The following post is a condensed excerpt from Taylor Smith’s article Knowing What You Don’t Know: Practical Considerations for Picking the Right Legal Spend Management Partner, available in its entirety in our Experts’ Corner.
Effective and successful legal spend management in today’s world is, in my opinion, based on three core tenets. This three-pronged approach influences what litigation executives should look for in their legal spend management partner.
It’s not just about cutting bills. Historically, auditors (and some e-billing software companies) expressed their value by emphasizing how much they could cut legal invoices. As attractive as this may seem, most savvy carriers recognize the importance of the role that their counsel play. For them, legal spend management is about compliance with billing guidelines and not bill cutting.
Human expertise is a critical component to the process. Roughly 70-80 percent of all adjustments made to legal invoices are what can be called “discretionary.” That is, they require some element of human discretion to judge whether the billable item is appropriate. Software does a good job today of flagging a specific line item on a bill, but it can’t judge the appropriateness of a charge. Therefore the combination of advanced software and human experts is the best approach, hands-down.
It’s all about the analytics. The buyer of legal services gets to define the value that firms provide. And what buyers of legal services generally want are the “best attorneys for the job”, not the “least paid attorneys.” Of course, “best” can be defined to include cost effectiveness. However, more sophisticated buyers look at many things beyond cost, such as speed of resolution, accuracy in predicting exposure, and subject matter expertise. This data exists within the invoices being processed, and analytics is the path to those evaluations.
If this three-pronged approach resonates with those looking for effective legal spend management, then several other things must be true also. Specifically, there are three attributes that I recommend litigation executives look for when selecting a new spend management software and services provider:
- Insist on the Best Technology – Pick a provider with the industry’s most advanced artificial intelligence and machine learning capabilities. These technologies dive much deeper into invoice data, spotting patterns, building algorithms, and learning from each invoice over and over. Ensure that the provider specializes in integrating its software into your existing claims system, into Microsoft office, and other existing platforms your teams use every day. Focus on customer-centric workflows that help your teams work smarter.
- Insist on Superior Analytics – The point of machine learning, artificial intelligence and advanced analytics is to gain new insights, improve counsel performance, and optimize case outcomes. Insist that the data and information can be presented to your litigation management teams in ways that make sense. The ability to compare different firms against one another is key, as is the ability to find and use benchmarking data.
- Select A Consultative Provider – In a world where your provider may offer valuable insight, don’t pick a provider that sells you software and says good luck. Instead, focus on selecting a provider that promotes transparency with your law firms, that believes stronger relationships with counsel are the goal --- not an invoice cutting frenzy that jeopardizes your relationships with counsel and undermines your longer-term objectives.
The industry has moved beyond a focus on bill cutting to something more exciting, with artificial intelligence and machine learning and truly consultative approaches. It’s a wonderful time to be looking at new opportunities in legal spend management. With this three-pronged foundation and the three provider attributes in mind, litigation executives will minimize surprises and address their challenges much more effectively.
To read more about the choice of ELM providers, as well as the history of legal spend management, download the full article from our Experts Corner here.