Recently, I had the opportunity to share my thoughts with attendees at the Legal Marketing Association’s P3 conference in Chicago. This annual event provides a forum for firms to discuss and learn new techniques for developing a successful law practice, including the disciplines of project management, pricing, and process improvement. The session I led, called “Analog to Success – The Defensive and Offensive Use of Information” prompted lively conversation while allowing me the chance to share observations and advice on how data can help law firms compete in a challenging economy.

It was clear from those in the room that the current economic environment has corporate legal departments (CLDs) increasingly focused on managing their bottom line. CEB has reported survey results showing that the average legal department could save $2.3 million annually by getting outside counsel better aligned to their quality priorities. In order to retain and grow business, law firms have to be able to support their clients in meeting financial challenges and making the necessary improvements. Current demands require even more innovation from law firms on the operational side than in their legal counsel.

As CLDs grow more sophisticated and better able to compare outside counsel performance on the specific measures that are important to them, firms that wish to stay competitive must know what their clients are measuring and how they compare against competing firms. Knowing this, law firms will be better positioned to fully leverage any data they themselves can collect on the most critical client metrics

What Clients Measure

Presenters and attendees at the P3 conference confirmed that it is now common for legal and claims departments to leverage business intelligence (BI) in their processes. For example, reports on billing practices are widely available and used by clients to uncover patterns in outside counsel invoicing that lead to excess costs and reduce the value of the client’s data. Here are a few examples of what these reports can reveal:

  • Rounding up task durations to the nearest half hour or hour (upbilling)
  • Billing even momentary activities at the minimum increment (six minute billing)
  • Using non-specific task codes (“other” billing)
  • Including more than one type of work in single line items (block billing)
  • Submitting identical descriptions of work done on separate occasions (duplicate billing)

The best approach is to reach out to clients and ask exactly what they measure so that you know what to keep an eye on internally. Be very honest, letting them know that you want to keep their business by keeping them happy and staying on top of those concerns that are most important to them.

Combining Effective Defense and Offense

The key to maintaining existing client relationships can be summed up in one word: Comply. This may seem like very basic advice – and of course it is. But many law firms have trouble consistently complying with client billing guidelines. And that’s an issue with which any client will be unhappy. Firms that don’t already do so should implement internal tracking of invoices against billing guidelines. Reviewing this data regularly allows you to correct and avoid any issues before the client notices.

Every client has their own unique “hot button” issues, those practices that are particularly important to them and that can lead to immediate dissatisfaction when their outside counsel firms don’t comply. For some, this may be late billing, for others budget overages or staffing irregularities. By establishing a culture of compliance, you can ensure that you avoid these “hot buttons” and stay on the right side of client satisfaction.

Take the First Steps

For a law firm that would like to begin using analytic tools, it is not necessary to take on the entire business right away. Tracking and benchmarking one or two practice areas, and then communicating openly with clients about the results, will help you learn what types of information are most useful and demonstrate the competitive value of having insight into other firms’ pricing and practices.

Data collection will also provide a new perspective on your own operations, enhancing your ability to follow your clients’ billing guidelines and meet their goals. It will even provide a solid foundation of data on which to suggest AFAs that will benefit both you and the client. The most important thing is to take those first steps and begin to reap the benefits of the data that can help you retain business and stay competitive.

To learn more about the metrics that corporate legal departments typically use, I suggest reading my book Cutting through the Maze, which provides best practices and a roadmap for legal departments to leverage data in improving performance.

For information on LegalVIEW®, the world’s largest source of legal performance data providing benchmarking intelligence, predictive and analytical models, and management insights visit the Wolters Kluwer ELM Solutions website.


About The Author

Bill Sowinski

Bill Sowinski directs all decision support services at ELM Solutions. In this role, Bill leads an expert team in the design of client legal spend analyses and benchmarking disciplines based on each organization’s specific needs. He works with clients to structure and analyze their legal data, helping to develop and deploy measured strategies that improve legal and claims department performance. A litigation expert and a pioneer in the legal analytics space, Bill has extensive experience working with key clients across myriad industries.