Managing and Reducing Your Business Legal Costs
When times are tough for your business, you need to start looking at costs anyway and how to cut unnecessary expenses. Today we discuss how to reduce legal spend.
I was in the position of both managing an in-house legal team and sending instructions to external lawyers. I therefore understand that it can often be quite tricky when it comes to managing your legal costs.
Individuals normally appoint lawyers based on recommendations or keep to the same trusted individuals. Businesses are more likely to shop around. Larger businesses may well have their own legal resources.
So, the question is - how can you reduce spending without compromising on work quality?
This is especially a concern if you tend to instruct external lawyers whom you now feel are too expensive.
1. Review your Current Invoices
How many times have you been quoted a figure which has been exceeded at the billing stage?
It is always a good idea to have a close look at your bills. Are you being charged for admin time and research without your knowledge? Whilst such charging might be implicit rather than agreed, it can often appear on your invoices. It is always sensible to check time spent on matters and make sure you are comfortable with what you see. You will recognise trends in the invoices which may be capable of being challenged.
2. Allocation of Work
An important consideration is who should do the work?
If you have a legal resource available within the business, make sure that it is used to its maximum ability. Have a decent set of contract templates to hand. Ensure that any legal resource isn’t simply a conduit sending instructions from the business to external advisers. Sometimes external lawyers will have to be instructed for reasons of expertise which is simply not available in house. If you are sending work outside, ensure that the correct level of expertise is handling it and that you are not paying over the odds.
If you are setting up a new company, there is no need to use expensive lawyers as there are plenty of formation agencies available.
However – remember that no external adviser will understand your business like an employee will.
3. Use Templates
Clearly it will save considerable time and expense if you can become familiar with contract areas and use templates for future legal work. A decent template can be used time and time again with the appropriate adjustments being made to reflect a different supplier/client or matter type.
4. Improve Awareness
If possible, allocate a legal budget and aim to stick to it. Obviously, something exceptional might crop up during the year but otherwise it makes sense. If you frequently use external lawyers, it might be an idea to include them in the discussions – if for no other reason than to stress that your external legal spend will be subject to limitations. It would also encourage transparency.
5. Change Advisers
Do not feel obliged to stay with the same lawyers. Change can sometimes be a good thing and new advisers will try to beat the charging rates of the previous advisers and will look at your business with fresh eyes. It might also be an idea to install or increase your own legal resource or appoint a consultant who can advise when and where need quickly and professionally.
6. Fee Processes
When working with external lawyers, try to agree either fixed or capped fees rather than being billed on an hourly basis. If you are charged hourly, try to secure a favourable rate. Ask to be kept informed on work in progress and be prepared to adjust instructions if possible. If you are a large client, it will be possible to agree ratchet fees where the charges become cheaper on a pro rata basis the more instructions you provide. Don't be afraid to haggle over the price.
Technology can be a great help when it comes to managing legal spend. The market has a wide and varied selection of differing options which might suit your needs.
8. Watch Those Bad Habits!
It can be very easy to revert into the old status quo especially if you are busy and send out instructions to external lawyers without thinking and certainly without first considering your alternatives. Take a moment and consider.
Is the work something that your in-house facility could do?
Have you got a template of a similar piece of work in a file somewhere?
Take time to consider if there is a cheaper alternative.
9. Self Service Will Save You Time and Money
How long does it normally take for instructions to be returned completed by external advisers? Firstly you need to prepare the instructions in a reasonable form to be understood. Secondly you choose your advisers and agree the fee. Thirdly you wait for the work to be done which of course is subject to the workload of the adviser you have instructed.
Our do it yourself service with a wide contract selection will not only introduce considerable costs savings but you can download the final version as soon as you wish to. Similarly, our bespoke services offer fees which cannot be bettered on the High Street and we pride ourselves on our speed of return.
It's easy to be lazy!
29th September 2020
Saving you time and money
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