"There’s a clause in your agreement that talks about incurring expenses in connection with your representation and they can bill you for these up to a certain amount without prior approval.
Tell them you require them to get your approval before incurring such expenses. And list out the expenses you will not pay for. It’s likely they will have a clause detailing the types of third party expenses they can incur on your behalf. Push back on this list and exclude items like mileage, travel, food, phone charges, copying and research expenses such as Lexis-Nexis, storage and data management services."
Ridiculous. As a business person that has dealt with lawyers, consultants, accountants (in the bricks and mortar world, not the startup lottery) as well as has clients that I do work for (so I've been on the other side) I would totally steer clear of anyone that comes out saying things like this. Unless I was desperate.
It's just not the way to have a professional relationship which involves trust.
Get approval on every expense? Even minor ones? Not going to reimburse for something unless on a white list? Get serious.
This strikes me as penny wise and pound (and time) foolish. The major cost is the hourly rate and whether you are being billed honestly for that (or not). And that is something you have no control over unless you are watching them all the time.
To expect that it matters that you will not approve a minor charge when the attorney can easily jack up his billing on the major charge is a waste of time.
Better to question the bills after the fact and if you feel that you shouldn't have to pay for the lunch bill that your attorney had when meeting with someone on your behalf while leaving a large tip by all means bring up the issue.
But just like with employees a certain amount of leeway is often necessary.
I would say that it is "penny wise and pound foolish" for a lawyer to nickel and dime by charging for expenses like these. The bigger picture is actually that the lawyer realize that eeking out every little expense from a startup client isn't productive. The aim should be helping that company to get to a stage that they can have a big exit, and charging for things like these is only going to constrain that possibility. Lawyers often seem to pass on charges that in any other industry would be considered a cost of doing business. The aim here is not to accept that from a lawyer. The main cost should be the rate rather than the ancillary services and expenses.
"that the lawyer realize that eeking out every little expense from a startup client isn't productive."
You are making a statement of fact based on your perspective. You could be right. My thoughts are based on many years in business, what I have experienced, and what I have observed. [1]
"The aim should be helping that company to get to a stage that they can have a big exit"
Except that it's a lottery and the attorney probably realizes that they have to make hay while the sun shines (or whatever that expression is). Most companies won't progress and won't have big exits, right?
Now if you want to argue that by doing this enough startups will be offended to the point that they won't refer business to them that might be a valid criticism. But in a world where people forget the price and remember other things (like results or even the way they are treated) I'm not sure that is the case (although it could be).
"Lawyers often seem to pass on charges that in any other industry would be considered a cost of doing business. "
What do you mean by any other industry? Are you saying that there aren't consultants that do the same thing? There are.
As far as those industries that don't do that it's because they are charging for a product or service that has certain bounds already set and baking in their costs into that. Law is charged generally by the hour. So it makes sense to break out those costs. Or they have certain methods that have billed over time that are not easy to change. My accountants don't charge when they write a letter because it's not what accountants do. But they charge me a fixed rate for services also.
And, in fact, I'd rather hire a painter and say "give me an hourly rate and I'll buy the paint and supplies for you" that way I don't have to worry that he is estimating to high and baking that into the price.
"The main cost should be the rate rather than the ancillary services and expenses."
If we can assume that if they have to eat things that they previously passed on, in order to make the same profit they will then have to either a) charge more per hour or b) bill for more hours, right? Unless you are arguing in general that "lawyers make to much money" which is an entirely separate argument.
[1] Now I once had a case where an attorney charged me for fedex overseas that the opposing side requested and made me pay for it. I said "why did you charge me" and he said "that's what attorneys do for each other". My thought was "why do I have to pay money so you can maintain a good appearance with that attorney"? But when you think about it if the attorney on the other sides sees that your attorney has a cheap client they will also know that that client won't want a long dragged out case which runs up legal bills. And they will use that to their advantage. I know this because I have done that to my advantage in situations (both legal and non legal). After all nobody wants to go against a deep pockets client. (This doesn't cover every possible pro and con but only illustrates that there are dynamics that you might not think of.)
Ridiculous. As a business person that has dealt with lawyers, consultants, accountants (in the bricks and mortar world, not the startup lottery) as well as has clients that I do work for (so I've been on the other side) I would totally steer clear of anyone that comes out saying things like this. Unless I was desperate.
It's just not the way to have a professional relationship which involves trust.
Get approval on every expense? Even minor ones? Not going to reimburse for something unless on a white list? Get serious.
This strikes me as penny wise and pound (and time) foolish. The major cost is the hourly rate and whether you are being billed honestly for that (or not). And that is something you have no control over unless you are watching them all the time.
To expect that it matters that you will not approve a minor charge when the attorney can easily jack up his billing on the major charge is a waste of time.
Better to question the bills after the fact and if you feel that you shouldn't have to pay for the lunch bill that your attorney had when meeting with someone on your behalf while leaving a large tip by all means bring up the issue.
But just like with employees a certain amount of leeway is often necessary.