Accessibility Links

General counsel call for better budget prediction

Posted by: Laurence Simons 05/12/13

Lawyers are regularly underestimating litigation costs, putting general counsel in a difficult position and making it harder for firms to cut down on their legal budgets, it has been claimed.

Research of senior in-house lawyers conducted as part of The Lawyer's Global Litigation Top 50 survey revealed that the worst-case disparity between the final bill and the budget predicted initially is generally around 40 per cent.

In some situations the fee was more than 100 per cent more than what had previously been suggested, the report found.

Like the optimistic festive reveller who heads to the work party expecting to spend very little and finds himself in a night-club buying £7 cocktails six hours later, litigation lawyers appear to be downplaying potential costs.

While they would argue, with some justification, that the inherent nature of the legal process means it is impossible to know how a case would develop, this doesn't prevent general counsel from establishing their consternation at the issue.

"We expect to get value in nearly everything we do as a large corporation - and we've got to adopt that approach to legal services. The way it will work is that if we use a firm that does not provide value, we will never use that firm again," said one respondent.

Another concern brought up by in-house lawyers was the ongoing debate over hourly billing, which many feel is an out-dated and inefficient model.

Some 37 per cent of respondents said litigation rates were expensive relative to fees for other legal services, while many posited that alternative approaches to billing are likely to become popular in the coming years.

With even the biggest businesses keen to cut their budgets and avoid unnecessary expenditure, it is obvious that general counsel will seek out law firms that can offer them the best value for money.

For many, the prestigious name or shiny City office may no longer be enough to attract the top companies.