Linda Hovanec is a senior director in product management, global business intelligence and analytics at Wolters Kluwer ELM Solutions. Lately, she has been devoting a good deal of time to studying law departments’ billing processes. A recent survey that ELM Solutions collaborated on revealed that companies aren’t all that happy with the billing guidelines they use to manage their law firms, and they aren’t doing very much to make them better. As Hovanec sees it, they’re missing a big opportunity to simultaneously strengthen their guidelines and enforcement, while also improving their relationships with their law firms. Her remarks have been edited for style and length.
Your company and Gartner put together a survey recently about billing and staffing guidelines. What did you hope to learn from that survey?
Linda Hovanec: Well, we really wanted to understand how corporate legal departments were using billing guidelines with their law firms. And then how well their law firms were complying with the guidelines. We surveyed more than 50 large and mid-size companies, and 62 percent said that they currently had billing and staffing guidelines in place.
Are detailed billing guidelines important to them? And how do most corporate law departments use them?
Hovanec: They're extremely important. Billing guidelines are a primary way that you communicate to your outside counsel about how they can deliver the value that you're looking for from them. Nine out of 10 of those surveyed said that the guidelines should be detailed and specific. What we learned is that the most common use of billing guidelines was really about controlling costs; that was the highest percentage – over 75 percent. Ensuring compliance with their processes was also a high priority for corporate legal departments. That was up around 60 percent to 65 percent. Creating consistency across their outside counsel relationships was also a priority.
Was there anything in the results that came as a big surprise to you?
Hovanec: It was a little surprising that only 31 percent were satisfied with their guidelines. And none actually said that they were completely satisfied. They're not working as well as they could be. The other thing was that they're not looking at them regularly. Less than a third said that they updated their guidelines annually. We know that they're not including emerging topics like data security or diversity and inclusion. We were surprised that the updates were not happening regularly. The other thing that was interesting was that around 36 percent don't know who is responsible for overseeing the guidelines, which kind of leads back to why they're not making the updates – because more than a third of them don't know who really owns the guidelines and enforces them.