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Insider Tips on How to Put a Cap on Spiraling Legal Fees

Since mediation is not about an adjudicator choosing between a winner and a loser, but rather about the parties resolving a dispute for the benefit of both of them, relationships are far more likely to survive a mediation process than litigation.

Yvonne Wakefield

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Last year a flippant email exchange between lawyers discussing a client’s mounting legal fees surfaced in court papers submitted as part of a fee dispute between the client and the law firm. The lawyers worked for one of the world’s largest law firms and the offending email stated: “That bill shall know no limits.”

The law firm in question has since denied that overbilling took place and described the emails as, “an unfortunate attempt at humour by three former lawyers of the firm.” However, apart from resulting in a public relations nightmare for the firm, this is one of several cases that have once again thrown the international spotlight on legal fees charged by commercial lawyers.

The burning question of cost

It is not surprising then that for any business requiring legal services, whether large or small, the burning question usually is whether a fair deal from a law firm is even possible.

Yvonne Wakefield, founder of Caveat Legal, says small and medium business owners are not alone in worrying about the cost of legal advice.

“Big corporates have similar concerns,” says Wakefield. “The difference is that they are doing something about it.”

Last month the Association of Corporate Counsel (ACC), a global in-house bar association for legal departments, reminded their members as well as law firms that legal professions across the globe should be working towards the following three targets:

  1. Reducing the client’s total legal costs by a significant amount;
  2. Providing near-complete predictability in cost and process; and
  3. Significantly improving outcomes.

Navigating a minefield

Wakefield says in an attempt to avoid spiraling legal fees many small and medium business owners choose to struggle through legal minefields without the guidance of a legal expert.  But Wakefield explains that  avoiding legal advice at the right time can lead to costly unintended consequences later.

“Foregoing legal advice often results in businesses being incorrectly structured or basic business agreements not being in place. We also find that entrepreneurs frequently incur unnecessary opportunity costs by trying to progress important business deals as far as possible on their own in order to minimise the costs of briefing a law firm.”

So how do you ensure that your business does not become the victim of the bill that knows no limits? Wakefield has the following advice for entrepreneurs (or in fact anyone in need of legal advice):

Do your homework before seeking legal advice

There are many different legal service providers out there and your specific requirements should dictate whom you brief. Only limited categories of legal work such as litigation and conveyancing are the exclusive domain of attorneys practicing at a law firm.

If, for example, you need help with drafting contracts, advice on buying or selling a business, or help with commercial dispute resolution big law firms are not your only options. Independent legal practitioners and legal consultants will be able to help you at a fraction of what a big law firm charges. You are also likely to find that many of these lawyers come with big law firm credentials.

Understand the system

The reality is that lawyers at most large firms work towards monthly fee targets. These are used to judge their performance and determine eligibility for promotions and bonuses. While this does not necessarily lead to “bills that know no limits” at the large firms, this does mean that big firm lawyers are likely to be more interested in taking on cases that are complex enough to deliver the hours. 

A stitch in time 

If you are likely to need help from a lawyer, contact the right person for the job as early as possible. Getting lawyers involved too late often results in them having their hands tied, with far fewer angles to pursue to get you the best results.

Also, as your legal challenge grows in complexity, the more expensive it will be to resolve.

Request a quote or a fee cap 

Just as you would request a quote first before signing up for major surgery or dental work, you should also request a cost estimate from your lawyer.

Understand that time is a lawyer’s currency. Since most lawyers use time-based billing, ask what the hourly rates are for the lawyers that you would like to engage and request an estimate of how much time will be required. This will give you a good indication of what to expect from your legal bill.

Once you and your lawyer have an understanding of the ambit of the brief, you can also impose a fee cap, meaning that you communicate to the lawyer that you will only spend a certain fixed total amount on the work in question.

Be realistic

Do not underestimate the amount of time required by your legal team to properly deal with your case and deliver a solution of high standards.

While you want to be charged a fair price for the work to be done, you also don’t want to put unrealistic pressure on your lawyer to deliver a professional outcome without spending the necessary time.  Similarly, you would never ask a surgeon to do his or her job as quickly as possible.

Be well prepared

Prepare an instruction to the lawyer by carefully collecting all relevant documents and listing the relevant facts. A written instruction is always a good starting point and helps the lawyer to prepare before consulting with you.

Lengthy time delays for collecting documents and information on your side may mean that when the lawyer picks up the matter again after a time lapse, he or she may have to spend time reading back into the matter. Understand that you will be charged for this.

Also avoid to-ing and fro-ing. Each time a lawyer is asked to incorporate further changes to documents already drafted, the cost rises. Therefore, if you need a document to be reviewed by several people, gather all the comments and only then ask the lawyer to incorporate them.

Communication is key

Ask your lawyers to keep you updated regarding the progress of your case and to highlight any complexities arising that may require more time. If yours is a complex matter that is becoming time consuming, ask for mid-month fee summaries so that you can track the costs.

Communicate to your legal team that you are happy for work to be delegated to junior legal professionals where appropriate. This way junior lawyers who charge lower hourly rates do the legwork under the supervision of more experienced (and expensive) seniors.

This is only a good option, however, for straightforward aspects of your matter. You do not want to insist on having junior lawyers working on a complex issue, which then results in the work taking much longer than it would have in the hands of a senior lawyer.

Insist on technology to reduce costs

If your legal case involves the processing of volumes of documents, ask whether your lawyers use technology allowing for the most cost effective processing and management of documents. There are excellent solutions that have been developed for this purpose and all lawyers should be doing what they can to avoid using hourly-billing professionals to manually work through volumes of documents unnecessarily.

Consider mediation over litigation

Mediation is often quicker and more cost effective than litigation when it comes to resolving commercial disputes, workplace disputes and those involving family trusts.

Parties to a dispute generally opt for mediation for three reasons: they want to maintain their business association with each other, they want resolution as quickly as possible, and they want to prevent exorbitant legal fees.

Yvonne has a BA (law) and LLB from Stellenbosch University, a Diploma in International Studies from Antwerp University, and an LLM from UCT. She has qualified as both an attorney and an advocate in South Africa, and as a solicitor of England & Wales. Yvonne now heads up Caveat Legal, a legal consultancy aimed at making quality commercial legal services more accessible to the business market.

How to Guides

(Podcast) Phone Calls Often Solve Email Problems

Irate customers can become your most ardent supporters, but it’s important to treat your clients like people. People like people, and phone calls are more personal than emails.

Nicholas Haralambous

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Emails solve problems – but they also create them. When a real problem arises in your business, is an email the best way to solve it, or should you pick up the phone and give your customer a more personal experience?

Irate customers can become your most ardent supporters, but it’s important to treat your clients like people. People like people, and phone calls are more personal than emails.

Listening time: 3 minutes

Related: (Podcast) Being An Entrepreneur Is Painful

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Company Posts

Why Choose ISO 90012015 As A Starting Point For Your Business

Implementing all elements of the standard can help your business, but what parts of the ISO 9001:2015 standard in particular should prove to be of most beneficial for yours? We’ve listed a few below.

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Ask for any Entrepreneur’s to-do-list, ISO Implementation and certification may not always be at the top of it. Businesses are constantly faced with financial, operational and socio-economic pressures, while business owners must make decisions on projects related to “cost vs the benefits”. But here’s why ISO 9001:2015 is a reasonable investment.

If your businesses is certified under ISO 9001:2008 you had three years to transition to ISO 9001:2015, if you don’t transition, your certification will become redundant. The three‑year period started on the date the new standard was published in September 2015. Don’t wait, your Day 1 of 365 days starts now.

Related: How ISO Certification Can Help You Access Market Tenders

Implementing all elements of the standard can help your business, but what parts of the ISO 9001:2015 standard in particular should prove to be of most beneficial for yours? We’ve listed a few below. It may also protect your business (against big business)

How can ISO 9001 make the difference for my business?

Start by viewing the costs as an investment that allows you to better assure your clients, improve your productivity and raise your ability to compete.

Your certification to the standard, can attract reputational benefits and establish a ticket to levels of business that non-certified companies certainly cannot obtain. This may be the most practical time to implement ISO 9001 for your business.

As the full process can take up to 6 months, you need time to plan and execute your transition to the new standard and it will require work, commitment and changes to the habit of doing things.

This is why it’s vital to begin early and hire consultants with a 100% certification record with any SANAS (South African National Accreditation System) or International Accreditation Body. It gives the guarantee and expertise you need.

iso-process

Your 6 steps to getting ready for ISO 9001:2015

1Establish Processes

  • Documenting and Implementing processes in your business can yield great benefits as your business grows. Setting common processes in the beginning will result in consistency in the products and services, this sets a sound foundation for expansion and future growth.
  • Save time, cost, and ensure delivery. This takes place when you have new employees and point them to processes that are well established and well documented.
  • It allows your staff to feel confident in doing their job, knowing there is a process to follow and with the help of the Document Control Process, you can always re-engineer the process to adapt to change, this results in Continual Improvement.

2Formulate PDCA cycle (Plan-Do-Check-Act)

  • The fundamental basis of the ISO 9001 standard is based on Edward Deming’s PDCA Model. If implemented effectively it can benefit any type of business however large or small you are, it’s practical. The Method is also used by fighter pilots.
  • You build a culture of “careful planning, monitoring, and adjustment of actions” this speaks volumes to your employees, and your clients benefit in return.

3Increase your sales by using ISO 9001

  • By using valuable customer feedback, you build up information to monitor and review your client’s perception of your products and services, this feeds into a corrective action process, which results in a continual improvement to create relationships with existing clients and attracting new clients.
  • Most Tender Requirements from Government, Local and International Companies require ISO 9001 as a qualifier to their procurement process. This gives them the assurance that a Third Party Auditor is auditing an effective Quality Management System aligned to International Standard that has effective process control and will measure client satisfaction.

4Develop an attentive mindset to risk and opportunities

  • Risk and opportunities is the latest introduction to the ISO 9001:2015. This allows businesses to identify potential and current risks in their process and mitigate them before it’s too late, the fundamentals of a successful business.
  • By cultivating a culture where your team have a sharp eye for risk and opportunities will serve your business well.
  • Profits will be maximised while risks are spotted early and can be minimised.

5Take control of change management

  • As the saying goes, “Change is the only constant in the 21st century”. The inability to handle change and adapt accordingly is one of the main reasons that many businesses do not survive through the first two years of existence.

Related: 7 Steps To Achieving Our Higher-Level Goals

6Setting goals and objectives

  • Goals and objectives are key fundamentals of the ISO 9001:2015 standard, these are tools to assist in attaining your companies Vision.
  • When you get into the habit of setting, reviewing, and taking action against objectives, the end results is growth and driving improvement.

It is clear that implementing ISO 9001 can take your business to the next level that benefits startups to established corporates. We stress again the vital importance to begin early and hire consultants with a 100% certification record with any SANAS (South African National Accreditation System) or International Accreditation Body.

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Company Posts

How ISO Certification Can Help You Access Market Tenders

Want to leap-frog your competitors by building your business credibility?

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ISO Certification

2017 has been a challenging year thus far. A decline in exports, slower growth in private consumption and fixed investment has caused the economy to contract in Q1 and enter into its second technical recession since 2009. This means that it is now more crucial than ever to break away from your competition to survive in this economy.

The question we as businesses are all asking, is how can we become more competitive during these tough times?

The answer is ISO Management systems and certification.  The implementation process allows organisations to streamline their processes and benchmark to international standards that have worked for the likes of Toyota, Coca Cola, MTN SA and many more.

The ISO Certification gives your clients the national and international credibility that they are looking for, in you as a business.

What are ISO Standards?

ISO is not an acronym, it is derived from the Greek word ISOS, which means equal and is interpreted as The International Organization for Standardization, which comprises of various National Standards being superimposed into one International Standard. There are approximately 21500 ISO Standards, from Quality, Health and Safety, Information Security, Environmental, Energy and many more. (The International Organization for Standardization)

The ISO standards set a precedence for companies to create a Management System which comprises of Policies, Objectives, Processes, Risk Assessments and Procedures with the aim of being able to provide a consistent service.

The standards requirements can assist a one-man tuck shop to large corporates such as Google.

Think about it this way, when you buy a house, does your insurance company grant you a policy without an Electrical Certificate of Compliance? Do you buy a brand new laptop, mobile device or any other electrical device without a warranty or guarantee? Will you send your child to a hospital that does not have standards in place? Will you buy vegetables that have not undergone the necessary food safety controls?

We, as consumers, have all become cautious, hence the birth of ISO Certification. An independent body (Watchdog) such as the SABS, BSI, TUV, and Bureau Veritas conduct regular audits against your processes and the International Standard to create the assurance you are looking. How ISO Standards And Quality Management affects SMMEs

That is why your company must invest the time and money to implement the value adding systems with the right consultant. This in turn will provide your current and potential clients the assurance that you have the relevant processes in place to deliver what is required and will provide you with the competitive edge. You are not too small to become ISO certified.

Where do I start if I want to become ISO Certified?

where-do-i-start-if-i-want-to-become-iso-certified

ISO Management systems work on a four-phase approach to develop, implement, train and assist organisations through certification.

The following will give you an overview of how the process works:

Phase 1: GAP analysis & Identification of processes

  • GAP Analysis Audit on the choice of your ISO Standard
  • All Staff to undergo awareness training on the ISO Standard (Requirements)
  • Analyse & identify current systems (Policies, Objectives, Risks, Processes and Procedures) within the company and gather information.

Phase 2:  ISO Management System Development

  • ISO Management systems manual (Policies, Objectives and Mandatory Procedures)
  • Process documentation and Standard Operating Procedures
  • Risk assessments and tools to assist in Monitoring, Measuring and Analysing. 

Phase 3: Implementation

  • Coaching and change management of Top Management and attaining Leadership Values.
  • On the job training with all staff and workshops on the ISO Management Systems
  • Internal Auditor & Maintenance Training
  • Internal Audit, non-conformances, corrective actions and reviewing of risks
  • Management Review Meeting and Review of all Statistical Analysis.

Phase 4: Certification

  • Stage 1 Desk Study Audit with the Certification Body
  • Stage 2 Certification Audit, Non-conformances and Corrective Actions completed
  • Annual Surveillance Audits to justify continuous improvement.

ISO standards aren’t rigid rules, but rather a set of generic requirements and guidelines to what we as a business should be following.

It’s the basics of business, we tend to overlook the basics and focus on profits, which jeopardies our quality and service.

Your clients are becoming more advanced, better informed and their expectations are growing. Having ISO Management Systems provides organisations with the competitive edge over their competition, by gaining National/International recognition.

In fact, any organisation, whatever their size or industry sector can give themselves a secure future by introducing ISO Management Systems. Remember to look for management systems that can guarantee 100% certification with any certification body such as SABS, TUV, BSI, Bureau Veritas, DEKRA etc.

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