In-House Counsel Take on Outside Expenses

Nothing irks in-house counsel more than unreasonable expenses in outside counsel bills. But what’s considered unreasonable? A couple of in-housers offered their thoughts Tuesday at an Association of Corporate Counsel seminar in San Diego. (Technically, the subject was “Leading Edge Processes for Selecting Outside Counsel.” But an important first step toward selecting would appear to be eliminating past overbillers.) Eric Abbott, associate GC and director of IP management for Progressive Gaming International Corp., doesn’t like getting billed $1 a minute for telephone call expenses, as he says has happened in the past. He also doesn’t care for questionable legal research, especially from expensive outside counsel. “If you’re paying someone $600 an hour to do patent litigation, they don’t need to spend an hour re-reading the Markman case,” he explained. Bradley Block, managing counsel for litigation at McDonald’s Corp., has issues about legal research, too. Specifically, he doesn’t like being billed for Lexis (or Westlaw) searches, because he believes few major law firms are billed by the search any longer. Most have or should have flat-fee arrangements with online search providers. “It’s all part of overhead,” he said. (Abbott and another panelist said they generally do allow such expenses, though the betting here is they won’t be much longer.) Block also suspects that some law firms may be passing along travel expenses that they receive year-end rebates on depending on the amount of travel they do. He said he requires his outside counsel to refund him the value of any such rebates. Finally, Block, who acknowledged that McDonald’s size helps enable his hawkishness, said he inserts a “most-favored nation” clause in his agreements — meaning that outside counsel promise that any discount granted another client will be awarded to McDonald’s as well. “Nobody pays retail anymore,” he explained.

— Scott Graham

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