If you charge back outside counsel fees to clients, do clients then meddle with your management?

Some general counsel reject the suggestion that they charge back to clients the outside counsel payments made on their behalf. One reason for such reluctance is a fear that clients will then believe they have a right to say which law firm to use and how to manage the firm, to meddle in the management of cases, to pick and choose which associates and partners, as if even to sit second seat at trials.

Fear of clients meddling is misguided. In my experience, clients do not want to be so involved; at the same time they will sometimes want to know more about how the costs charged back to them were spent. Quite rightly, and these inquiries help to keep corporate attorneys on their toes, being careful stewards of their clients funds (See my post of July 31, 2006: try to charge back 100% of fees; Aug. 31, 2005: hypothetical bills sent to clients; Oct. 30, 2005: dissenting view on whether client charge backs create market discipline; May 31, 2006: charge backs to clients; Oct. 15, 2007: client gatekeeper for invoices; April 17, 2006: comments on accounting granularity; Nov. 10, 2007: approval levels can rise if clients review bills; and Feb. 27, 2008: 60% charged back at one law department.).

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