“Litigation efficiency adviser” (LEA) consulting is a new development on the legal landscape in the current recession. In today’s tough economic climate, small and midsize companies in particular cannot afford to overpay on their outside legal fees. Corporate operating budgets are already stretched too thin.
However, while Fortune 1000 corporations have their own large, full-service in-house legal departments to ensure that they receive efficient value for their “litigation dollar” from outside law firms, small and midsize companies generally do not possess the same internal know-how and capability. They either lack their own in-house legal department altogether, or if they do have one, it is generally a very small law department more often staffed by a solo non-litigator general counsel or a handful of non-litigator business attorneys.
Small and midsize company non-litigator CLOs, whether solo or in very small departments, will still end up being responsible for outside legal fee oversight, litigation management, and case budgeting in any expensive lawsuit where there is no insurance coverage to pay the company’s legal fees. The non-litigator CLO will naturally hope that their outside law firm will end up being reasonable and efficient about billing and budgeting in the company’s lawsuit. Unfortunately, that does not always happen. For that reason, LEA consultants work closely with CLOs.
An LEA consultant is a very experienced, seasoned business litigator (usually with 20 or more years of complex litigation experience on their resume) who wears a different kind of hat. They do not practice law, give legal advice, interpret the law, or make legal strategy decisions in the company’s lawsuit.
LEA consultants advise CLOs on “dollars-and-cents” litigation cost issues. They educate the CLO about legal fees, efficient litigation management practices, case budgeting, and appropriate law firm case staffing. For example, an LEA consultant may advise the CLO that there are too many law firm attorneys staffing the company’s lawsuit (which is a major driver of litigation inefficiency and overbilling), and what staffing levels are more customary in the legal marketplace for that type of lawsuit. An LEA consultant may also tell a CLO whether the case staffing is concentrated tightly enough in the hands of a small core team of attorneys at the law firm (which is the desired objective), rather than being too fragmented and inefficient.
In a May 22, 2012 article on CorpCounsel.com, Connextion general counsel Stephen Kaufman predicted that “as the next generation of general counsel takes charge, evaluations of outside counsel will rely more and more on metrics assessing efficiency and productivity.”
Non-litigator CLOs at small and midsize companies may not have enough experience to be able to evaluate efficiency levels by their outside law firm in an expensive, uninsured lawsuit, which can last two to five years through trial and possible appeals. Although they are the client, the non-litigator CLO may feel they are not on a level playing field with their outside law firm. They may feel that the legal fees in the company’s lawsuit are too unpredictable or inexplicable. When the CEO, CFO, or board inquire about why the company’s legal fees on the lawsuit are so high, the CLO may not feel they have enough answers at their fingertips to satisfy the higher-ups. Talking to their outside law firm may not give them all the answers they need, either.
The LEA consultant’s role is to help alleviate those CLO concerns. The LEA consultant aims to make the CLO’s life easier by making the CLO a smarter, more knowledgeable, more informed client about the company’s lawsuit, and by continually suggesting to the CLO ways to reduce the outside legal fees over the course of the lawsuit. Figuratively speaking, the LEA consultant is like a “guardian angel” sitting on the CLO’s shoulder as an independent voice in their ear throughout the lawsuit.
Following is a sampling of problems that a CLO may encounter in their company’s lawsuit that an LEA consultant can help them troubleshoot. Left unattended, all of these problems will drive up the company’s outside legal fees:
- Hiring inefficient outside counsel
- Not clearly understanding the law firm’s retainer agreement
- Litigating the lawsuit without having a strategic litigation plan
- Litigating the lawsuit without having understandable case budgets from the law firm
- Not recognizing inefficient law firm case staffing in the lawsuit
- Continuing to litigate without understanding the provable damages in the lawsuit
- Filing expensive court motions that have questionable chances of success
- Spending tens of thousands of dollars on marginal depositions and discovery
An LEA consultant is not to be confused with a “legal bill auditor.” Legal bill auditors are sometimes hired by companies to review the legal work already performed and billed by their outside law firm and to find ways to cut the legal bills after the fact. Needless to say, law firms do not like legal bill auditors. An LEA consultant, on the other hand, relies on up-front, proactive (not reactive), preventive methods and techniques to promote greater legal fee control, litigation management efficiency, and case budgeting predictability before the legal work is performed by the law firm. The LEA consultant can be engaged by the CLO at the start of a company’s lawsuit (even at the outside counsel selection stage) or midway through the case as it churns toward trial.
By playing this more up-front, proactive role, the LEA consultant also works to ensure that the CLO does not end up in a nasty, expensive fee dispute with their outside law firm after the company’s lawsuit is over, as is happening more frequently to small and midsize companies. LEA consulting helps take the unpleasant surprises out of the legal bills for the CLO. It is essentially a form of risk management for uninsured litigation expenses.
The following criteria provide a general rule-of-thumb for when a non-litigator CLO at a small or midsize company may want to consider hiring an LEA consultant:
- Company has $20 million-$500 million in annual revenues
- Company is litigating in U.S. federal or state court in any of the 50 states, or before a regulatory/administrative agency
- Company is continually paying at least $15,000 each month in legal fees out of its own pocket on a single lawsuit
- No insurance coverage is available to pay those legal fees
- Total legal fees on that single lawsuit are expected to reach mid-six-figures, and may approach or exceed $1 million over the lifespan of the lawsuit
