The legal services market works on the same basis as any other one.
It is just less transparent for the clients.
How could you reduce your costs in such a context? What can you do about it?
You agree to pay legal services based on hourly fee.
It means that you cannot predict with certainty the cost of a case and that you are likely to be surprised in the end by the invoiced amount.
The reason why attorneys price their services on an hourly basis is, among other things, because it limits the financial risk (the customer bears the inefficiency risk) and because some lawyers lack the operational capability to compute the value of the services upfront.
The result is that you have no control on the final invoiced amount.
But, as many lawyers know, working on a fixed price basis is not that easy.
Because of this, the amounts invoiced by law firms remain mostly based on the hourly fee.
We recommend seeking legal services providers working on a fixed-price by default.
Many companies negotiate discounts on hourly fees.
But what is the point of discussing discounts on something you have no control about?
We recommend seeking providers offering demonstrable (i.e. factual) discounts.
Asking for fixed fee and then changing the scope
Asking for a fixed fee implies that you are satisfied with a fixed scope.
We sometimes see clients validating a scope, a price and a list of deliverables and then asking for much more.
The provider receiving this request may or may not charge you more for the service, but be sure that next time you ask for a quote, it will be higher due to a material contingency fee added to the basic price.
We recommend respecting the scope of any fixed-price intervention you request from a provider.
Urgency means that you are in need and this creates an asymmetry in the commercial negotiation position between you and the provider.
On the provider side, handling an urgent request means often reorganizing the agenda, delay other clients’ request and working under higher pressure.
This flexibility has a price.
We recommend you planning workload with your legal service provider so that he/she can make room for your request in the agenda.
Every year, November, December, May, June and July are pretty hectic. It is certain that you will pay a higher price during these periods.
Other peaks in workload can also be linked to some specific legal deadline.
For example, when the GDPR entered into force in May 2018, a big multinational asked one of its regular top-level law firms to review a simple Data Processing Agreement.
The law firm estimated the cost of the service at 20.000€, VAT excl..
The explanation was very straightforward: “Ourresources on GDPR are so stretched that we would have to ask one of our lawyers to do this job
during its sleeping time”.
We recommend asking for services proactively outside the abovementioned peak periods.
Way too often clients tend to order services from lawyers they know, or lawyers recommended by lawyers they know.
Knowing a lawyer is not in any way an indicator of its quality.
Ideally even within a selected legal matter, the most appropriate lawyer for the job might be
different from case to case.
The consequences on price can be dramatic. A lawyer will tend to avoid ditching any request because he/she would rather answer “I have a solution to your problem” and because, at the end of the day, he/she has to invoice clients.
When you retain the services of someone who is not a good match for your case, you will pay more because of the learning curve followed by the lawyer – and you will probably get a less optimal result.
We have the experience of a client who paid a lot to his lawyer in an energy law case and who got the following comment from the lawyer at the end of this case:
“Thank you, thanks to this case, I have learned so much
on energy law”.
Is this what the client is supposed to pay for?
We recommend making sure you always rely on the most appropriate lawyer every time,
on a case by case basis.
Are you interested to further discuss the above ?
Feel free to reach out, we are passionate about finding pragmatic and actionable solutions for complex issues in the legal domain!
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