Tips on Keeping Legal Fees in Check
Nadler, Paul S., American Banker
As bankers push to control costs and improve their efficiency, one area impeding profitability is the cost of legal services.
There are a number of reasons.
On is that more-complicated financing devices and extra regulation have demanded more legal protection.
In addition, we have seen the United States become a far more litigious society. In the past, when something went against our wishes, the normal response was to curse. Now it is to sue.
On top of this, legal costs have soared as law firms have raised rates and costs to the sky.
These companies have developed creative charges such as "keyboarding, telecopier, and transmission" fees, which include fees for receiving each page of fax transmissions.
On top of this, legal fees take priority over almost everything else in time of trouble, draining bankrupt companies and their creditors with an inexorable flow of invoices for "billable hours."
This explains why so many banks settle nuisance suits that have, in their opinion, no legitimacy -- settling is cheaper.
One strategy that many banks have tried is to hire an in-house lawyer or to expand their own internal legal operations. But this does not solve the problem. The law is complex, and one lawyer or even a small staff cannot handle the various specialties needed to respond to every suit or development.
Fighting the cost of this litigious environment is explored by two lawyers writing in December's Journal of commercial Lending -- a publication of Robert Morris Associates.
The authors, Richard T. Nassberg of Philadelphia and Irwin L. Gubman of San Francisco, offer a number of ideas for curbing legal costs. They include:
* Compare rates charged by various firms.
* Look to smaller communities for some legal services. The rates there are lower and quality may well be the same.
* Watch out for bills for "working-group meetings" -- a term meaning that a number of lawyers have sat down to discuss your case, when one lawyer working alone may well be able to do the job.
* Establish research goals and don't let the law firm reinvent the wheel by doing research the bank has already done. …