"It's a drastic change," he added. "Clients are no longer satisfied with bills and having to pay, pay and pay. They want the biggest bang for their buck."
Indeed, some clients have taken the once unheard-of step of hiring legal watchdogs to audit their bills for overcharges, waste and even fraud.
In Philadelphia, a firm called Legalgard Inc. performs this service - for its own fees.
Initially, said Legalgard vice president Frank J. Dalicandro, the reception
from law firms "was cold because the question of reviewing a legal professional's work was unprecedented."
"It's saved us money," said Eric Larson, a senior claims manager for St. Paul Insurance Co. who has hired several auditors, including Legalgard, to review bills because of skyrocketing legal costs.
But more often, clients go directly to their firms. Lawyers report that clients are increasingly hounding them about everything from the number of lawyers assigned to a case to bills for meals, couriers and secretarial work. They are demanding itemized accountings of work billed, cuts in fees and volume discounts.
Before paying a dime, clients set budgets and caps on costs, and scrutinize hourly billings.
They even delay paying bills; refuse to pay for some expenses, such as word processing, overtime, cabs and first-class air fare, and spread their business around among firms.
"No client is as concerned about costs . . . as when there is no money being made or they are losing money," says Peter M. Mattoon, managing partner of Ballard, Spahr, Andrews & Ingersoll.
"It's encouraging (lawyers) to look at new ways to provide the most effective counsel."
Such as, for example, accepting flat fees for a job instead of billing a client for every hour and expense incurred. The result is that clients end up paying their lawyers in the same way they might pay plumbers who agree to do jobs for fixed prices and get paid when the work is done.
"There's a shift in power from the law firm to the client," said Ward Bower, a principal in the legal consulting firm Altman Weil Pensa, of Newtown Square. "The client is in the driver's seat."
These cost-cutting efforts are putting pressure on the bottom lines of law firms at a time when demand for legal services is flat, competition is up and many firms are struggling to stay afloat.
Indeed, last month, a 147-year-old Boston law firm, Gaston & Snow, dissolved under the burden of $20 million in debt, an exodus of key partners and cash-flow problems caused by slow-paying or bankrupt clients.
Only weeks before the firm disbanded, Gaston & Snow's chairman said its problems were not unusual.
"I don't think it's dramatically different from a lot of firms," Roger D. Feldman told the Boston Globe. "I think it is better than some, and worse than some."
Another part of the problem, another Gaston & Snow lawyer said, was that clients "don't have cash either" and leave law firms with unpredictable cash flows by "stretching everybody out."
In Philadelphia, lawyers acknowledge that the financial troubles of clients and their efforts to cut legal costs contribute to cash-flow problems.
At Dilworth, Paxson, Kalish & Kauffman, where the threatened departure of the chairman and key partners last month raised fears about its financial future, lawyers are looking for ways to improve cash flow. For example, Dilworth Paxson is looking to hire a non-lawyer to manage the firm's business operations and to track receipts for services.
"Clients look at lawyers as their bankers - and (lawyers are) always the last to be paid," said Bruce W. Kauffman, Dilworth Paxson's chairman. "They may want three, six even nine months to pay, and would never think about paying interest to their lawyer."
In a recession, lawyers have to find ways to help clients emerge from their
financial difficulties, Kauffman said. So firms stretch out payment schedules, give volume discounts to their biggest customers and offer breaks on fees.
But at all firms, there is a limit to the legal good will.
"If clients could pay and aren't, you have to tell them to pay or go elsewhere," Kauffman said.
But even clients who pay apparently are making it tougher on their lawyers. They are asking outside law firms for budgets upfront for work because they want to know what they are getting into.
"Clients are very careful about the things they bring to attorneys - where before . . . they might routinely call their lawyer," said Philip Shiekman, managing partner of Cohen, Shapiro, Polisher, Shiekman & Cohen. "Now they will not call or (will) make it clear they only want to get a handle on what a lawyer thinks in one phone call, not with a lot of research."
So far, law firms have not responded to client complaints with wholesale reductions of hourly billing rates. They say they will hold the line in other ways, such as by not increasing the salaries of new associates.
Shiekman said firms also could cope by assigning younger lawyers, whose services are billed at less per hour, to handle some work. And they can carefully monitor bills.
But if the recession is prolonged, law firms will face increasingly tough decisions about how long to carry clients, how much to reduce total bills, and whether to charge clients interest on delinquent bills, he and other lawyers say.
"Firms don't (charge interest) yet," Shiekman said, "but they've thought of it."
At the same time clients are forcing their lawyers to float them, they also want their law firms to pick up some of the risks of representation.
When lawyers lose cases or do not get the rewards a client expects, for example, unhappy clients want lawyers to pick up part of the tab.
"Clients can become highly critical of their lawyers, and a lot of the criticism is unjustified," said Korn of Korn, Kline & Kutler. "There's an awful lot of carping and nit-picking going on, too."
Concern that they are being ripped off and outrage over skyrocketing legal costs have created a cottage industry of outside legal-auditing firms.
These legal watchdogs provide their services - for flat fees ranging from a couple hundred to a few thousand dollars or according to money saved - to go over a client's legal bills for excessive billings, errors or waste.
Legalgard says the demand for legal-cost containment has allowed the firm to experience skyrocketing growth since it was started in 1987.
Whether the oversight comes from outside auditors or their clients, law firms insist the scrutiny is not unwelcome.
In fact, some suggest that law firms should do everything they can to provide more efficient legal services and to control costs for their clients so that the clients - and the firms - can survive the recession.
"Historically, clients have ridden us hard, making sure we're lean and athletic, but it doesn't mean we couldn't do better, shouldn't do better," said David F. Girard-diCarlo, managing partner of Blank, Rome, Comisky & McCauley.
"Certainly, when clients have economic pressures, it's expected and appropriate," he added. "No marriage is good if one side is taking advantage of the other."
