How to Reduce Your Commercial Litigation Costs (2020 Update)
Commercial litigation has a reputation for being expensive, however there are ways you can minimise these costs. Read about them in this article.
Commercial litigation has a reputation for being expensive – and it’s not hard to see why. Hourly rates, court fees and incidentals can rise rapidly. Going to Court is an expensive exercise which can go for months and even years. However, there are ways that SMEs and small businesses can reduce their Commercial Litigation Costs, should they become involved in legal proceedings. In this article, we’ll provide some ways you can minimise your commercial litigation costs.
Being in control of your legal costs
The nature of litigation and hourly billing means that it can be hard to keep track of your legal fees. This is because you won’t know when your lawyer is going to be performing certain tasks and billing for them (until you receive your invoice a month later). Due to this, the only real way you can completely control your costs is to have them quoted up front.
Commercial litigation is a daunting prospect for any entrepreneur or SME. This is because they face writing a blank cheque to their lawyers to deal with a case. Most lawyers are ethical and reliable, but hourly fees encourage inefficiency. If it turns out that your lawyer is unethical, it puts your interests against those of your lawyer.
1. Define your vision and strategy with your lawyer upfront
Are you frustrated because your lawyer isn’t pushing the case in the direction you want? A key cost driver in commercial litigation is the failure of a client and lawyer to clearly define objectives in a case. Litigation is not usually an end in itself. Therefore, an exit strategy is important so that the client and lawyer focus on achieving an outcome. This can be devising a certain amount of money that you’re willing to settle for or a broader outcome of what you want to achieve.
2. Ask for a monthly report with a snapshot of key information
Ask your lawyer for a monthly report that sets out:
- The fees paid to date
- Tasks that have been completed in the last month
- Favourable and unfavourable events
- Cost drivers
- Progress toward your exit strategy
This report will give you a strategic snapshot of your case and will help you identify any directionless and expensive commercial litigation costs. From this, you’ll be able to see how your costs compare to the results you’re seeing. It’s important to note that litigation is a long game and you won’t see results immediately. Despite this, you should be able to see your case etching towards an end goal.
3. Insist on detailed and itemised billings
The invoices you receive should be clear and easy to understand. The methodology for charges should be consistent (hourly, fixed fee or retainer fees). Most lawyers do not apply an uplift to disbursements. Further, all add-on charges should be consistent with your retainer agreement. If you want to cut costs on your bill, you can request that any clerical or non-Court related work be allocated to paralegal or clerk. Paralegals and clerks charge lower hourly fees, however they’re perfectly capable of doing a large share of the work in a Court case.
4. Limit the scope of work in a matter
Before the legal work begins there should be a value conversation to identify what is important. By limiting the scope of the retainer to the real value-add this will focus your lawyer and maximise the benefits from your litigation. For example, if your lawyer isn’t experienced in alternative dispute resolution why not hire an outside consultant to push settlement in parallel to Court proceedings?
5. Ask your lawyer to prepare ‘to do’ lists each month
Experienced commercial litigators do not see each case as a moral challenge but instead a project that needs planning, consultation, strategic direction and execution. If your lawyer cannot give you a list of tasks (such as a completion plan) then how are they going to actually manage the litigation? The answer is likely to be that the lawyer will take a reactive approach that will adversely affect your bank balance and blood pressure.
6. Require monthly billing
The benefit of monthly billing is that it will keep you in touch with your legal fees on a regular basis. It will also mean your lawyer will need to write off any Work-In-Progress (WIP) on your account that hasn’t added any value to the case.
7. Communicate with your lawyer online
Advancements in technology mean that you don’t need to attend your lawyer’s office nearly as often as you used to. Even the Courts these days conduct some hearing by online video link or telephone. In this sense, you can also have your meetings conducted virtually. Further, there is technology which allows you to sign documents online. Although these seem like small measures, they can go a long way in reducing your legal fees over time.
8. Maintain a good relationship with your lawyer
If you develop a negative relationship with your lawyer and make their work difficult, this may increase your legal fees. By contrast, having a positive relationship with your lawyer will avoid scrutiny by your lawyer of all tasks done. Lawyers are known to respond to negative client relationships by carefully documenting all exchanges with clients, being pedantic, writing detailed advices and terminating retainers when fees are unpaid.
9. Ask for an upfront price
It is possible for a lawyer to charge fixed fees in litigation and project manage the litigation (if it is already on foot). Try to select a lawyer with business acumen and one that can deal with the tasks that will come up during the case. Further, you should ask if they can give you a quote for the cost of doing the work. At the very least, your lawyer should be able to provide you with an estimate of Commercial Litigation Costs. If your lawyer refuses to give you an idea of how much you’ll have to pay, take it as a sign to walk away – and find a lawyer that will.
Jackie is the Content Manager at Lawpath and manages the content team. She has a Law/Arts (Politics) degree from Macquarie University and is a solicitor in NSW. She's interested in how technology can help shape the future legal landscape.