Taking counsel

  • 2004-12-01
  • Kaido Loor, partner at Sorainen Law Offices in Tallinn
How to buy legal services smart

Before going into the question of how to buy legal services, there is a question about when to buy. One way to look at this is to separate doing the right things from doing things right. It is clear that in the complex world of nowadays not everybody is able to do the right things, and not everybody is able to do things right. Sometimes different skills are required for both. Most managers make the distinction and assign legal matters to lawyers, because even the best thing may fail if done the wrong way.

Another way to avoid the question how to buy ... is not to buy at all. It is true that sometimes lawyers' input can be reduced to a large extent and predeveloped models can be used. For example, there are business areas that have standard contracts made by their respective national or international trade associations. These utilize industry practice, limit involvement of the local lawyer and may save some money for a business. However, a local review of documents developed abroad is recommended, and even the most typical client agreements should be reviewed annually - to take into account changes in industry practice, clients' wants, court practice and the ever-changing law.

Another type of source of legal documents is low-cost electronic or paper-models that one can get from bookstores, the Internet or a friend. Regrettably, experience shows all too often that these have little value when disputes arise in real life, as normally these low-cost variants are not written by practitioners, nor are they suitable for a particular transaction.

Another often overlooked method to control legal expenses is to require binding estimates, fixed prices or success fees. Although sometimes this will lead to an increase in fees (due to an acceptance of risk by a lawyer), it may be worthwhile. Exceeding estimates or budgets will mean that the lawyers have to cut down their efforts and input, which can lead to loss of interest, reduced quality, exclusion of important matters from the scope of work. Speaking about estimates, statistics and binding offers, most law firms should have IT systems that show the average expense of typical projects. Such an average is something you can ask to be disclosed in order to assess your potential costs.

A clear way to spend too much on your lawyer is to have lengthy negotiations. Negotiations tend to drag on mainly because of a lack of specific experience, or because the sides are too busy or opportunistic. If you take into account the monetary value of the transaction and the lost time, it almost always makes sense to hire more specialized lawyers (even if more expensive) who can agree on things on the fly and speak the same (legal) language as you, your contract party and the latter's lawyer. In order to shift legal cost to the contracting party, you can reject a very one-sided or unclear draft agreement and require the contract party produce something more balanced and clear that can be used more efficiently as a starting point.

It is important that your lawyer understands your business. But then clients sometimes require exclusivity so that the lawyer cannot serve your competitors. These goals work against each other, and a lawyer can very seldom learn very much about a specific industry by serving one client only. If your lawyer understands you, your business and your transaction, then it is easy to trust him. Law offices that can afford specialization of lawyers in particular business areas are therefore in much better position than general full-service firms. This is also the reason why international law firms with many offices have usually more know-how about specific industries than do local ones.

Trust in your lawyer will help avoiding excessive calls, e-mails and progress reports and ultimately has good effect on fees. Therefore, make sure you are confident in the lawyer and his law office in order to ensure topmost efficiency. If you become involved in a dispute, you should know that many experienced clients replace their lawyer. This ensures that the lawyer advising the dispute can bring out also flaws of the first lawyer.