
What does a 200-Page Legal Bill Look Like? - outericky
http://blog.simplelegal.com/what-does-a-200-page-legal-bill-look-like
======
7Figures2Commas
I think there's a place for SimpleLegal and services like it, but when it
comes to managing professional service fees, some things are worth pointing
out:

1\. In many cases, clients have themselves to blame for "unnecessary" costs.
Lots of clients fail to educate themselves on legal issues before they engage
with their attorneys, so interactions are lengthier than they need be, and
often some work that clients can do themselves (organization and preparation
of materials, etc.) gets offloaded to the law firm. Many costly litigation
matters arise because clients aren't proactive on the prevention front.

2\. Clients often choose the wrong providers. The OP writes:

"Buried in those 200 pages were charges from a law student. It wasn't much.
But charging over $200/hr for someone less than halfway through law school is
one of those self-inflicted image hits that's tough to stomach."

If you use a large, full-service law firm, you should not be at all surprised
that a summer associate billed against a matter. Do some clients push back on
summer associate hours? Sure. But if you expect an experienced attorney to
perform all of the work for you and you have a low tolerance for summer
associate time billed at substantially less than what you would pay for even a
mid-level associate, you should probably not be using a large, full-service
law firm in the first place.

3\. Ultimately, if you do not trust your law firm or are not comfortable with
the relationship between the cost of services and the value you receive, you
should find a new firm. Unless you're a multinational corporation that
purchases ungodly amounts of services from a firm and thus has significant
leverage, you absolutely do not want to be known as the stingy client who is
always complaining about cost.

Bottom line: if you're not thoughtful about how you consume legal services,
scrutinizing your bills is not the most effective use of your time.

~~~
nwenzel
Post author here. Definitely agree that clients should take time to educate
themselves. That's actually the point of the post and the point of reviewing
the bill. We can't all start off knowing everything.

Hopefully being able to forecast legal expense is part of that learning
process. In this case, the client was able to separate the one-time from the
ongoing legal spend.

Reviewing your bill is great way to make better decisions in the future. The
point in the post about investor-driven costs is a good example of something
they can do differently the next time around. Hopefully it's also something
that startup founders reading the post can be proactive about.

The post was not meant to be anti-lawyer in any way. I know much of the
commentary around law firms turns out that way. But it's certainly not my
intent.

~~~
rayiner
> The post was not meant to be anti-lawyer in any way. I know much of the
> commentary around law firms turns out that way.

FWIW, I don't think you come across this way at all. Also, I think there is
value to your product from the point of view of lawyers as well. At large law
firms, realization hovers around 85% (i.e. they collect $0.85 for every dollar
billed). Clients who are better informed about what they're getting billed for
and who have more trust in their bills are probably less likely to just
arbitrarily not pay part of it.

~~~
nwenzel
Thanks.

Not only do law firms have trouble collecting 100% of billed, they aren't able
to bill 100% of their standard rates. [0]

The same partner that made the talking/billing comment believes that part of
the problem is the amount of time between receiving the service and paying for
the service.

Our legal billing API should help fix that problem, too.

[0] See page 6 (pdf)
[http://ar.thomsonreuters.com/_files/pdf/2013ReportLegalIndus...](http://ar.thomsonreuters.com/_files/pdf/2013ReportLegalIndustryPMGeorgetown.pdf)

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toddmorey
SimpleLegal is a fantastic idea for a service. It's horribly sad that it's
even needed, but I love the work you've done. If the 200+ legal bill is a like
a log file, SimpleLegal is like an analytics dashboard. Question: is there
enough standardization in the way legal fees are presented or are there a fair
amount of edge cases you have to handle?

Edit: Do any firms subscribe to your service on behalf of their clients? That
would be a firm I'd love to do business with.

~~~
nwenzel
Hi. Co-founder here. Thanks!

We're talking to a few law firms now. Small/mid-size firms believe their
structure is a competitive advantage over Big Law firms. Our dashboard is a
good way for their customers to see that advantage.

We just added integration to Xero. Quickbooks and Netsuite will follow, so
we'll be well positioned to help small/mid sized law firm.

Re: standardization. It's industry and matter specific. Patents and IP work is
very different from litigation and insurance work. But, within each vertical
we have opportunity for price discovery which is really exciting to me. Fixed
fee legal work is growing in popularity because attorneys and their clients
are tired of watching the clock.

I like your analogy of a a legal bill to a log file. Though, hopefully
SimpleLegal isn't "like" an analytics dashboard. Hopefully it is an analytics
dashboard. Or at least a giant spotlight pointed at one of the largest P&L
line items where companies currently have almost no data.

~~~
larrys
This is a nice product you have created but I think the problem you will have
is in being able to acquire customers cost effectively that have enough pain
with legal bills to want to pay the price you are selling the service for.

You can't build a business that is (or appears to be) targeted toward startups
who may have large legal bills at one point in time.

You have to have a product that is used by traditional firms.

So how will you acquire and market to those traditional firms that need this?
And, at the low prices you are charging, will you be able to market to them?

So I think what you need to do is have one product targeted toward one
community (say low priced, startups, what you are doing now) and an entirely
different branded product that has a much higher price that is targeted toward
the legal department of small and mid sized companies.

So my feeling is you need two brandings, you can't just have different levels
of offerings out of the same website and name.

I know the people at this company:

[http://legalfiles.com/](http://legalfiles.com/)

If you look at their client list they are the type of people that would use
your product. But at your pricing there is no margin to get them involved as a
sales channel for you.

~~~
outericky
Thanks for the feedback - we'd love an introduction to the folks at LegalFiles
if you'd give it.

As for our target customers - we services startups, but it's our customers
that do routine work with outside counsel, spending tens and hundreds of
thousands of dollars monthly that benefit most from our application. We're
working our way into the million(s) per month customers soon.

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codegeek
Now someone needs to replicate this for accountants specially CPAs. My CPA's
bill always exceeds my expected number by 20% at least and I am clueless as to
how he gets to that calculation. Am I crazy not to ask him for his timesheets
?

~~~
nwenzel
Hi. Founder here. In 2012 $20B was billed by the top 100 audit firms. $14B+ on
accounting consulting services. Another $14B+ on tax advisory.

We're headed in that direction and consulting services as well.

Really all time-based billing suffers from an inherent conflict of interest.
The supplier controls the inventory. They control the amount, price, and
quality of inventory consumed while the buyer has little if any data.

For your own situation, when you ask your CPA for a budget follow up with a
request for a fixed fee proposal. If the two numbers differ significantly, ask
for an explanation of why costs might exceed budget. That at least gives you a
starting point. You could ask for time sheets, but if it's a one-person show,
there may not be any time sheets. Fixed fee is the answer.

~~~
codegeek
I own an S-corp and even single person, my accounting/tax bills are over $2500
per year. That may not seem like a lot because that _is_ considered the
average cost in my area but i just want to know how they got that number. All
I get is an invoice with a list of things he did but no way to connect those
things with the amount. Solve this problem and you might get a paying
customer!!

~~~
roc
How is a third party going to divine data that isn't included in the bill?

If you want an hourly breakdown and your current service isn't providing one,
you need to demand it, or simply find a new service.

Anyone billing hourly, one-man-shop or otherwise, ought to be able to provide
an hourly breakdown.

~~~
roel_v
I charge consulting rates, and if you'd ask me to specify by the hour what I
do I'd tell you to stuff it. People routinely asking for hourly breakdowns,
for work that priced entirely reasonable and who are kept in the loop on what
is done and at what rate, are pathological customers you don't want in the
first place.

(lawyers are used to billing in 6 minute increments, and while I think it's
interesting to go over their bills, I'd pay them (at least my current firm)
the amounts they ask too if they wouldn't provide me with a specified bill. I
sometimes feel sorry for them, what kind of life is that, having to write down
the time for every 2 minute email you write?)

If you don't trust your professional services suppliers enough to pay their
bills without knowing what they did hour-by-hour, you need to find other
people who work for you, because that's not a healthy relationship you have.

~~~
roc
It's not about trusting what they did, it's about being able to forecast and
budget for what you might like them to do in the future. If it was "services,
20 hours" you have no idea what part of a project/task/matter might have been
a cost-effective use of your budget.

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dsugarman
>“If I’m talking, I’m billing.”

I can't imagine that this kind of mindset will last into the future. The way
you set incentives drives behavior, so paying per hour for a law partner to
talk to investors just gives him incentive to talk as long as he can, not
provide you with substantial value. There has to be a better business model.

~~~
michaelt
There are two traditional ways you can incentivise someone outside your
company to do custom work for you.

If you pay them a fixed price for the job, their incentive is to do as few
hours as possible, to ignore your phone calls and e-mails, to test/mitigate
risk as little as possible, to push work back to you, to produce no
documentation, to refuse any change of scope without a big cost increase, and
to deliver the least they can within your contract. IT example: Elance

If you pay them by the hour, their incentive is to increase complexity, to
investigate every possible risk in painstaking detail, to re-do work you've
already done, to call and e-mail and hold meetings with as many people as
possible for as long as possible, to produce more (and more carefully
produced) documentation than you want, to interpret every cough and sneeze as
an instruction to widen the scope, and to deliver late and over any estimated
budget. IT example: Government IT and defense projects.

Theoretically it's possible to come up with an agreement that doesn't have
either set of flaws - but in my experience if you've got the expertise and to
do that, you've got the expertise and time not to need to hire outsiders.

~~~
eru
One way out is to have lots of small agreements, one after the other. Then it
doesn't matter what the small agreements say in detail, just that the
relationship will only go on, if both parties are satisfied.

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ogreyonder
Am I missing the link to actually get a peek at the dashboard?

All I see are account walls. I like the idea, and I'm interested -- but pardon
me if I say this looks like an astroturfed conversion funnel and not a genuine
submission.

~~~
outericky
Here's an overview of some of the screens:

[http://blog.simplelegal.com/simplelegal-
reports](http://blog.simplelegal.com/simplelegal-reports)

Though it does make sense to open things up a bit more for people to see.

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scott_s
Please put a direct link to your startup itself (not the blog) in an obvious
place in your banner.

~~~
outericky
Unfortunately PostHaven controls the main link - but I've added it to the
subheading

~~~
scott_s
Yes, that's much more clear.

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jdlshore
nwenzel, your video at [http://blog.simplelegal.com/simplelegal-
reports](http://blog.simplelegal.com/simplelegal-reports) doesn't play on
Firefox. I'd suggest using a service like Vimeo or one of the tools listed at
[http://praegnanz.de/html5video/](http://praegnanz.de/html5video/) to make
sure you have a Flash fallback.

~~~
brett
Hi, I work at Posthaven and we host his blog.

Odd, video on the site works for me on Firefox (25.0.1 on OS X), and we're
actually using mediaelement.js which is listed on the page you link to. What
OS/version of Firefox are you using?

~~~
jdlshore
Sorry, didn't see your reply. Feel free to contact me directly at the email
address listed in my profile.

I checked into this further and it looks like a bad interaction with the
FlashBlock plugin on Firefox. When I whitelisted the site, it worked fine.

