Fund Directions - What Boards Should Know About Curbing Legal Fees

What Boards Should Know About Curbing Legal Fees

In this environment, with assets down and expenses up, its not surprising that fund boards are looking for ways to reduce the expense burden on their funds and ultimately on their shareholders. One area that may be ripe for review is legal expenses. In some cases, funds and shareholders end up paying for multiple lawyers, e.g. fund counsels and counsel for the independent directors. Although that may be appropriate and necessary, boards may want to look at ways to maximize the benefits and minimize the expense. Boards should understand firm billing practices and policies, demand detailed invoices and negotiate alternative billing arrangements with incentives for cost efficiency.

George Martinez George Martinez, executive director of fund administration, and Helen Robichaud, vice president and associate general counsel at J.P. Morgan Worldwide Securities Services, spoke with Fund Directions last month about actions boards may want to consider in order to better manage legal expenses.

Billing Model

In many cases, billing time is the best alternative when dealing with complex matters, new issues or litigation. However, there are many situations where a more cost effective alternative may be appropriate.

Board Meetings & Related Matters

Board meetings are essential and regardless of the number of meetings held during the year, many components of the actual meeting are routine. Instead of paying by the hour, boards may want to consider negotiating a discounted annual fixed price for routine board meetings. Even the annual contract renewal meeting may be a candidate for this type of approach if the same process has been followed for many years.

In cases where outside counsel is used to ...

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What Boards Should Know About Curbing Legal Fees