As I shoveled my driveway for the third time in as many days, I got to thinking about how data can start piling up just as easily: Legal invoices, budgets, analyses, adjustments, reserve schedules – you name it. I also began to find creative places to put it, all of which are problematic - back out on the street, next to the fire hydrant, in my neighbor’s driveway (that’s actually ok. They deserve it. They’re in Hawaii for three weeks).
The same might be said of your network, which has morphed into one big electronic English muffin, with every nook and cranny storing something important to somebody. If you’re an attorney responsible for all patent-related matters, do you maintain all law firm invoices and adjustments in your own folder on your local drive or on the network? Even if it’s the latter, how do you communicate and manage workflow with Accounting? Do you maintain a spreadsheet of approvals, adjustments and accruals? How does this information inform budgets? Does everyone know that you’ve just superseded your ‘FY 2010 Patents Budget – Final Revised3.xls’ Excel file with version 4?
If your workflow is as unpredictable as the weather, then it’s time for some new business rules, and those rules start with centralized data storage. There’s a tried and true saying that’s popular with Lean/ Six Sigma professionals, “a place for everything, and everything in its place.” It’s true on the factory floor, and it’s true for back office legal information.
Perhaps this is where the snow blizzard – data dump analogy breaks down. After all, snow melts and goes away. You don’t really care to have it stick around, unless of course you’re a skier, bobsledder, snow machine enthusiast or any variety of winter athlete, Olympic or otherwise. For most of us, there’s only so much igloo building, sled riding and snowball fighting we can take (“…honestly, Mrs. Carmody, I had no idea the kids’ snowball catapult would go that far…I’m sorry about your poodle… how long does she have to wear the cast? Yes, ma’am…”). Further, while my storage options for shoveled snow are limited (and ill-advised), the cost of data storage is cheap.
So why not centralize data for enhanced knowledge management? First, from a cultural perspective, since you’re accustomed to managing your own information (and relationships), chances are you’re not going to be receptive to giving someone else control over when, where and how your invoices, budgets and reserve estimates are stored. After all, you need it to manage relationships with outside counsel and the CFO. Add to that the sensitive nature of the data (privileged vs. merely confidential), and you have a good case for keeping others out of your domain. Your system is not perfect, but it works for you. Consider the alternative, however, where more predictable workflows translates into faster and more accurate invoice adjustments, approval and payments, which allows you to focus on what you do best.
Second, you don’t want to cede control to just anyone. Someone has to manage that database. Legal workflows take a particular specialty, someone who understands your needs and supports your technology. As noted in the just-released Legal Technology Institute’s survey, most corporate law departments tend to use their company’s IT resources, as needed. The survey goes on to state that generally, the ratio of IT staff to end users typically ranges from 1:20 to 1:35 – that is, one IT specialist for every 20-35 people. Support requires a dedicated resource, not just a shared service.
Third, managing the database requires business rules. For example, protocols might demand that you should only be able to see invoices, budgets and other information related to your matters. There are data formats (e.g. LEDES, UTBMS, etc.) that must be communicated and adhered to by outside attorneys and internal staff. The practice of law demands that one follows protocols. Your workflows should be no different.
In your efforts to improve workflows, You may think of centralizing data as hiring a snowplow. I don’t know about you, but I’ve had enough of shoveling my driveway. With my driveway clear, I can move on to the day’s more important tasks, like tracking down that vet bill for Mrs. Carmody’s poodle.
]]>Given the rush to alternative fee arrangements since the recession began, might we be seeing a new equilibrium emerging, where alternative fees drive new thresholds of billable hour efficiency?
]]>This trend has not been good news for small business, where owners and managers have little experience in controlling legal costs. Sacramento-based Foremost Superior Marble settled an overtime suit brought by three former employees. The suit lasted eighteen months and cost the company $400,000 in legal fees. As the economy limps along, expect more small- and middle market companies to face similar suits.
There is one downward trend, however, in California.
The number of overtime complaints filed directly with the state - in which plaintiffs do not have to spend money on attorneys - dropped to 7,847 in 2009 from 8,588 in 2008, a decrease of 8.6%. This suggests that employees expect bigger payouts by hiring trial lawyers.
Foremost Superior Marble used to have 24 employees. It now has 13.
]]>These results should come as no surprise. The current economic climate exacerbates companies’ struggles with controlling legal costs, as increased regulation, employment issues, bankruptcies and other issues continue to dominate the schedules of GCs.
]]>Corporate counsel seeking more value from outsourced law services
]]>While we’ve seen a shift in economic power from attorney to client, I’ve encountered more general counsel who are less concerned with merely negotiating lower rates than they are with a more holistic approach to cost control – an approach that not only reduces costs, but also manages expectations and improves performance.
Our clients want to reduce fees and expenses, but if the tradeoff is a decrease in quality or an increase in administrative oversight (of less experienced associates), any short-term economic benefit will be far outweighed by more fee volatility and a contentious relationship. Some, therefore, are willing to pay for more experienced attorneys as long as there are corresponding increases in predictability and efficiency.
]]>Last year saw law firms restructuring their practices by deferring start dates for associates, reducing salaries and other measures. Law departments responded to doing more with less by evaluating the merits of legal process outsourcing, exploring alternative fee arrangements and identifying and monitoring key metrics.
For our part, we continued to improve LegalEyeTM, launched this blog and ended the year with a terrific sponsorship of ALM’s Controlling Legal Costs conference. Brad Blickstein and his staff were a pleasure to work with, and I very much enjoyed my panel discussion with Brian Benjet, Vice President and Deputy General Counsel of Cigna, and Terri Martorana, Senior Manager of Outside Counsel and Vendor Relationships for Abbott Laboratories.
We’re just getting warmed up. We have many things lined up in 2010, including the LegalEyeTM newsletter and a speaking engagement at the Council on Litigation Management’s annual conference March 24-26 in Ponte Vedra Beach, FL. A big thanks to Adam Potter and all who continue to make CLM such a success after just a few short years.
Like you, we realize that cost reduction is just one third of controlling legal costs. We are acutely aware of the need to manage expectations through more accurate budgeting, enhanced communication and other initiatives. Improving performance by streamlining processes, benchmarking key metrics and realigning resources is equally important.
We’re proud of what we’ve accomplished with LegalEye’sTM capabilities in each of these areas, and are preparing to launch version 2.5, which has more bill processing options, enhanced reporting and improved benchmarking. We invite you to schedule a demo to see how LegalEyeTM can help you control legal costs. Of course, our work, like yours, is never done. Our resolution will continue to be helping you reduce costs, manage expectations and improve performance without sacrificing the quality of legal representation.
]]>