Archive: March, 2007

Legal Costs Part II: Technology to the Rescue?

Don’t give me problems, give me solutions.

Moaning about bloated legal costs is one thing. But how do you fix the problem? To what extent can technology be used to deliver better value legal services, with less padding of bills?

One approach is to use technology to monitor and analyze bills so that it’s easier to get a breakdown of costs and easier to spot any deviations from agreed budgets or billing guidelines. According to The Lawyer, this type of spend analysis tool is currently being used by Barclays to scrutinize its legal bills. Indeed, a Corporate Counsel technology survey suggests that a significant number of companies now require their external counsel to use some kind of e-billing software.

Legal Costs Part I: Padding and Other Problems

I’m not paying for a junior to learn the ropes.

If it ain’t broke, don’t fix it. This might well be the motto of many law firms when it comes to billing by the hour. But if recent reports are any guide, it’s getting increasingly difficult for firms to cling to the illusion that the hourly billing model ain’t broke.


According to Susan Hackett, GC at the Association of Corporate Counsel, there is something wrong with a system where “law firm newbies will make more in their first year than an associate justice of the U.S. Supreme Court.” Describing partner profits as “obscene“, she reckons the time has come for in-house counsel to draw a line on costs. It’s time to say “we’re not paying for this anymore.”

And she’s not the only one. The stats from a recent YouGov survey (conducted for The Lawyer magazine) are similarly ugly: 73 per cent of general counsel have been on the receiving end of padded bills, and 95 per cent of in-house counsel think that chargeable hours targets encourage padding. The preferred alternatives are project-based billing (68 per cent) or flat fees (20 per cent).

Does Reasonable Endeavours Mean Anything?

A favorite legal drafting trick is to play around with the strictness of obligations. Rather than say Fred must deliver the rocks to Barney within 7 days, why not say that Fred will use reasonable endeavours to deliver the rocks to Barney within 7 days. If the contract says “must” then Fred’s failure to deliver will be a clear breach. If it says “reasonable endeavours” then Fred may well get away with delivering late, or not at all.

In light of a recent English decision on the meaning of “reasonable endeavours”, we now present a menu of phrases for your drafting pleasure: