. Buying Legal Services. Jon Jenkins, a local attorney, was contacted by a doctors' professional corporation to represent it in a series of legal matters. After a negotiating conference, Jon offers to provide up to 400 hours of legal services during the next year if the corporation will pay a retainer of \(\$ 3,000\) per month plus direct expenses. After 400 hours, his rate is \(\$ 100\) per hour. Or he could charge the corporation \(\$ 130\) for each billable hour plus direct expenses.

Dr. Beall, chief administrator for the doctors' group, thinks that a competent attorney could be hired full time for \(\$ 90,000\) per year including direct support costs. He knows that the firm has used about 15 hours of legal services per month for the past two years. He sees a 50 percent probability that this trend will continue for the coming year, a 20 percent chance that 20 hours per month will be needed, and a 20 percent chance that 40 hours per month will be needed. A 10 percent likelihood exists that one particular case may force the firm to need 100 hours per month.

Required:

Recommend an approach to analyzing Dr. Beall's purchase of legal services. What decision does your approach suggest?