In a world in which legal costs keep spiraling upward, how effective can any company be at capping those costs? Tremendously effective, says Joseph Harary, vice-president and general counsel of Research Frontiers, a Woodbury, N.Y., high-tech-licensing company. The trick is being willing to spend some time and manpower on tracking the specifics of your company's legal needs and fees.
Harary attributes his assertive stance to his prior experience at corporate law firms. "I've seen how a company's legal bills can get inflated and what an efficient flow of work should look like. If you're forthright about your company's needs -- and financial budget -- and organized about your approach to your legal problem, some lawyers are willing to control costs."
Case in point: During the early 1990s, the management team at Research Frontiers was concerned about the company's possible vulnerability to a hostile takeover. Harary wanted to set up a "poison pill" shareholder-rights defense plan, "but the typical cost was around $75,000, way beyond our budget." To simply abandon the project would have been risky, but paying top dollar for a state-of-the-art defense plan was unnecessary.
His solution? "I contacted a lawyer who had drawn up so many of these plans before that he didn't have to reinvent the wheel for us. He could plug our specifics into a basic package that he knew would work for us." Then Harary set up-front guidelines for the project, such as a fee cap of $20,000. "The lawyer ultimately submitted a bill that was lower than the cap," recalls Harary.
Another of Harary's cost-cutting tips: "Require your law firm to send a monthly printout that specifies every single task performed for your company, along with the name of the lawyer who performed it and the billing time." That way you can figure out if your work is being churned through too many lawyers in a bid to boost fees, if tasks are taking too long, or if high-priced partners are working on jobs that an associate or a paralegal could handle at a small fraction of the cost.