on his or her core skills, you can avoid paying a king’s ransom for a glorified administrative assistant or file clerk.

This section takes that strategy a step further. In some cases, you can even take on responsibilities that you might think legitimately require a lawyer’s skills.

Let me emphasize that this is an area where you must tread carefully. If a legal project is complicated or involves a meaningful amount of money, then it is probably a good idea to leave the truly sophisticated work to the professionals. Skilled attorneys can help you to avoid certain pitfalls and to improve business outcomes. Also, an impartial, outside voice is helpful when you may be too close to or emotionally involved in the situation. Finally, hiring a professional allows you to focus on what you do best: running your own business.

However, there are plenty of situations where you could hire an attorney to assist you but don’t really need to do so. The first of these involves extremely low-value legal work. For example, there is no requirement that a contract has to be drafted by an attorney. If you hire a vendor to do some low-cost, low-risk work for your company, even a few hundred dollars of attorney time to review the services contract may be overkill. You are probably safe negotiating something like that on your own. Similarly, if you are setting up a very small side business, online services like LegalZoom and Rocket Matter may be the right choice for creating basic formation documents.

A similar strategy can work in situations where the contracts are very valuable to your business, but you find yourself using very similar ones again and again. Perhaps you are developing a new technology and you will be asking a dozen people to sign non-disclosure or non-compete agreements. Or maybe you will be licensing the same intellectual property to multiple partners. Or you might be in the business of providing one or two clearly-defined services (It consulting, auto repair). In these situations, it makes a lot of sense to invest in some professional advice at the outset. However, there is absolutely no reason you should be hiring an attorney to reinvent the wheel and draft a brand new version of the same contract from scratch every time the need arises.

What you need in these situations is an attorney to draft you a “form contract” or a “contract template”. Every time you need to use it, you simply fill in the blanks yourself with basic information like names, places, quantities, and deadlines. Form contracts can even include checkboxes so you can select different options to fit a variety of similar situations. Your attorney has already thought through the more complicated issues once, and there is no need to go back to him or her every time you use the same agreement with someone new. This is an underused strategy that can save a lot of negotiating time and attorney time.

Contract-drafting is the most common place for non-lawyers to take a do-it-yourself approach. However, there are certain situations where you do not even need an attorney to settle a dispute. This is a bit of a gray area, but state legislatures and bar associations are starting to warm to self-representation.

The main complication here arises when you have set up a business entity like a corporation or an Llc. Individuals do not need to hire attorneys to represent them in court cases. They are free to represent themselves, and there are all kinds of laws and rules that help them to protect their rights, even when they are up against an opponent who has hired a skilled attorney. However, the law treats business entities differently. This may sound strange but, even though an Llc or corporation is viewed as a separate person under the law, it cannot represent itself in court. And if you, a non-lawyer, try to represent your company in court, you may get into trouble for practicing law without a license.

There are a bunch of exceptions to this general rule. In many states, corporate officers can appear in court on behalf of their business if it is sued in small-claims court. Also, many state and federal agencies do not require you to hire an attorney for administrative hearings. This is common in the area of labor law, including workers compensation hearings and proceedings before the federal government’s National Labor Relations Board. This is an area where you need to exercise caution and consider the legality and risk of going it alone. However, in some situations, it may make more sense to represent your own company instead of hiring an expensive attorney.

A variation on this approach is known as “limited representation”. This is a cutting-edge strategy. Instead of your attorney representing you for every aspect of a project, your engagement letter carves out very specific tasks that your attorney will perform, leaving everything else to you. For example, you may decide it makes sense for your attorney to draft letters or briefs that you will file in small-claims court, with you handling all settlement negotiations and courtroom appearances on your own.

As with self-representation, the rules on limited representation vary from place to place. In some states, you will need to tell the court or the other side that an attorney is helping you. In other places this may not be required. In still other places, limited representation may not be permitted at all. Regardless, this is a strategy that can result in very significant cost savings. It is worth exploring in situations where your legal budget is extremely tight.

The final strategy I will leave you with is far less controversial than self-representation. As I have said again and again, a lot of lawyering is about common sense and does not really require a lot of specialized knowledge. There are plenty of non-lawyers (patent agents, realtors, and accountants, to name a few) who deal with legal concepts all the time. Whatever business you are in, it cannot hurt to keep yourself up to date on legal developments in your own industry. Trade associations, seminars, and industry publications can all be great resources for you.

Self-education on the laws affecting your business can have so many benefits. You will be able to ask your attorney better questions, understand his or her answers better, and minimize the amount of time your attorney spends educating you about the law. Also, knowing the law ahead of time can help you to prevent problems instead of reacting to them once they have already developed. If you don’t know where to begin, a good business lawyer in your industry should be happy to point you to worthwhile resources.

Part 5: Managing Contract Negotiations

How BigCo Manages Contracts And Deals

Every year, BigCo enters into hundreds of contracts on a range of topics. Even with all that variety, the contracts fall into two main categories: low-value, high-frequency contracts that change little from deal to deal, and unique, one-off contracts, each tailored to a specific, major deal. BigCo takes a different approach to cost savings in each case.

The first category includes contracts involving employees, purchases of raw materials, and sales to wholesalers. They represent the bulk of the contracts that BigCo negotiates. After doing so many of these deals, BigCo knows exactly what contract terms almost never change. Even for the few contract terms that do vary from deal to deal, BigCo knows what the three or four most common variations are for each one.

Armed with this information, BigCo has hired software engineers to work with its legal staff and develop programs that automate the creation of its most frequently used contracts. For instance, when a salesperson at BigCo needs to negotiate a contract with a wholesaler, he or she doesn’t even need to talk to anyone on the legal staff. Instead, the person just enters all the relevant information into a questionnaire: the name of the buyer, the sales price, the length of the contract, and the penalties for backing out of the deal, among other things. Based on that information, the program generates a complete, perfect contract, and the deal gets done without a lawyer drafting anything from scratch.

Contract automation is an amazing, game-changing development that frees up hundreds of hours of attorney time for BigCo. However, automation doesn’t make sense for unique, important deals that only come around from time to time. Examples in this second category might include a major real estate deal for the new corporate headquarters, a public stock offering, or a strategic partnership with another large company. In these cases, the negotiations and issues are far too complicated to reduce them down to a list of questions. And, regardless, BigCo would not be willing to trust a major deal to a non-lawyer filling out a questionnaire.

That doesn’t mean that BigCo hasn’t found ways to reduce the costs of drafting these special contracts. However, the savings in this area have more to do with project management than with technology. BigCo negotiates major deals in stages. First, the company and its deal partner talk in broad terms about what they want the contract to look like. They may even start sharing some basic information with each other early on – just enough to make sure it is sensible to move forward.

As time moves on, the deal terms get more specific and exchange of information gets more involved. However, the attorneys do not draft a formal, detailed contract until the very end of these negotiations. By proceeding in this methodical way, BigCo saves a great deal of attorney time. There is less drafting, reviewing, and redrafting of contract terms, and the parties are able to figure out very early on whether to invest the time and money to go the distance and come to a final agreement.

In my experience, it is rare for small businesses to use either contract automation or term sheets. This is a shame, because many of them could benefit from these strategies in much the same way that BigCo does. In this part of the book, I will show you how easy it is to start using document automation and term sheets to save on attorney fees for contracts. As added benefits, these strategies will help your business to get deals done faster with less effort, and you will start to develop a consistent approach to all of your business dealings.

The Wrong Way To Draft Contracts

If you have ever had an attorney draft a contract for you, there is a good chance that the process went something like this:

• Over the phone or email, you provide some background information about the deal, answer a few questions, and then maybe send along some relevant emails or documents. Your attorney isn’t sure how long the negotiations will take, but this is enough information to get started.
• Your attorney locates a similar contract prepared for a different client. It isn’t exactly what you need but, after a lot of changes, your attorney completes a first draft and sends you a copy.
• You are surprised. You did not expect the contract to be 20 pages long. The first few pages set out the core terms of the deal and seem fine to you. However, the rest of it raises questions you had never even considered: What happens if one party is dissatisfied with the other? What are the payment terms? How do disputes get resolved?
• After another phone call with you and a few more revisions, your attorney sends a draft to the other side. A week later, you get a response, and the other side wants a lot of changes. In fact, the new draft looks like a completely different contract.
• Things go back and forth like this several times. With each round, your attorney spends an hour or two reviewing the other side’s changes, conferring with you, conferring with them, and proposing new changes. It takes a couple of weeks.

Finally, everyone signs off on the deal. However, you cannot help but feel that a lot of time, effort, and money was wasted to get it done. And you are right about that.

The problem with this approach is that it puts the cart before the horse. It is crazy to go through the time and trouble of drafting a 20-page agreement before you have a solid idea of what both sides are willing to agree to. And every time someone circulates a new version of that 20-page agreement, the problem gets even worse.

In the next section, I will show you a saner approach to getting a deal done. By ironing out as many issues as possible before anyone drafts a formal contract, you can cut costs dramatically.

The Right Way To Draft Contracts

Most of the inefficiency described in the last section was avoidable. Instead of attorneys reviewing and revising a 20-page agreement half a dozen times, they could have started out with a 2-page term sheet and gone back and forth several times with that much shorter, simpler document before drafting the final contract.

The main problem with the typical approach to contract drafting is that it gets the entire process backwards. You should iron out as many details as possible first and draft the final agreement last. There may still be a bit of back and forth at the end, but you can limit it significantly.

To manage the process, we are going to use scaled-down versions of the same tools that large companies and law firms use to keep track of enormous deals with hundreds or thousands of moving parts. To copy exactly what they do would be overkill, but anyone can benefit from simplified versions of these strategies:

• Knowing How The Process Works. It is very difficult to manage your attorneys and tell them exactly what you want out of a deal when you have limited experience negotiating contracts. I will walk you through how the process should work and what deal points you should be thinking about before attorneys get involved.
• Working With A Term Sheet. A term sheet is a simple summary of the major deal points. It should only be a couple of pages long, even if the final contract may be dozens of pages long. The term sheet is a fantastic tool that will help you to cut down on the time spent negotiating and revising the terms of the deal.
• Managing A Contract Budget. As I have said before, the engagement letter should require your attorney to maintain a simple project budget. I will show you a simple but well-designed budget for a contract negotiation. (In the next part of this guide, I will show you a slightly different budget format to use for dispute resolution projects.)

Two worksheets go with this part of the book. They will help you to put these contract-drafting strategies to use. Worksheet #5 is a contract budget template that you can use as a model for the one you will have your attorney prepare. Worksheet #6 is a questionnaire that covers obvious and not-so-obvious deal points. your responses will help your attorney to put together a comprehensive term sheet and will ensure that you are both on the same page about what your business wants out of the deal.

The Stages Of A Contract Negotiation

Contract negotiations do not tend to follow a straight-line progression from Stage “A” to Stage “B” to Stage “C”. Negotiations will continue throughout the process, starting with “big picture” ideas and gradually focusing on very specific deal points and even individual words. At the same time, the parties usually will be exchanging information with each other. As negotiations progress, discussion of “big picture” issues will give way to a narrower and narrower focus on the details. In terms of the agreement itself, you will start out working with a brief term sheet summarizing all the major deal points. After the parties have agreed to a term sheet, it will serve as a framework for the final, formal contract that the parties will sign.

Drafting a contract usually involves negotiations, the exchange of information between the parties, and the creation of various deal documents, including the final contract itself. Here is a breakdown of the key tasks:

• Due Diligence. During due diligence, the parties share and analyze information. If the contract is a simple one, there may be very little of this. It may only involve reviewing some product specifications or examples of work a service provider has done for other customers. However, if the parties are planning a long-term deal involving a lot of effort and money, there could be a mountain of financial data and other paperwork to review. At the extreme end – a merger, acquisition, or investment – due diligence can easily make up the bulk of the work involved.
• Negotiation. Throughout the process, the parties will be negotiating about everything from the amount of due diligence involved to specific language in the final contract. Sometimes, business people will do a lot of the heavy lifting here, but it is also common for the lawyers to act as intermediaries, especially if the negotiations grow tense.
• The Term Sheet. During early negotiations of all but the most basic contracts, it makes sense for the parties to exchange a short list of deal points as each party’s starting point for negotiations. This is the key to efficient contract drafting and we will cover it in more detail below.
• The Memorandum Of Understanding. An Mou is typical in deals where the parties are going to have to conduct a lot of expensive due diligence, or will incur other significant costs before the final contract is signed. This is less common in simpler negotiations. Think of it as a document that is a bit more involved than a term sheet but is not quite a full-blown contract.
• The Final Contract. Sometimes one side wants to be in charge of drafting the agreement, either because the company uses a standard form in its business, or because it sees some advantage in drafting the document its own way. However, even if you anticipate that the other party will take the first crack at the contract, there can still be a lot of back-and-forth as the parties come to terms. It is still best to try to encourage the other side to start with a term sheet in order to save time and money.
• Enforcement. Once the contract has been signed, you still may need lawyers to help make sure that the other side holds up its end of the bargain. If things break down completely, this stage may turn into a dispute requiring litigation. However, the parties may exchange a lot of “lawyer letters” and other communications in an attempt to salvage the deal before it goes to court.
• Expenses. This is not a stage of contract negotiations, but significant expenses can arise throughout a contract negotiations, and it is important to make sure your attorney is budgeting for them. Categories of expenses can range from transporting and digitizing documents for due diligence, hiring outside experts to perform feasibility studies, covering travel costs for face-to-face negotiations, using notaries, and paying printing costs for final documents.

Now that you have this overview of the process, the budget described in the next section and the worksheet that follows should make better sense because they track closely the tasks described above.

Using A Budget During Contract Negotiations

A good attorney should know how to prepare a contract budget for you. Worksheet #5 will give you a better sense of what information that budget should contain. If your attorney’s budget is lacking in detail or omits certain line items, then you will know what changes to ask for.

The budget format in Worksheet #5 breaks down the work by function and seeks low and high cost estimates for each one. After you fill in your attorney’s budgeting numbers, Worksheet #5 will also perform additional calculations to help you test how reasonable your attorney’s numbers are.

For very complicated deals, an attorney probably would use a more detailed format than this one. For instance, the budget might break down the project by individual timekeeper and rate or provide a wider variety of estimates. However, to get buy-in from your attorney, it makes sense to use a more stripped down budget that will not require much time to create and maintain.

A budget is a tool. It is useful throughout the project, not only at the beginning. To get the most out of your budget, it is important to require billing statements throughout a costly project rather than waiting until the very end. By tracking spending throughout the project and comparing actual expenses to the budget, there will be fewer surprises and you will have an opportunity to anticipate budget issues and plan for paying your attorney.

Worksheet #5: Tracking Contract-Drafting Expenses

Using A Term Sheet During Contract Negotiations

Working with an attorney to draft a contract can present a conundrum for a non-lawyer. On one hand, you need to tell the attorney what you want the contract to say before he or she can draft it. On the other hand, you’re not a lawyer and probably do not have a complete picture of all the legal issues that will need to be addressed in the contract.

As we saw, this can lead to a very inefficient, repetitive process. The attorney gets incomplete marching orders from you, drafts a contract that isn’t exactly what you or the other side wants, and then you go back and forth for days or even weeks revising a lengthy, complicated document.

The best way to short-circuit this process is to start out with a term sheet. When hiring an attorney to help your company with a transaction, you should insist that a term sheet be prepared and negotiated in cooperation with the other side before the final contract gets drafted. By taking this approach, you can avoid a lot of time-consuming and expensive reading, negotiating, and revising.

Worksheet #6 is a questionnaire designed to help non-lawyers anticipate contract-drafting issues, including many of the less obvious ones. These are issues that your attorney is less likely to bring up early on in the process. For instance, it is relatively rare for an attorney to ask a new client up front about dispute resolution clauses or indemnification. Instead, the attorney will just drop in some generic language that he or she always uses in the hopes that everyone will just accept it and focus on the main deal points instead.

Worksheet #6 will help you to guide your attorney in preparing a detailed term sheet that goes beyond the basic points of the business deal to include important issues that often lurk in the many pages of “boilerplate” language that appear at the end of contracts. By including in the term sheet issues like interest rates, payment terms, and where and how disputes will be resolved, you can get in front of potentially contentious issues and limit the amount of costly revisions later on in the process.

For the best results, it is a good idea to approach this worksheet in much the same way as the “parade of horribles” exercise you used for Worksheet #1 to get a handle on the overall legal risk your business faces. Drafting a good contract is all about identifying potential problems and working out in advance how they will be resolved. To help you think through all of these issues, I have included a brief explanation of each one.

There are an infinite variety of deals. Many of the issues raised in Worksheet #6 will not apply to your situation. Also, it is possible that there are unique issues that will come up during negotiations but do not appear in this worksheet. However, this list strikes a good balance between completeness and manageability.

Worksheet #6: Identifying Key Contract Issues

Contract Templates And Automation

Up to this point, we have focused a lot on drafting contracts designed for specific, one-off deals. However, it is also common for a business to find itself negotiating the same type of deal again and again. When you are doing the same thing dozens or even hundreds of times in a row, there is probably an opportunity to make huge efficiency gains and save a considerable amount on attorney fees. This section will cover two strategies for managing these repetitive tasks: contract templates and automated contract assembly.

Let’s start with contract templates. We touched on this topic earlier when discussing the sorts of tasks that do not necessarily require the assistance of an attorney. You do not need to be a lawyer to draft a contract. Businesspeople of all kinds prepare their own contracts every day.

In many cases, they will be using the same exact contract repeatedly for different transactions. This is common when a business frequently purchases or sells a particular product or service, when it uses a lot of licenses or non-disclosure agreements, or when it hires a number of employees or contractors. In any of these situations, it is helpful for the business to develop a standard form agreement or template. A contract template contains a lot of language that never changes, and a series of fill-in-the-blank sections for information that is unique to each transaction, for instance: names, prices, quantities, and scope-of-work descriptions. Templates save time and lend consistency to your business dealings.

In the same way that you can draft a one-off contract without hiring an attorney, you can draft a contract template. However, if you are using that template frequently, then it is probably very important to your business operations. For something that important, it makes sense to hire an attorney to prepare the contract template for you rather than doing it yourself. Even if that template costs you a few thousand dollars in attorney time, you can divide that amount by the number of times you and your employees actually use it to generate final contracts. On a per-contract basis, the cost of a heavily-used template can be extremely low. Further, by hiring an attorney to create a quality template, you will limit the business risk that comes with entering into a number of contracts on less-than-ideal terms.

Many attorneys will be more than happy to prepare form contracts for you to use in your business. However, some may resist your request. They may argue that every contract is unique and that each one should be drafted from scratch. In some situations, they may be right. There are certain complicated deals that really do need to be built from the ground up. However, there are many, many situations where the variation from deal to deal will be relatively minor. In these cases, a few fill-in-the-blank sections will allow you and your employees to fill in a template yourselves with the specifics of each deal.

If you get pushback when you ask your attorney to prepare a form agreement, do not back down so easily. Ask him or her to identify the contract sections that are likely to change and in what ways. Use your own business knowledge of these transactions to test your attorney’s assumptions. Deciding whether a contract template is a suitable solution is often more of a common-sense business problem than a legal problem. You should not just assume that your attorney knows best on this issue. Make sure he or she has a valid basis.

This brings us to a second, slightly more advanced strategy for managing repetitive contracts: document automation. There certainly are situations where a simple contract template will not cut it. For instance, imagine a company that enters into about thirty licensing agreements each year. There is a lot of variation. Perhaps a dozen contract terms can differ from deal to deal. In that situation, a fill-in-the-blanks contract template would contain a lot of blank spaces and very little standard contract language. Filling in the form would be no different than drafting each agreement from scratch.

However, if that company digs a bit deeper into its licensing agreements, it will probably see some patterns emerge. There may be a dozen contract sections that change from deal to deal, but perhaps there are only a few variations for each one. Take a dispute resolution clause. Maybe some of the company’s deal partners insist on an arbitration clause. Others may prefer mediation. And one or two may require that all disputes be resolved through formal court proceedings. Across all of these deals and all of these clauses that differ, there may be 50 or so total snippets of language that can be mixed and matched to create just about any variation the company will need.

This is a very common scenario, and technology has given us a fantastic tool to deal with it: “automated contract assembly”. Currently, there are at least a dozen vendors out there who offer software packages allowing attorneys or their clients to construct detailed questionnaires that cover all of the variations in each contract the companies commonly use. With one of these questionnaires, a non-lawyer can type in some information, check a few check boxes, press a button, and have a complete contract tailored to the deal in a matter of seconds.

In some cases, it is possible to purchase ready-made questionnaires. Alternatively, a company may conduct a review of similar contracts it has drafted in the past, identify the most common and best provisions, and have a custom questionnaire built from scratch. The process requires some technical ability, but a growing number attorneys out there can do this sort of work for your business.

The takeaway from this section is that you do not need to reinvent the wheel every time you hire an attorney to draft a contract for your business. Contract templates and automated contract assembly are two strategies that allow you to pay for an attorney’s expertise at the outset, and then recycle that valuable work product again and again. Every year or so, you should still be hiring your attorney to review and update your company’s contract templates but, even so, this approach will cost you a fraction of what it would to have your attorney draft dozens of individual contracts from scratch.

Part 6: Managing Dispute Resolution

“BigCo” Goes To War

For such a busy operation with offices all over the world, BigCo does not end up in court as often as you might think. It’s not that the company doesn’t get into disputes of all kinds. It most certainly does.

However, BigCo knows that most of these disputes do not belong in court. It is BigCo’s policy to negotiate for alternative dispute resolution clauses in as many contracts as possible. And, even when facing a court case, the company tries to work with the other side to find other, less expensive approaches to resolving the dispute. The possible alternatives include early settlement, early case assessment, mediation, and non-binding arbitration.

BigCo rarely sees a dispute through to the bitter end. The company decides very early on whether it has a good chance of winning and how much it would cost to do so. Over time, its cost-benefit assessments have become more and more accurate. It settles, and usually for the correct amount, whenever it can.

However, sometimes either BigCo or its adversary is unwilling to negotiate and the case moves forward to arbitration or trial. This is where BigCo’s document management policies really shine through. All of its archives are digitized, searchable, and well organized. Also, any confidential materials are clearly labelled and easy to separate out from the rest of the relevant documents. This makes reviewing documents and sharing them with the other side easy, efficient, and cost-effective.

Another advantage BigCo has in this area is the many attorneys on its staff with courtroom experience. They know exactly what is involved in a dispute, where the cost pressures will be the greatest, and how to craft a winning strategy and stick to it. They know whether it is worth fighting on a particular issue and how to avoid angering the judge or arbitrator making the important decisions in the case. Most important, these staff attorneys know exactly what is at stake for BigCo from a business standpoint. With all of this in-house legal expertise, BigCo never gets bullied by its outside attorneys into accepting a costly or ill-advised legal strategy. The company knows what it wants and acts decisively to achieve its objectives.

Finally, BigCo requires all outside attorneys to prepare and maintain a detailed litigation budget for every case. The budget has a line item for each stage and for each attorney and paralegal billing time. At the beginning of the case, the attorneys provide low and high estimates for the cost of each line item. Every few weeks, BigCo receives an update as to whether or not the budget remains on track. If a task is over-budget or moving in that direction, BigCo explores the reasons why. If the law firm has a good explanation, the company may approve an increase in the budget. If not, the company negotiates a write-down on its next billing statement. This process only takes about an hour or two each month, and that is time well spent.

Several of these dispute-management strategies also work well for growing businesses that do not yet have BigCo’s resources. We have covered some of them in previous sections, including: choosing the right attorneys, taking control of overall strategy, and maintaining a good records-management system. In this part of the guide, the focus is on two additional strategies: understanding how litigation works so you can make more informed decisions in consultation with your attorney, and using a budget to manage litigation expenses.

The Stages Of A Legal Dispute

When your business faces its first major lawsuit, it is hard to know what to expect. You have little or no context for figuring out how long it will take to resolve, how much it will cost, or what strategy is best for achieving your business goals.

Usually, a business owner without much experience in lawsuits will rely very heavily on his or her attorney to navigate these issues. Some attorneys may do a very good job educating the business client and charting an efficient strategy for resolving the case. However, as you have seen, this is not always what happens. An attorney has a strong incentive to leave no stone unturned and often very little incentive to control costs. He or she may not be an effective project manager or may be reluctant to spend too much time walking the client through the boring legal details of the case.

To ensure you make informed decisions and prevent overworking the case, it is important to educate yourself about what actually happens in a lawsuit. The stages of a business dispute are relatively predictable:

• Gathering Information. At the start of any new matter, your attorney will need to get up to speed on the relevant people, documents, and events. How long this takes will depend on the complexity of the legal issues, how organized your business data is, and whether or not your attorney is already familiar with your company and its procedures.
• Settlement Negotiations. Once your attorney has gotten up to speed, the attorneys for the parties will discuss the possibility of settling the dispute before it gets to court. Settlement talks continue throughout the process, even if the dispute ultimately goes to trial.
• Alternative Dispute Resolution. Many courts require that the parties attempt mediation, arbitration, or some other form of streamlined, inexpensive dispute resolution. There are a lot of different options here, and the attorney preparing the budget should consider them. Often, if the dispute involves a contract, the parties have already agreed to use one of these alternatives to avoid a costly court battle. Even so, the proceedings before a mediator or arbitrator will likely be similar to a court case, though somewhat less formal.
• Motion To Dismiss. If the dispute does go to court, a party may argue early on that the case does not belong there. In these situations, the party will file a “motion” with the judge explaining why the case should be dismissed. Some of these motions are simple affairs, others can be very labor-intensive. The attorney’s budget will give you an idea of his or her approach on this issue and will give you an opportunity to ask questions and test the strategy.
• Discovery. Discovery is the exchange of information between the parties to a lawsuit. It involves the parties requesting, exchanging, and reviewing documents. It also involves preparing for, taking, and defending depositions, which are formal interviews of key individuals. In complex cases, discovery can be the most time-consuming stage of the process.
• Expert Witnesses. In a case that involves any sort of technology or specialized knowledge, it is possible that you will need to hire an outside expert or experts. Working with experts is another part of the discovery process. Like fact discovery, it can be expensive and it can take up a lot of time.
• Summary Judgment. After discovery concludes, one or both parties may argue that the case can be resolved without going to trial. The court filings for a summary judgment motion can be an enormous expense. And arguments in front of the judge can amount to a mini-trial of the entire case. You cannot control what the other side does, but you and your attorney will need to do a cost-benefit analysis to decide whether or not it is worth going down this road yourselves.
• Trial Preparation. In the weeks leading up to trial there will be a flurry of activity as your attorneys prepare to go to war for you. It is important that you do not under-budget for trial prep, because cutting corners here can impact the outcome significantly.
• Trial. The budget should include an estimate of how many days a trial is likely to take and how many attorneys and support staff are likely to be involved.
• Appeals. One party and sometimes all parties will be unhappy with the result of the trial. The dissatisfied parties may appeal the outcome to a higher judicial authority. It is hard to estimate the cost of appeals until the trial is over, but it is important to keep in mind that the work and the expenses do not necessarily end when the trial does.
• Enforcement. Let’s say you sue someone, win, and survive the appeals process. Even then, your attorney’s work may not be done. If your adversary is facing financial difficulties, tries to hide money, or is located in a foreign country, additional effort may be necessary to recover the money that you are owed. The best time to think about this issue is before you even start the lawsuit. If you know there is very little chance that you will be able to recover money you are owed, then that may lead to you to pursue a different strategy or abandon the lawsuit altogether. Also, there are actions you can take to surprise your adversary and freeze assets until the case is resolved.

Worksheet #7: Identifying Key Issues In Your Dispute

Using A Budget During Resolution Of A Dispute

Budgeting is a key cost-control strategy when you are involved in a legal dispute. If your attorney does not create and maintain a budget, it becomes very difficult to hold him or her accountable for cost overruns. The budget also serves as a basic scheduling tool, giving everyone a sense of what time periods will involve a lot of activity and when the lulls are likely to be. This second point is particularly important in a dispute. Unlike a contract negotiation, a lawsuit progresses in stages that tend to occur in a set order. You will know exactly how much each stage has cost you when move on to the next stage.

Although there are differences between a deal and a dispute, you can approach budgeting in much the same way in either situation. A litigation budget should be updated periodically by the attorney who is supervising the work. At times, the cost estimates or timeframes may change as new information or other developments arise. Although you cannot expect your attorneys to predict the future, you can expect that they are experienced enough to have a ballpark idea of the amount of time and effort it will take to accomplish your legal objectives. A budget may change over time, but it should never double or triple without there being a very good reason. If something like that happens, then you have every right to push for explanations, improved efficiency, write-downs on bills, or changes in how the matter is being handled.

Worksheet #8: Tracking Dispute Resolution Expenses

Part 7: Assessing Attorney Performance

“BigCo” Keeps Score

Throughout this guide, we have seen that BigCo spends a lot of time looking back into the past. It mines data on old deals to figure out how it will structure new ones. It looks at the sorts of disputes it has gotten into with an eye to preventing them or minimizing their costs going forward. BigCo puts just as much energy into looking back at how much its attorneys charge and how well they perform.

This work starts with attorney billing statements. As I mentioned earlier, BigCo uses a complicated system called task-based billing. This allows the company to figure out how each individual attorney spends his or her time, which ones are the most and least efficient at what tasks, and where time was spent wisely or unwisely.

BigCo uses this information to push back on excessive attorney fees. One staff attorney at the company is responsible for reviewing bills and negotiating write-downs with law firms. He makes sure that the firms are complying with the terms set out in engagement letters and in BigCo’s billing guidelines. He also tracks actual billables against project budgets to identify potential cost overruns before they happen.

BigCo also uses billing information to measure performance and to decide which firms to hire in the future and for what projects. One firm may be particularly effective at resolving labor disputes. Another may be very good at negotiating equipment leases or licensing agreements. Armed with that knowledge, BigCo can send work to the right place, it can have discussions with underperforming firms, and it can stop working with the ones who do not improve over time.

Your company does not yet need to hire a full-time staff member to review legal billing statements, make sure billing guidelines are followed, and evaluate how different law firms perform. However, it is important for you to get comfortable with some basic techniques that will help you to make sense of your legal bills, realize when you are being overcharged, and decide whether you want to keep working with a particular attorney in the future.

This final part of the book will give you the tools you need to tell fair charges from unfair ones and effective attorneys from ineffective ones.

Reviewing Attorney Billing Statements

As I said at the beginning of this guide, disputing your attorney’s bill is not a true cost-control strategy. It is far better to have proper policies and procedures in place from the beginning so that you can try to prevent the bills from becoming inflated in the first place. However, as someone who has reviewed thousands of pages of attorney billing statements, I can tell you that billing is not the legal profession’s strong suit. No matter how efficiently you manage your attorneys or how strict your billing guidelines, you need to review your legal bills very carefully.

The advice in this section has a lot in common with the earlier discussion of billing guidelines. When you first hire an attorney, it is important to make clear your expectations for how the attorney will keep track of time, how detailed billing statements need to be, and how frequently they ought to be provided to you.

When you receive a billing statement from your attorney, here is how I suggest you approach reviewing it:

• Even if you have agreed to allow your attorney to bill on a monthly or quarterly basis, you should require the initial bill after only a week or two of work. This is really a trial run to ensure that you are not going to have any problems with compliance going forward. If the attorney fails to or refuses to follow directions, then it is probably still early enough to change attorneys without it causing too many problems.
• Try to review all legal bills within a day or two of receiving them. You want to address any concerns while the information is still fresh in everyone’s minds. The longer you wait to contest the bill, the harder it will be for you to win write-downs.
• Before you dive into the details of the bill, briefly review your engagement letter and billing guidelines. The deeper you get into a project, the harder it will be to remember the dollar limits you placed on travel expenses or the maximum number of hours your attorney is permitted to bill on any given day.
• Also keep handy the most up-to-date version of the budget your attorney prepared. If this isn’t the first bill you have received for the project, add up the total charges so far and compare it to your attorney’s budget estimate. Depending on how far along the work is, you will have a general idea of whether the project is on track. For instance, if you are only halfway through the discovery phase of a lawsuit and have already burned through more than half of the estimated total cost, then it will be nearly impossible to stay under budget. In that case, it is time to ask for an explanation and, possibly, a significant discount on your latest bill. Now is also the time to discuss any adjustments that need to be made to the budget or your attorney’s approach to the project.
• Now that you have all of the facts and figures at the top of your mind, you are ready to review the latest bill in detail. First, focus on each entry for attorney time. Has your attorney followed the rules that you both agreed to? Is time tracked in fractions of an hour, or is everything rounded to the nearest hour? Are the descriptions of work performed detailed and broken down by day and by individual timekeeper? Are all participants in meetings and conference calls identified by name? Did your attorney bill time for a task that you expressly told him or her not to do? And, remember, under no circumstances should the attorney bill you for time spent preparing the engagement letter or billing statements.
• If the work descriptions reference legal research, memos, emails, or other written work product, you should make sure that you actually received a copy of those documents. If you have not, then ask to see all of them before paying the bill. Compare the quality and usefulness of those documents to the amount of time and money spent on them. If there seems to be a lot of wasteful busy-work involved, then you should add that to your list of concerns to be raised with your attorney.
• Some problems with the bill may be a bit tougher to spot. Has the team of attorneys working on the project expanded without your approval? Are the hourly rates listed in the billing statement the same ones listed in the engagement letter? If any of the rates are higher and you did not approve those increases, then the bill needs to be revised. Also, keep in mind that it is very rare for an attorney to bill for every single minute at the office. Lunch breaks, phone calls and all manner of interruptions take up a lot of time. An attorney billing you for 12 hours of work in a single day was probably working an 18-hour day. That does not leave much room for commuting or for sleep. If you see that an attorney is pulling a lot of 12-hour days or 80-hour weeks, then that is a red flag and you should ask for an explanation.
• Don’t just rely on billing guidelines. Trust your intuition. Does your gut tell you that a particular task should have taken far less time than it did? Ask yourself what your attorneys have accomplished during this billing cycle. See whether there are any low-value tasks in the billing descriptions that you or your own staff could be doing at a lower cost. This step is the key to proactive legal project management. If you see ways to make the project run more efficiently, then you should raise that with your attorney.
• Take a similar approach when it comes to disbursements for expenses. Are there any items being charged as expenses that are prohibited by your billing guidelines? Has the attorney provided supporting documentation (receipts, invoices) for all expenses? Are there charges that you may not be able to avoid paying this time around but do not want to pay for in the future?
• It is a good idea to take down some notes to keep track of any issues you have with the billing statement.
• The next step is to contact your attorney with any questions you have. At this early stage, it is a good idea to present questions rather than make accusations. Give your attorney an opportunity to explain. Remember, you are hoping to build a long-term relationship and there is no sense in setting an angry tone.
• Contact your attorney in whatever way you want to, but if you do it over the phone, it is still a good idea to send a follow-up email so that you have a written, timestamped record of your objections to the bill. This may seem like a lot of work, but what you are doing is creating a detailed record of the dispute. If you end up having to sue the attorney, you will save yourself an enormous amount of preparation time, and you will give yourself a better chance of winning.
• As you discuss each of your concerns, be specific about your objections and what billing guidelines have been violated. If there are problems with the format or level of detail provided, ask that the bill be revised and resubmitted. If you are seeking a write-down, be specific about the amounts you do not think you should have to pay.
• If your attorney agrees to revise the bill, note how long this takes. If the attorney has kept detailed time records, it should not take long. If, instead, the process takes a long time, this may suggest that he or she had to make great efforts to reconstruct how much time was spent doing what.

You may have a very easy time winning a significant write-down on a bloated bill. Many attorneys will knock 10% off the bill without argument, as a way to keep the client happy and avoid an uncomfortable conversation. Even If you are satisfied with that automatic write-down, you should still insist on having a conversation about what changes can be made to avoid future disagreements.

It may be that the attorney needs to change his or her approach. Or it may be that your company could be saving attorney time by doing things in a different way or taking on more responsibility than you have been. By taking this collaborative approach, rather than attacking the attorney, you have a better chance of working out lasting solutions that will make both parties happier.

However, sometimes you will not be able to persuade an attorney to adjust your bill. In that case, you should first ask yourself whether your own position is a reasonable one. This is one of those times for honest self-reflection. Ask the attorney why, specifically, he thinks you do not deserve a write-down. Listen to your attorney’s response with an open mind. If the attorney pinpoints causes for the cost overruns, then you ought to examine those. If there are things that you can do differently to lower costs in the future, then perhaps you should focus some energy on making those changes.

At times, a factor completely outside the control of you or your attorney is the cause of the cost overruns. Perhaps the other side in a contract negotiation is wasting a lot of time with excessive rounds of revisions, changes of course, or time-consuming demands. If so, then you and your attorney need to think about strategy going forward. Do you need to revise the budget to reflect the new reality? Do you need to think about changing or abandoning the deal?

In a dispute, it may be that you are up against a vicious competitor who is out to drive up your costs in the hope that you give up. Or maybe new facts have come out that change the complexion of the dispute. Finally, maybe the judge or arbitrator hearing the dispute is simply not seeing things in the same way that you do. Again, all of these issues may lead you and your attorney to change course in some way. Perhaps you need to budget more for the case going forward, or maybe lowering your settlement demands to resolve the dispute will save you money in the long-run.

If you have gone through this problem-solving process and still do not see eye-to-eye with your attorney about the fees being charged, then the next step is to seek formal resolution of the fee dispute.

Before taking action, think about timing. If you are early on in a project, and it is still possible to start over with a new attorney, then there is less risk in firing your current attorney and going after him or her for overcharging. However, if you are far along in the project, then you need to balance the risk of overpaying for future work against the risk that your attorney drops you as a client a few yards from the goal line.

In the event that you decide to sue your attorney, the first step is usually mandatory mediation. A mediator is a referee. He or she will remain impartial, listen to each side, and try to help work out an agreement about the amount you have to pay your attorney. This is a very effective process and it should not cost you anything. However, if the mediation is unsuccessful, then you will need to pursue a lawsuit or arbitration proceeding. How much energy and effort you should put into this process depends on how much money is at stake. This is the stage where all the documentation you have been keeping will make your life easier and increase the likelihood that the dispute is resolved in your favor.

A lot of non-lawyers feel too intimidated to question the amounts attorneys charge for their services. However, there is a lot of room for error in these billing statements. Attorneys tend to be busy people. Some do not put much effort into billing statements because they will not be compensated for preparing them. Some make honest mistakes: legal projects can get complicated and errors do find their way into bills from time to time. Some know full well that they have inadvertently overworked a project and submit the charges anyway, fully expecting that you will seek a write-down. And some do in fact pad their hours, hoping to defraud overly trusting clients.

Whatever the reason behind them, it does not take any legal expertise to uncover inefficient work, inconsistent billing statements, inadequate descriptions of work, and outright errors. It just takes a bit of time and common sense. If you are spending thousands of dollars on attorneys, a careful review of attorney billing statements is an investment that can pay meaningful dividends.

Measuring Value

Legal advice is expensive. And it is not like most other products and services. You can understand why an Aston Martin costs so much more than a Toyota. A $500 haircut may seem insanely expensive, but at least you can get your head around the difference in quality between that and a $10 buzz cut from the barber shop.

Legal services just seem different because there is almost infinite variety in costs and you are dealing with very uncertain outcomes. Does it make sense to hire an attorney that charges $500 per hour rather than $250 per hour? Well, it depends on the skill of the attorney, how efficient he or she is, how valuable the legal issue is for your business, how complex it is, and how uncertain the outcome is. That’s a lot of variables to deal with.

Let’s say you have a very simple issue: you caught an employee skimming thousands of dollars from your business checking account. You keep good records, know how much was taken, and the thief is in custody. This is a simple, slam-dunk case. You do not need the $500 attorney and, as long as most of the money you recover doesn’t go into your attorney’s pocket, you will probably be happy with the results.

For a more complicated case, the choice may not be so obvious. For instance, winning a multimillion-dollar patent dispute requires a lot of skill. A top-notch patent attorney may cost a small fortune, but he or she may very well add more value than cost. The more expensive attorney may get you better results, or he or she may be able to resolve the dispute early, without going to trial. In that case, he or she may even end up costing much less than a cheaper but less skilled attorney who spends months going through every stage of the litigation without settling.

Unfortunately, there is no sure-fire way to tell at the outset whether your attorney is going to do a great job and whether his or her hourly rate is justified. Early in the book, I walked you through a two-stage vetting process that will help you to make better choices when selecting attorneys to represent you. However, you will probably have to wait until the end of the project to determine whether you actually made a good choice. The next worksheet provides a simple calculator that you can use to get a better idea of attorney value after the fact.

Of course, it would be better if you could make this determination before you hire an attorney, but most legal projects are too unpredictable for that to be possible. However, assessing value after the project is over is still a very valuable tool:

• First, if it turns out your attorney overcharged you, then your value assessment will give you a lot of concrete information that you can use to negotiate a write-down in the fee. It is one thing to say that the bill was too high. It can be much more effective if you are able to say that expenses were 25% of total billables and that is outrageous, or that the senior attorney billed 20 hours and only delegated 5 hours of work to junior staff.
• Second, when you assess performance, it gives you an idea of whether you want to work with this same attorney again in the future. If someone does not provide great value, then you probably will not want to hire that person again or recommend him or her to someone else.
• Third, the assessment allows you to give concrete feedback to your attorney. Say your attorney performed well, but you think he or she could do even better next time. You can have a conference after the project and explain what can be improved. “I want you to delegate more work to Nancy next time”, or “In the future, I want you to use Skype rather than making long-distance phone calls to India.”
• Fourth, this information allows you to compare different attorneys over time. Once you have worked with multiple attorneys, you will be able to compare them on efficiency and results.
• Fifth, you can use this information to adjust your own billing guidelines. If you find that your attorney’s expenses were excessive, then maybe you want to impose more restrictions on travel, overnight mailings, or whatever it was that caused the overage. Further, if a new attorney pushes back on those billing guidelines in the future, then you will be able to explain that you have had this problem in the past and it is a legitimate concern for you.

The working relationship between you and your attorney should improve over time. You should be able to work out systems that are efficient and effective. Your attorney will get to know your business and your approach to decision-making. The same issues may come up repeatedly, meaning the attorney has past knowledge and work product to draw upon and will not need to reinvent the wheel every time.

When evaluating your attorneys after legal projects, it is important not to make the conversation all about what they can do better next time. Praise them if they did a great job. Discuss the possibility of offering success fees or other alternative billing arrangements in the future. Ask them if there are things that you can do in the future to make things run more smoothly. The more you approach these discussions in the spirit of collaboration, the more likely you will be able to build lasting relationships with great attorneys who know your business and achieve results for you.

Worksheet #9: Did Your Attorneys Earn Their Fees?

Conclusion

Controlling your legal expenses will be an ongoing process. As your business grows, you will encounter new challenges, as well as opportunities, that involve legal issues. This book is a tool that you can carry with you on that journey. Topics addressed here that may not seem relevant to your business right at this moment may become extremely important to you at some point down the line. And the nine worksheets that accompany this workbook will help to guide your thinking as your business needs change, as you hire new and different kinds of attorneys, as you review their bills, and as you manage and evaluate their performance over time.

Here are a few key takeaways to keep in mind until the next time you decide to pick up this workbook:

• Have confidence in your own business knowledge, common sense, and project management skills. Lawyers do not hold a monopoly in any of these areas.
• Take responsibility for managing your business information and for charting a strategic course that minimizes the legal risks your business faces. If you leave all the thinking and planning to your attorneys, I guarantee that you will end up overpaying for their services.
• Measure and track costs and compare them to budgets and business outcomes. With very little effort and some basic arithmetic, you really can determine whether your attorneys have earned their fees.
• Try to anticipate legal issues rather than reacting to them after they arise. In legal emergencies, it is natural to panic, act irrationally, and dive right into action without first taking the time to plan.
• When hiring an attorney, think about the long term. The longer you work with a trusted adviser, the better they will understand your business and the more efficiently and effectively they will be able to serve you.

My hope is that this guide has demystified the work that lawyers do, and the way in which healthy attorney-client relationships can work. Your dealings with attorneys will never be perfect. Mistakes will happen. Strategies may fail. You may end up paying for work that comes up short or ends up not being necessary. However, now that you are armed with the information in this guide, you are in a much better position to limit cost overages, achieve better business results, and hold your attorneys to appropriate standards of performance.