April 18, 2019

Seven Questions to Ask Candidate Law Firms to Assess the “Billing Culture”

One huge aspect of shopping for legal services involves fee discussions.  It is common to gather hourly rate information and fee schedules from candidate and incumbent law firms.  Whether you are a claims professional, risk management, insurer employee, TPA rep or an in-house general counsel, you must make sound cost decisions when selecting outside counsel for your legal needs.

A simple review of hourly rate or fee schedule may not tell you all you need to know, though, in managing litigation, controlling costs or assessing a good economic “fit” between yourself and a law firm.  What hourly rates and fee schedules will never tell you is the “billing culture” within a firm.  Hourly rate tells you nothing about how efficiently a lawyer works.  It masks the situation where the firm low-balls the hourly rate but “makes it up” by laying on charges with  a heavy pencil.  If the firm arranges to take twice as long to draft a motion or research some point of law, the 10% reduction in fees you won are now offset.

That is a false economy.

While it’s easy to determine hourly rate, discerning a firm’s billing culture is notoriously difficult. That does not mean that it is impossible, however, or that the discerning buyer of legal services shouldn’t try nonetheless.

How do you get to the issue of a firm’s “billing culture,” the degree of pressure within a firm to pump up the volume on billings?  One approach comes from asking the right questions during the “courtship phase.”  This is part of doing due diligence on any attorney or law firm that you are considering. These may be out of the norm from the usual list of interview questions posed by risk managers, adjusters and other buyers of legal services.

Nevertheless, these questions can poke beneath the surface gloss, to probe the depths of the billing culture of the law firm in question. Consider these questions to discuss fee issues with any firm you are considering using.  True confession time. I cannot take credit for these.  They come from Chicago attorney Mitch Orpett of Tribler Orpett & Meyer.

Orpett rightly observes that few clients pose the following questions to law firms:[1]

  • What is the minimum number of hours your associates and partners are expected to bill?  (We hear of some firms that have minimum billing quotas of 2000, 2200 or 2400 hrs. per year. That puts a premium on heavy billing.)
  • What are the bases of attorney compensation and advancement?  (Is work quality considered?  How? What percentage of the evaluation is driven by production of billable hours?)
  • Are billing minimums used, particularly by new attorneys who often handle the firm’s motion call for each day’s scheduled court appearances?
  • What kind of training do new lawyers receive from the firm and who pays for training time?  This tells you the commitment that the firm has or lacks with regard to ongoing continuing education.
  • How are attorneys supervised?  What is the firm’s general culture?
  • Do your attorneys engage in non-billable activities?  Who is responsible for reviewing and approving bills?  Is there some kind of quality control or quality check on bills before they go out to the client or the insurance carrier?
  • Do attorneys receive bonuses for hitting certain billing targets?

By posing these questions, you are putting yourself ahead of probably 90% of all clients.  Many (most) client meetings with firms are “grip and grin” glorified social calls.  It need not be this way.  You do not have to transform yourself into The Grand Inquisitor, but pack the exchange with substance.

Let’s be clear and not dismiss out of hand the relevance of hourly rate as one data point to capture. None of this means that checking out the attorney’s or law firm’s hourly rate is irrelevant.  Do not throw away the fee schedule.  Factor in those quantitative data points but leaven them with answers to these searching questions.  Listen carefully to the answers.  Then and only then decide if, financially, you and the law firm are a good fit.

What is missing here?  What do you find are other ways to assess a law firm’s billing culture in order to help manage litigation costs?  Share your thoughts here.

 



[1] “Crisis in Billing: Is There a Professional in the House?” White paper by Mitch Orpett Esq.

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