Three simple ways to reduce legal costs

Legal costs in the public sector are skyrocketing, according to figures released by the Attorney-General’s Department. Fifteen percent growth over two years, eight percent last year. $792m spent across federal government alone. We need lawyers – but surely not this much?

Nearly 20 years ago, the CEO and founder of a company at which I once worked said one day: “you need two people to run a company – a lawyer and an accountant.  But never let either of them run your company.”

That’s not to say that those that hold legal and accounting qualifications can’t run business – just that they can’t be acting as lawyers and accountants when they do. It has been great advice over the years – particularly as we have worked on the bigger contracts.

I like lawyers, mostly. They are clever, typically articulate, and have a useful skill of identifying boundary issues, ambiguity, and things that might go wrong.  They can advise on the legal ramifications of actions. They can create great protections in case something goes wrong. They are great in court – if that’s where you want to go.

Unfortunately, lawyers are a cost to the bottom line, without value to the top line.  In public sector parlance, they are a drain on budgets without adding value to outcomes.  You can’t get better outcomes from a defensive play.

Good job to all the legal firms and Partners who have convinced government that they need more of their services.  Legal support is expensive.  Experienced Partners are highly priced and lawyers always hang around in pairs – unless someone yells Discovery, in which case they arrive with hordes of graduates!

Lawyers could charge less, of course. They need only to increase the utilisation of their staff and reduce their overheads.  It doesn’t seem that many are either willing or able to do that.  Lawyers know clients think they are expensive, but why change if the customer feels they have no alternative?

We can’t expect lawyers to change. But we can change the way we deal with lawyers.

There are three simple things you can do to reduce legal costs.

  • Contracts. Lawyers don’t know how to run businesses, projects or services.  They don’t put things in contracts that foster better outcomes, they put things in to deal with matters when they go wrong. They don’t focus on the statement of work or performance frameworks; they focus on the terms.  Instead, engage people who can draft commercial agreements well.  Don’t use lawyers to draft tenders and contracts – use them to review the ones drafted by your commercial experts.

  • Negotiation. The negotiation of contracts and other arrangements is a business issue. It doesn’t require a bevy of lawyers (remembering they tend to come in pairs anyway) to sit through all the discussions. Save them for the negotiations that are specifically legal in nature such as liability, IP and other rights based clauses. Build teams that negotiate and draft reasonably clear agreements. The legal support can then finalise unambiguous wording – giving the added advantage of an independent review of the contract.

  • Disputes. Reach for a lawyer for workplace and other litigious disputes that are likely to be taken out of your control – for example where the decisions are based on precedent and interpretation by tribunals, commissions and other third parties. Commercial disputes, on the other hand, are a business issue, not a legal one. They are negotiable and in your control. Avoid arguments over who is right and look for negotiable pathways. Your goal is not to apportion blame but to find a workable solution. Mediation is a useful tool but it, too, is not a legal process.

We don’t advocate that you go without lawyers. You will always need some legal services.  We just don’t think they are needed this much. Use your lawyers wisely and save their expertise for where it is truly necessary and beneficial.

John Glenn, Managing Director

John is an experienced and successful strategist, negotiator and dispute resolver.  He has a wealth of experience in the delivery of complex programs, often with significant technology and logistics components.  He has operated in both the public and private sectors in project delivery and senior executive roles, and is often in demand to lead rapid intervention and project turn-around work.

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