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Reblog: “Five Steps to Reduce Legal Costs”

August 21, 2012

We all know that general counsel are under increasing pressure to reduce costs and that the “good ol’ days” are ending, and firms must offer better value to survive (what continually amazes me is how there was ever a time when general counsel let firms run rampant).  Ron Friedmann’s recent post “Five Steps to Reduce Legal Costs” posits that the “new normal” requires doing the following five actions:

  1. “Do Less”:  Do only the amount of legal work commensurate with the legal risk.  Lawyers, if given the chance, are trained to leave “no stone unturned.”  When billing at high hourly rates, this can get VERY expensive to the client.  Click here for six ways unmonitored attorneys can run up the bill .
  2. “Improve Efficiency”:  For work that really needs doing, do it as efficient as possible through innovation, automation and project management.  Check out this NALFA post for five other “court-tested” factors.
  3. “Delegate to the Lowest Cost Competent Resource”:  Use the lowest cost biller with the requisite skill to do the task.  While this seems straightforward and obvious, care must be taken to avoid inefficient billing by lower cost timekeepers.  For an example, see here.
  4. “Build Factories”:  Scaling #3 above where possible, whether in-house or outsourced
  5. “Reduce Overhead”:  Combine steps 2-4 to reduce overhead, which at many U.S. firms is over $200,000 per lawyer!

Kudos to Mr. Friedmann for mapping areas to boldly go where few firms have gone before.  Smart clients will chose those firms that are at the leading edge of these seismic shifts and not lagging behind, or worse, entirely resistant to exploring the new frontier.

For another good take on many of the above issues, check out Bruce Raymond’s “Do Alternative Fee Arrangements Work? – A Real World Test“.

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