Note: This case study by Wendeen H. Eolis has previously appeared in the New York Law Journal. I republish this article in 4 parts during December 2009 in response to current client demand for advice on law firm retention arrangements (whe).
Ultimately, a law firm under scrutiny volunteered to reduce its fees for a litigation by 10%. It proved to be a savvy move by the key partner who had impressed his new client but for questions about the fess—given the current economy.
The firm is currently acting for the client in a major transaction. The re-negotiated retention agreement should give Mr. Wise and Mr. Foreman a good bang for the buck and the firm a healthy profit from an efficiently managed matter.
Here are some pointers that were applied to the re-negotiated retention letter:
1) Include a statement that reinforces American Bar Association rules and legal requirements of a law firm to make "reasonable" fee charges and holds the law firm's feet to the fire with respect to cost-effective management of the work.
2) Insure that the law firm sets forth the legal issues to be addressed and the scope of the matter in clear layman language that fully comports to your understanding.
3) Require advance notice and/or authorization for billing rate increases prior to commencement of work at the increased rate and a cap on the percentage increase in a given year.
4) Ask for the lowest billing rate offered to standard commercial clients and for billing in time increments of six minutes
5) Insist upon monthly bills, appropriate summaries (as advised by your accounting department), and clear information regarding personnel, and their individual rates.
6) Obtain bills that are broken out by matter with task-based billing descriptions (free of bundled tasks to the extent practicable).
