In the July 2011 issue of Legal Technology News under Action Items there was a piece written by Monica Bay titled “Did E-Discovery Kill Howrey?” The gist of the piece was how Howrey created a wholly-owned subsidiary called Capital Litigation Support to provide litigation support services to the firm’s own clients. The problem was, as reported by a former employee named “Paul W” on the WSJ blog, was that this wholly owned subsidiary was significantly more expensive than many third party vendors providing the same service. He closed his blog with the comment “Corporations are demanding reasonable fees that are comparable with other firms in the practice type”.
Now I don’t know if E-Discovery killed Howrey or not, but I do know that unfair cost recovery practices do damage client relationships and leads to questions about fees, hours and a whole host of other areas. Firms that do charge non-competitive rates may think they are making out but in the long term there will be consequences. A fair, verifiable cost recovery strategy will not only lead to sustainable recoveries, but in the long term, prove to be much more client advantageous.