Corporate counsel checking legal billings

Saturday’s edition of Wall Street Journal, on page B1, talks about Amtrak checking its legal billings. Several lessons result from their experience.

1.    Amtrak was so busy with corporate governance, compliance and other such issues that it failed to monitor its outside counsel, many of whom ignored its billing guidelines. This cost the company millions of dollars in legal expenses.

Parenthetically, I received a call just two days ago from a major corporation whose General Counsel said that the most frustrating part of his job right now is dealing with outside counsel who fail to follow his guidelines and who fail to give the billing information he needs to effectively manage his legal affairs. He is able to get this information from the lawyers on his staff, but can’t get the same information from outside counsel.

2.    Many fee bills were cryptic in their descriptions. Not only does this not provide sufficient information to the client for reviewing purposes one, two or even more months later when the law firm finally gets its billing out to clients for earlier work. That’s from the client’s perspective. From the law firm’s perspective, they miss a “golden opportunity” to market results they achieved for the benefit of the client.

3.    Some (many) law firms are still “block billing” which ensures that the client will not be able to efficiently manage its legal affairs. Since costs cannot be attributable to specific tasks in block billing, just a batch of tasks, nothing can be reviewed for cost effectiveness. Such analysis is being asked for by more and more general counsel; law firms are either not being hired in the first place or not being retained because of their lack of cooperation with their clients in the billing process and corporate objectives.

4.    Repetitive billings (e.g., the same number of hours on multiple occasions) are a “red flag.”

5.    Rigorous billing review, including electronic billing, is among the current focus for many corporate clients.


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