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Hold-backs on budget overages

Legal bill auditors are necessarily pugnacious types and John Toothman is no exception. The website of his firm, The Devil’s Advocate, offers a 28-page document that discusses many aspects of managing outside counsel’s costs. Here’s one of his tough-as-nails ideas (at 11).

“To reinforce the importance of the budget, the retention agreement may provide that any fees over budget either will not be paid or will be deferred until the matter is over and the client is able to assess whether further payment should be made.”

A law firm that faces that hammer will, it goes without saying, propose as generous a budget as possible. This club notwithstanding, ultimately, the judgment of what ought to be done and for how much will return to the desk of the inside lawyer (See my posts of Nov. 6, 2005 on the uncertain efficacy of matter budgets; and Dec. 15, 2005 on the practicalities of such budgets.).