This is the last in a three-part series that addresses questionable billing practices. My first two posts focused on the top ten reports that help you identify non-compliant billing practices and getting started on improving billing practices. This final entry will help you understand how to ensure continuous improvement over time. After all, improving billing practices isn’t a one-time activity – it is an ongoing effort that both you and your outside counsel must actively maintain to be successful.
Revisiting the Data
Once you have discovered the billing practices you want to address and have had initial conversations with the appropriate law firm relationship managers about these practices, what is the best way to move forward? The key is discipline – for both the legal department and the law firm. On the legal department side, it is important to regularly run the reports that initially helped illuminate issues and to measure each firm’s progress over time. A disciplined and consistent approach can save a typical corporate legal department tens or even hundreds of thousands of dollars annually.
For the firm, clear data that reveals invoice entry details at the timekeeper and line item level provides the tools needed to improve billing habits. Once they have learned which behaviors will be flagged as troublesome, firms should remain vigilant, conduct regular reviews and ensure that the most frequently flagged timekeepers learn how to avoid these problems.
At a minimum, updated report results should be shared annually as part of law firm reviews. For legal departments whose leaders want to manage billing practices very closely, quarterly updates are appropriate. When you’ve implemented a turnkey solution, as discussed in my previous entry, these periodic updates are quick and inexpensive to run, yielding useful, cost-saving results without much effort.
Where possible, this sharing of information should be formalized as part of a structured review process. Particularly when a law firm requests rate increases, it is critical for the legal department to have up-to date information on the firm’s billing practices to make an informed decision about whether to honor such requests.
When you see good results from a law firm that has made progress, it doesn’t mean that the subject is closed. At the next opportunity, share those positive results and let your contacts at the firm know that you have noticed and appreciate the improvement.
When you see that a firm is taking an active role in reducing your unnecessary spend and enhancing data quality, you may choose to increase the matters you refer to them. If that is the case, be sure they recognize the connection between your improved spend and their increased share of your business. Similarly, it is a good idea to recognize successes internally among Legal Operations team members who have overseen the improvements. It is an effort worthy of recognition on both sides of the relationship.
Even more important than saving money on individual tasks is the knowledge that managing your cost and data integrity are important to a firm. When a firm responds well to the billing practices data you share, it shows that they are invested in their relationship with you and are committed to ensuring good value for you on an ongoing basis.
When Changes Have Not Been Made
What is the best way to handle the situation when a firm has not made the requested improvements and you continue to experience issues with their billing practices? In this circumstance, it is important to follow through with the firm. Someone in a leadership position in the legal department, such as the GC or AGC, should initiate a serious conversation with the firm, conveying the importance of the improvements being requested.
The firm should understand that you may reduce referrals or refuse rate increase requests until they improve. If you find that a firm has clearly made some effort but achieved mixed results – with some timekeepers improving their performance, but others still showing poor habits – it is fair to ask the firm to keep certain individuals off of your matters and to share that request with colleagues internally.
Once these billing practices are in hand across most of the department’s outside counsel, there is still more that can be done to optimize law firm value. Branch out to other areas where unnecessary costs might still be hidden using exception reports on topics such as most expensive matters, number of resources devoted to matters, or time spent on discovery or research. Finding instances that lie outside of the normal range for these measures can provide another source of significant savings.
It is also useful to apply benchmark data against the internal data you collect to ensure that your legal department costs are within industry average ranges. Combining your internal metrics with external benchmarks provides a complete analytics toolkit that delivers maximum value.
With improvements in billing practices as the first step, there is no limit to the added value that stronger law firm partnerships can bring to the legal department.
For more information on how Actionable Insight reports for Passport and TyMetrix 360° can help you curtail costly and inefficient billing practices, visit our website to request a demo.