Managing and Reducing Outside Legal Expenses

Economic conditions have virtually all businesses looking for ways to cut costs. In this time of retrenchment, one place to look for savings is in the line item for outside legal services. Many businesses pay more than they have to for lawyers. Hourly rates at some firms have reached extreme heights, and not just for their stars. While the opportunity to reduce legal costs exists regardless of economic downturns, the current recession presents a greater need to do so and increased opportunities as law firms face intense competition.

Most legal fee disputes are private, which complicates an effort to analyze them. A recent public fee dispute arose in a securities receivership action that provides guideposts for many issues that in-house counsel face when attempting to manage and reduce legal fees. In SEC v. Byers, et al., Case No. 08-7104, slip op. at 22 (SDNY Dec. 30, 2008) — in which the authors were involved — U.S. District Judge Denny Chin, in what is known as the WexTrust matter (arising from one of the largest pre-Madoff Ponzi schemes), explained: