Hiring Legal Counsel & Initial Litigation Management for Startups

by Hinshaw & Culbertson LLP

This is a follow up in our series, How to Select New Counsel and Manage Legal Fees, related to litigation management for startup companies to help ease the frustration and confusion of hiring and managing legal counsel for the first time. As you may recall, previously we have discussed typical legal needs for a startup, tips for selecting an attorney, big and small firm size, and crowdfunding and The Jobs Act.

The initial stages of litigation management become important as you close in on hiring counsel. Early litigation management can include negotiating a billing rate appropriate for your legal needs, determining whether your work can be billed at an hourly or project rate, considering deferred billing and regularly reviewing your legal billing for inconsistencies and excessive charges. As we have noted earlier in this series, legal billing is changing drastically due to the challenging economy. Many common billing practices, such as billing clients for routine overhead costs, such as utilities, copy services, library maintenance and rent, are considered excessive. You may want to discuss these types of costs in advance with your lawyer. In addition, you should consider having your legal counsel managed either by a dedicated person internally or by a third party law firm. 

Discussing Rates, Staffing and Overall Fees with Your Attorney

Attorney billing rates generally vary from $200 to $1,000 dollars per hour depending on location, complexity of the work, and the time and resources needed to complete the work. In addition, law firms are known for often charging different rates to different clients. Your funding (bootstrapped, seed or VC) may strongly influence the capabilities and cost of the counsel you hire. Discuss billing rates, deferred billing, alternative billing and retainer fees as applicable during your initial consultation. Utilize billing rate surveys and talk to a few firms. In the present economic climate, many firms may be willing to lower their rates in order to work with your startup.  You may also save money by finding a partner at a small firm with prior big firm experience who is now charging a much lower billing rate. 

Other Ways to Keep Fees Down

Project staffing can limit casework to lower billers such as junior attorneys and paralegals. Keep in mind that a lower rate does not always result in savings. An inexperienced lawyer could take twice as long to work on a project as a lawyer with extensive experience. Other options for savings include reducing the formal reports prepared by your attorney and receiving information in an informal manner (conferences, bullet point lists, etc.). Also, you may be able to reduce the time counsel spends drafting certain documents or charts by collecting basic records or information from counsel and preparing some documents yourself. We will discuss costs (expenses), legal fee billing guidelines and billing entries in future posts.

Where to Research Firms and Rates – Rate Surveys

There are many places you can research law firms and billing rates. The LexisNexis Zimmerman's Research Guide lists many databases and rate surveys. Rate surveys list various common billing rates by geographical region or by practice area. Many news articles also provide excerpts from rate surveys. Below we note a few commonly used rate surveys:

Alternative Fee Arrangements

Most law firms bill by the hour. However, some firms are starting to work with alternative fee arrangements (AFAs) including project billing, fixed fees, and bonus arrangements in an effort to manage projects more efficiently. 

Hourly Rate or Project Rate?

Hiring a lawyer at a project rate may help you avoid surprise legal bills. Some firms may have startup packages for work such as entity formation, basic contracts, financing documents, employee agreements, trademarks, and patents. Make sure to discuss whether there are additional or hidden fees for any related follow up work such as filings or additional document preparation with counsel in a proactive manner.

Is Your Lawyer An Efficient Project Manager?

Many law firms are learning from the business world how to scope out projects and use software tools to manage projects. Be sure to address possible obstacles, and detail staffing and key milestones in your budget and project agreement. Discuss how to regularly communicate the status of a project including using a project tasklist. It is also crucial to talk about “scope creep” and the boundary of the project.

The “10% Discount”

Many law firms will offer a “10% Discount” per invoice for ongoing legal work with a client. Some firms may increase their rates, negating the supposed discount. You should research and discuss the benefit of this type of discount.

Next Post - Deferred Billing

Startups may be interested in deferring their billing for various reasons. Some law firms will work with startups and defer billing until anticipated funding from an investor occurs or a round of financing is complete. We will discuss this further in our next post.

Jeevan Subbiah also contributed to this article.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hinshaw & Culbertson LLP | Attorney Advertising

Written by:

Hinshaw & Culbertson LLP

Hinshaw & Culbertson LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.