In the midst of a recession, cost-cutting is a top priority for many corporate legal departments. And general counsel looking to pinch pennies have turned their attention to outside legal spending, namely bills from their law firm partners, the Wall Street Journal (WSJ) reported Monday.
Often at issue are “soft costs,” which include expenses such as research database fees and word processing and photocopying costs. Many law firm clients argue that these expenses are part of a firm’s overhead, and not the financial responsibility of the client. Faced with these costs, many GCs are pushing back—or refusing to pay altogether, according to a Mattern & Associates study cited by the WSJ.
A 1993 opinion from the American Bar Association seems to bolster the in-house argument. “In the absence of an agreement to the contrary, it is impermissible for a lawyer to create an additional source of profit for the law firm beyond that which is contained in the provision of services themselves,” the opinion reads. “The lawyers’ stock in trade is the sale of legal services, not photocopy paper, tuna fish sandwiches, computer time or messenger services.”
But not all law firms are unscrupulous: Rob Mattern of Mattern & Associates told the WSJ that the largest percentage of write-offs are from law firm billing attorneys trying to reduce costs for their clients.
Read more about GCs’ money-saving measures at the Wall Street Journal.
And for more InsideCounsel stories on in-house legal budgets, see:
Companies increase legal spending, both in U.S. and abroad
The pros and cons of 5 popular alternative fee agreements
