Something is seriously wrong if a main reason to settle a lawsuit is to lessen your attorneys fees

Lee Cheng, the general counsel of Newegg, spoke at the most recent Consero Corporate Counsel Forum. His portion of a panel covered relations with external counsel, including cost management. One bullet on his slides advised that “an excellent reason to terminate a relationship [is] when cost of outside counsel is the primary settlement driver.” Cheng’s sub-points were two: (1) “Very common if using large law firm in any dispute with settlement value <$500K, which a big firm can easily run up in 1-2 months. and (2) “Excessive legal cost should not be the primary reason to settle.”

Not having heard Cheng’s remarks, I can still see the wisdom of his slide material. It is a backhanded swipe at large law firms, whose costs mount very quickly even when defending a lawsuit that could be settled for an amount less than their fees. As to Cheng’s second point, settlement should be decided on in terms of possible damages (to be obtained or paid) or effects on ongoing business relations or publicity or factors other than the fees of legal professionals.

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