Legal fees are a necessary business expense. But many small companies pay more than they have to.

Perhaps your business has been using a reliable law firm for several years, but you're troubled by the size of the bills. Or maybe your company is just starting out and you're looking for a lawyer to serve you. In either situation, you may be able to save hundreds -- even thousands -- of dollars in legal fees without compromising the quality of the services you receive.

Here are 18 cost-cutting techniques that can help you.

1. TALK ABOUT FEES. If your lawyear doesn't bring up the subject of fees, you should. Don't be shy about it. And remember: Lawyers are in business for themselves and are free to set their own fees. It's often appropriate for you to negotiate regarding these charges. The best times to discuss fees is at the beginning of a new legal matter.

2. REACH AN UNDERSTANDING WITH YOUR LAWYER ABOUT HOW YOU WILL BE CHARGED. The three basic ways of calculating fees are:

* BY THE HOUR. The rate will depend on where the lawyer practices and on his or her skill and experience. Generally, competent legal services for a small business will range from $50 to $150 an hour.

* FLAT FEE. Sometimes a lawyer will quote you a fee for a specific job, for example, $200 for a particular contract or $2,000 to represent you before a state administrative commission. You pay the same amount regardless of how much time the lawyer spends on the job.

* CONTINGENT FEE. This is a percentage (such as 33 1/3%) of the amount the lawyer is able to obtain for you in a negotiated settlement or through a trial. If the lawyer recovers nothing at all for you, there's no legal fee.

In addition to fees for services, lawyers generally expect reimbursement for out-of-pocket expenses such as filing fees, long distance phone calls, and transcripts of testimony.

3. SEEK THE MOST FAVORABLE FEE ARRANGEMENT FOR EACH PARTICULAR CASE. Suppose you have a $30,000 claim against another company; if you are confident that the lawyer can easily settle the case for $25,000 with only a few hours work, suggest an hourly fee arrangement even though the lawyer usually charges on a contingency basis for this type of case. Similarly, if the lawyer proposes an hourly rate for a certain matter, see if he or she will put an upper limit on the amount that will be charged. For example, the agreement may be that the lawyer will do the job for $80 an hour, but that the total bill (except for out-of-pocket expenses) will not exceed $1,000.

4. TRY TO SETTLE CASES RATHER THAN LITIGATE. Don't give in to the impulse to fight for the last dollar because "a matter of principle" is involved. Usually it's better to compromise a conflict than to fight it all the way through the courts. You may be able to settle some minor matters yourself without the help of a lawyer.

5. HAVE YOUR LAWYER DESIGN FORMS THAT YOU CAN USE IN ROUTINE TRANSACTIONS. You simply fill in the blanks. Your lawyer can give you language to use in the most common situations that you'il face in your business. You can consult with the lawyer in special cases.

6. GUARANTEE A MINIMUM NUMBER OF HOURS OF WORK DURING THE YEAR. A $90-an hour lawyer may be willing to work for $80 an hour if you're a major clent who provides at least 200 hours of work each year.

7. USE A LESS EXPENSIVE LAWYER FOR SMALL COLLECTIONS. An eager lawyer fresh out of law school will probably be able to collect unpaid bills under $1,000. Use your more experienced lawyer for corporate matters, contracts, and bigger cases.

8. GIVE YOUR LAWYER COPIES OF ALL PERTINENT RECORDS IN A NEW CASE. Bring the records to the first meeting so there won't be unnecessary phone calls about missing items. Also, prepare a chronological summary of the records so your lawyer can have ready access to the most important documents.

9 FIND SOMEONE TO SHARE COSTS WITH YOU. If you're seeking a variance from a zoning board of appeals, maybe a neighboring business would benefit from a similar variance. If your lawyer processes both applications at the same time and attends a single hearing on behalf of both companies you can split the cost with your neighbor. Caution: Before sharing your lawyer with someone else, make sure there's no conflict between the positions of both parties.

10. INSIST ON AN ITEMIZED STATEMENT EACH MONTH. You are entitled to know exactly what services were permitted and what expenses were incurred. If something seems incorrect or unclear on the statement, contact your lawyer immediately for an explanation.

11. SUGGEST COST-SAVING METHODS TO YOUR LAWYER. If your lawyer is proposing a three-way meeting in another city, ask whether it couldn't be handled just as well by a conference phone call. Lawyers are not always as conscious of costs as they could be. Because of your business expertise, you can often point out ways to save money.

12. KEEP ABREAST OF LEGAL DEVELOPMENTS IN YOUR FIELD. Providing your lawyer with trade journal clippings that describe recently decided cases affecting your industry can reduce costly time spent on legal research.

13. ASK FOR PROGRESS REPORTS DURING PROLONGED CASES. As a part of these reports, your lawyer should estimate what the remaining legal expenses will be. This will help you decide whether to intensify your efforts at settlement or seek other ways to conclude the case promptly.

14. SEE YOUR LAWYER DURING NORMAL BUSINESS HOURS. Some lawyers charge extra for evening or weekend work. Try to arrange for meetings in your lawyer's office or over the phone. It's often wasteful to pay for your lawyer's travel time.

15. CONSIDER ADDING A "HOUSE COUNSEL" TO YOUR STAFF. This can save you money if legal fees to outside lawyers are running over $30,000 a year.

16. CONSULT WITH YOUR LAWYER ON SEVERAL MATTERS AT ONE TIME. If you're well organized, you can cover three or four items in a one-hour conference. This usually costs much less than making several visits or phone calls.

17. HANDLE SOME MATTERS YOURSELF. Some business people enjoy taking care of minor cases themselves in small claims court. On cases your lawyer is handling, ask what you can do to help move your case along. If you have the time, it may be less expensive to pick up certified documents yourself than to rely on someone from the lawyer's staff to do it.

18. SHOP AROUND, BUT DON'T LAWYER-HOP. Speak to other people who own or operate businesses in your area. Call or visit a number of lawyers and ask them about their fees. Comparison-shopping will help you avoid overpaying. But keep in mind that the cheapest hourly rate isn't necessarily the best for your company. For example, a novice who charges only $40 an hour may take three hours to draft a real estate sales agreement. A more experienced lawyers who charges $75 an hour may do the same job in 45 minutes. Clearly, the first lawyer is no bargain.

Once you find a good lawyer, stick with that person. A lawyer who's familiar with your business can handle your affairs much more efficiently than a succession of lawyers, each of whom must learn it from scratch.