The need for better management of outside counsel has never been greater. In fact, reducing outside counsel costs has consistently been among the most pressing issues identified in recent ACC/Serengeti Legal Department Surveys. But it’s not only a matter of reducing costs. Improved management and oversight of outside counsel can also promote more effective use of both in-house and outside counsel and better, more data-driven decisions.
Our recent discussions with GCs have yielded several trends and best practices for improving engagement with outside counsel.
Set The Rules Of Engagement
Legal departments are increasingly setting billing guidelines and requiring firms to follow them.
Basic project management mandates, such as requiring project budgets and early case assessments, are often involved. Guidelines may also set discounted rate levels and rules covering expenses such as travel. Many law departments are now specifying how matters are to be staffed through limits on usage of new associates, not allowing changes in assigned attorneys without client consent, setting diversity requirements and so on.
Guidelines may also cover items such as technology requirements, use of alternative dispute resolution and client ownership of work product.
Enforce Billing Guidelines
While billing guidelines are excellent in principle, they matter little if outside counsel don’t adhere to them. Because firms often deal with a large number of different clients and billing guidelines, it may be challenging for them to be 100 percent compliant with all of them, and it also may prove difficult to keep up with changes in a timely manner.
Electronic bill auditing and review tools, such as those found in Serengeti Tracker, can help ensure full compliance. Without electronic billing tools, monitoring guideline compliance can be a highly labor-intensive process that uses up department resources and detracts from other tasks. Automation also can reduce billing disagreements by pointing out exactly where invoices are out of compliance and citing the applicable section of the agreed-upon guidelines.
Studies show that an automated e-billing process can significantly expedite bill review, resulting in shorter review periods. This can lead to additional savings if early pay discounts have been negotiated with a firm.
It can be helpful to periodically evaluate usage of outside counsel and ask if there are ways to improve efficiency and cost-effectiveness.
Do you engage in systematic evaluation of outside counsel? What do you measure? How do you memorialize objective and subjective evaluations of outside counsel?
Based on historical data or management reports, have you reallocated work to outside counsel with lower rates.
Based on historical data or management reports, have you reallocated work to outside counsel with better performance?
Do you identify the firms that are doing the most work and ask them for additional discounts or other perks, such as CLEs?
As with bill auditing, electronic tools are available that can generate management reports for evaluating outside counsel performance through both subjective performance tracking and budget tracking. Such management reports and historical data can also be used to ask outside counsel to justify their hourly rate charges.
Subjective Performance Tracking
Subjective factors also can help determine which outside counsel to engage. While such factors can sometimes be difficult to quantify and track, Serengeti Tracker provides an automated means to evaluate, compare and track the performance of firms. It covers several key factors, such as how well a firm understands goals, as well as evaluation of a firm’s expertise, efficiency, responsiveness, effectiveness and predictive accuracy.
Automated budget tracking can monitor budgets from the entire department down to firms and even individual matters. Matter tracking can identify matters that are in danger of exceeding budget and may require some extra attention. This helps to spot potential budget issues and make corrections early, before they become major problems.
Budget tracking software can also evaluate which firms are most closely adhering to projected budgets and matter durations over a given time period.
Ideally, the legal department and outside counsel work together as a tightly coordinated team. But having outside counsel located across the city or even in a different state or country can make efficient communication and coordination difficult. This is especially true in cross-border and cross-jurisdictional matters, or cases involving multiple co-counsel.
New tools such as Thomson Reuters Concourse Matter Room can enhance collaboration among the entire legal team, streamlining communications and sharing of key information. Inside and co-counsel can quickly and easily share documents, legal research and emails. Team members can identify past work product that could be leveraged without needing to “reinvent the wheel.” With all matter-related information stored in one place, team members can easily search across documents, people and matters, with access and permissions controlled by the GC.
In addition, matter progress can be monitored in real time to minimize risk and maximize outcomes.
Mobile access means that GCs can oversee matters, and team members can securely access and share key case information anywhere they have Internet access.
Closer, Stronger Relationship
Outside counsel play a significant role for the legal department. They provide additional resources, reach, expertise and capacity. But using outside counsel as effectively and efficiently as possible requires forethought, careful planning and the right tools.
Establishing the right approach for managing outside counsel can generate significant cost savings and improve efficiencies.