How to Analyze Law Firm Billing Practices Closely

How cost-efficient is the attorney and firm? You want to look at hourly rates but also not mistake them as the biggest factor in managing costs. Law firms can quote a lower hourly rate but manage to “bill with a heavy pencil” on tasks to compensate for the low rate. Conversely, a worker’s compensation defense attorney with a lofty rate may be a bargain if, due to her experience, she can do the same task in half the time it would take the average lawyer to accomplish it. By all means, ask for a fee schedule but do not be beguiled or seduced by a low hourly rate.

Avoid approaching workers compensation legal services with a gasoline price war mentality. This week I drove behind a lawn service truck bearing the following message, “The bitterness of a poor job lingers long past the sweetness of a low price.” If you hire a “cheap” lawyer with a low hourly rate and he ends up botching a winnable contested comp case, the boss will not console you with the fact that you saved $10 per hour on the lawyer’s hourly rate. This is being penny-wise and pound foolish.

In conducting due diligence on workers compensation legal defense costs, dig deeper into the firm’s billing culture. Possible questions include:

Do your attorneys have annual billing quotas? If so, what are they?
How heavily are billings factored in associate and partner performance reviews?
If we pick your firm, can you lock in these rates for a three-year period?
Can you give us budgets up-front estimating the time and expense of each case?
Are you willing to consider any alternative to time-and-expense billing?

Focus not just on costs but also on the firm’s value. Does the firm offer any value-added services? For example, some law firms publish a newsletter highlighting changes and implications of the comp laws. Some put on free seminars for adjusters. Some may even send an attorney to your office to do a short in-service presentation on a topic germane to workers compensation defense.

Ask and encourage your firms to offer these!

Kevin Quinley CPCU, AIC, ARM is a claims consultant, trainer, speaker and expert witness. He is the author of ten books on various aspects of claims management. He is a contributing author to the IIA textbook for the Associate in Claims courses, Principles of Workers Compensation Claims (Second Edition) 1998. You can reach Kevin at kquinley@cox.net, by phoning (703) 239-1694 or via his website, www.kevinquinley.com

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Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.