Reducing attorneys’ fees: What you should never pay
To avoid paying too much in attorneys’ fees, a risk manager must be willing to take a stand and question many "standard" charges for service, says William B. Reisbeck, JD, director of risk management at Virginia Mason Medical Center in Seattle. Taking too soft an approach with attorneys can result in expenses that might have been significantly reduced while still fairly compensating for the lawyers’ services.
Much of the strategy for reducing attorneys’ fees requires planning, Reisbeck notes. As part of forming a strategic case plan for any lawsuit, Reisbeck recommends establishing a budget upfront for each facet of work the attorneys will perform, since it is far more difficult to challenge the charges once the work has been done.
Defense attorneys should sign off on the overall plan and budget, but they will insist that the budget be seen as a guideline or cap and not a firm charge. That is reasonable, Reisbeck suggests, but you may wish to include a provision that the attorneys will contact you for approval if it appears their work on any part of the case is going beyond the budget amount.
He suggests establishing a budget for each of these types of defense work by the attorneys:
• opening the file and conducting an initial investigation;
• reviewing the medical record;
• interviewing witnesses;
• pretrial motions;
• obtaining expert witnesses and consultants;
• negotiation and/or alternative resolution, such as arbitration;
• trial preparations;
• trial;
• post-trial motions and appeals.
The strategic plan also should specify the staff level of the law firm that will be responsible for each task.
Tell them upfront what you won’t pay
Risk managers also should establish a list of legal billing practices for which they will not pay, Reisbeck suggests. The billing practices of law firms vary widely, and once again it is better to argue about a particular billing item at the outset of the case rather than at the end when the bill is actually submitted. To give your position more validity and strength, he suggests compiling a list of billing practices the hospital routinely rejects instead of asking each law firm you work with whether it bills in certain ways. That way, you can present the list of prohibited billing practices as a standard part of your opening a case with a law firm, and it is then up to the firm to contest any particular item on the list.
The list you use may vary depending on exactly what billing practices you find unacceptable and how much law firms protest. Reisbeck provides this list of billing practices that his hospital will not pay for:
• Multiple attorneys attending depositions, meetings, routine court appearances, and similar functions.
• File review unrelated to a specific goal.
Watch for vague terms like "strategy" and "management" listed as reasons for the file review.
• "Block" or "narrative" billing.
Billing should be specific and describe who performed the task, what was done, and how the task applies to the strategic plan for the case.
• Acquainting new people with the file.
It is not reasonable for a firm to charge to get certain members of its staff up-to-speed on the case.
• A total charge for travel or expenses that could apply to other clients as well.
If the expense might apply to another client, your portion of it should be prorated.
• Billing for overhead and routine office expenses.
Some firms will attempt to bill for expenses such as "secretary time," office supplies, rent, and word processing. Also watch for obfuscation that may make simple overhead items either impressive-sounding or just indecipherable. A charge for "HVAC," for instance, is just the heating, ventilation, and air conditioning at the law office. And you don’t pay for that.
• Computer research.
The use of Lexis, Westlaw, and similar computer resources should be considered a routine part of the legal work and not billed separately. If the use of these databases will be so extensive that the firm must be reimbursed, this item should be budgeted up front.
• Summaries of expert witness and consultant billings.
The law firm should provide actual copies of the expert witness or consultant billings, not summaries. The billing should include the witness’ or consultant’s address and tax identification number or Social Security number.
• Charges for local phone calls, local faxes, or local driving.
• Charges for preparing the billing.
• Attorney charges for poring over depositions, unless a trial is imminent.
Until the trial is imminent, this is paralegal work.
• Legal research for information that should be common knowledge among attorneys.
• Duplicated efforts or work to correct a mistake or oversight by others in the firm.
• Time for training associates or staff.
• First-class air travel.
• Anything labeled "miscellaneous" or "other" expenses.
In addition, Reisbeck cautions that some overbilling will not be apparent until you take a close look at the billings for clues. One thing to look for is a member of a law firm billing for tasks that are not appropriate to his or her skill level. A law firm partner, for instance, should not bill for tasks that can be done by a paralegal. And the paralegal should not bill for tasks that can be done by a secretary.
Photocopying is a legitimate charge, but you should establish a maximum charge per page. Reisbeck uses 20 cents per page.
Your agreement with the law firm should note that payment of the bill does not waive the right to question its provisions later.
[For more information, contact William B. Reisbeck, director of risk management, Virginia Mason Medical Center, 1100 Ninth Ave., Mail Stop GB-RM, Seattle, WA 98101. Telephone: (206) 624-1144.]
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