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Don’t scrutinize disbursements as closely as hourly fees

Charles James, Chevron’s general counsel, disagrees with me, according to InsideCounsel, Feb. 2007 at 10. He places that focus – “scrutinize costs as closely as fees” – ahead of managing outside counsel staffing as well as bringing work inside. Possibly the order is random, but even so, disbursements are small game (See my post of April 18, 2005 and Aug. 20, 2006 on my 10 percent estimate; and Oct. 24, 2005 on FMC’s inclusion of disbursements in rates.).

It’s fine that his department has adopted “universal outside counsel guidelines specifying [Chevron’s] policies regarding costs and disbursements,” and instructs its e-billing system to ferret out violations. The tough decisions, however, and the best return on time invested, are to closely direct what and when outside lawyers should work on (See my post of Oct. 5, 2005 on Citigroup’s GC, and his focus on staffing patterns and risk/reward decisions.).

The lure of disbursement hunting is that shooting fax charges is easy to do, easy to explain, and easy to mount on the wall. The mistake is that disbursements are a dime on the dollar, so all the big game escape.