In the past several years, corporations have increasingly viewed their legal and risk services departments as regular business units. Instead of functioning as an autonomous unit without the pressures of budgeting, forecasting, and accountability towards the bottom line, legal departments are now being tasked with contributing to the overall health of the organization. However, not all departments have the operational manpower to accomplish these tasks in-house.
That’s where an external e-billing or legal spend management company comes into play; they take on the operational tasks of invoicing and business intelligence, leaving in-house counsel free to focus on managing their case load.
Before soliciting RFPs or meeting with potential e-billing or legal spend management partners, there are five things general counsel should take into consideration.
1. The Goals of the Partnership
Identifying the desired outcomes of the relationship will help general counsel in selecting the best legal spend management or e-billing firm. While realizing savings on legal spend is important, it may not be the only – or most important – outcome. Additional areas to consider include: What kind of data analysis and reporting is available? Do I want to evaluate my law firms and time keepers?
2. The Complexity of Your Organization
An insurance firm with the majority of legal spend in workers’ compensation will be a less complex setup than a corporate law department engaged in various types of legal work. Are there different types of billing arrangements that need to be tracked? How large is the volume of spend? Do law firms currently submit invoices in different formats? Should other departments such as Finance or Accounts Payable have an input in how the process is set up?
3. Your Billing Guidelines
One of the integral cogs to legal spend management is outside counsel billing guidelines. If law firms are not currently billing under any kind of standard guidelines, moving to this type of process will create a good deal of pushback. General counsel should prepare for requests for exceptions, suggested changes to the guidelines, or outright hostility from their outside counsel. Outside counsel who have been billing under guidelines, but which have not included full-scale enforcement, may also have similar reactions.
4. Your Team’s Level of Buy-in
Adding a new level of responsibility and process to an already over-worked in-house legal department also has the possibility of being met with resistance. Getting buy-in from in-house attorneys or claims managers is crucial to the success of the program. General counsel should be transparent with their team, detailing the goals of the program (see point #1 above), listening to feedback during the rollout, and tweaking the process where necessary. When the team feels that their suggestions are being received and considered, they are more likely to adopt the process change. Most importantly, share the results of the program, from the savings statistics to tools attorneys can use to manage their cases.
5. Anticipated Problems or Challenges
As with any change in process, moving to a legal spend management company or e-billing solution is going to create resistance (internal and external), as well as uncover issues not identified at the outset. Acknowledging that there will be a few bumps in the road will keep stakeholders from getting discouraged at the outset. Having a plan will not only help guide the choice of a legal spend management firm, but also in implementing the partnership.
Partnering with an e-billing or legal spend management firm has myriad advantages to legal and risk services departments, and can provide a high level of visibility into legal spend and department management. Data can be used to identify staffing deficiencies in-house, determine effectiveness of law firms, and even track the impact on legal spend of legislative changes in a specific jurisdiction. The more prepared a general counsel can be in implementing a legal spend management program, the faster he or she will reap the benefits of clean and organized data.