U.K. nearshoring initiatives continue. “By creating a legal centre of excellence focusing on a structured approach to these areas of recurring work, we can build up expertise, reduce timescales and enable other parts of the Ashurst network to focus on more complex matters.”

Even Magic Circle firms aren’t immune from fraudulent billing allegations.

In-house leaders, would a bar admission requirement for practical skills training affect your views on paying for first years? Seems to me that this is a good step but doesn’t really change the value equation for junior lawyers.

Seems like it was not a great week for “non-practicing entities” (a/k/a “patent trolls”) – President Obama spoke on “concerns that they are abusing the patent system and hurting competition,” and a high-end retailer took issue with a demand letter. But one commentator says the real issue “the poor quality of many patents, not the identity or business model of their owners.” And in related news, a new patent exchange hopes to become the “Nasdaq for IP.”

Fixed-fee U.K. firm adds litigators – it’s “a partner-only firm, with additional support coming from a growing bank of legal counsel, who work for the firm on a freelance basis.”

Panel news from the U.K. – Department of Health centralizes its outside counsel roster for four years, “during which hourly rates will be fixed and the firms will provide additional services…”

In-house leaders, how does your technology toolkit compare to this list? And if you use EverNote, here’s a checklist for creating better checklists.

Are your outside firms ready for your cybersecurity audit?

Assessing the cost-savings potential and other pro’s and con’s of including arbitration provisions in your contracts.

Overbilling results in Federal criminal charges. Allegations include padding fees passed through from other firms, and billing for non-existent meetings.

Take that, AFA’s – court throws out compromise fee award and replaces it with a “purely hourly fee.”

Know a legal services innovator? Nominate them for a “Legal Rebel” award here.

Are your outside counsel’s poor technology skills driving up your legal expenses?

Strategies for reducing class action costs include AFA’s, more in-house staffing, and early case assessments.

Small and mid-sized businesses have “widespread concerns about the value for money offered by law firms” according to U.K. study.

Back-office outsourcing continues. In-house leaders, do you discern any effects on your service levels or costs when your outside firms undertake these initiatives – or do all the benefits flow to the law firm?

Adding to our list of acronyms: LDO, or Law Department Operations, organization “will offer an ongoing curriculum for members on topics like benchmarking and analytics…”

6. Monitor Work-In-Progress: Use your billing system to ensure that you can get frequent reports on fees and expenses incurred to date as compared to any budgets, estimates or “alternative” fee arrangements you’ve worked out with your client. Assume that they have used those numbers for their own budgeting and forecasting purposes, and that any material deviations will matter to them – a lot! Alert your client to any significant variances within days, not weeks or months. I currently hear from more in-house departments that they are asking for periodic – even weekly – work-in-progress reports to assess budget compliance and forecasting accuracy. When your clients request that type of information, ask enough questions to fully understand what they’re requesting and how they intend to use it.

7. Check for Typos? I’ve encountered different views on the question of how much time to invest in flyspecking your invoices for typos, just as you would a billion-dollar indenture or a Supreme Court brief. Typos always annoyed me as a General Counsel and made me concerned that no one had given much thought to what was being billed and why. On the other hand, one of my mentors actually liked finding an inconsequential typo or two as he believed it showed that his outside lawyers weren’t wasting time with picayune details. Find out which side of this debate your clients endorse.

8. Don’t Duck and Cover: Never submit a bill with a significant variance from a budget or estimate without a phone call. Explain why it happened and what remedial steps you’re taking if it’s bad news. In the less frequent cases where it’s good news, identify how the savings can be replicated on future projects.

9. Understand What Happens After the Bill Goes Out: Find out more about the technologies and processes your major clients use to intake, review, adjust, approve or reject, and pay your invoices, and the internal financial issues they have to deal with, including budgets and accruals. Work with your billing department to ensure that you are making life for your client as easy as possible when you send them a bill. Become familiar with the e-billing and matter management software platforms your clients are using to dive ever more deeply into invoice data – whether for basic concerns such as flagging expenses that don’t comply with their billing guidelines, to creating metrics across similar project types to enable them to compare your efficiency against your competitors and make future sourcing decisions accordingly.

10. Coach Your Team: Educate your colleagues, junior lawyers and support staff on all of the above – especially when they’re billing time or expenses to the file of a client who has significantly ramped up their scrutiny of outside billings, whether manually or by joining the increasing ranks of in-house legal teams who have implemented e-billing and matter management software platforms.

If you can address each of the items above – or you’re fortunate enough to have already done so – I believe you will have gone a long way towards reducing the potential for discord and dissatisfaction in your invoicing processes, so that the true value of your great legal work can shine through – and your bills will move through your clients’ review processes more smoothly, and potentially even be paid more quickly.

In-house and law firm leaders, what do you think? What other bad habits – and good habits – have you observed?

Infrastructure giant’s “radical approach” includes looking at “the legal function through an outsourcing lens…”

U.S. legal system ranked as the world’s most costly, according to a new study: “excessive litigation is putting U.S. companies at a competitive disadvantage globally. Lawsuits create high costs for businesses…[and] affect consumers, employees, and the overall economy.”

Litigation finance is a hot topic, but not all of the funding sources have successfully cleared the launch pad. (subscription req’d) In-house litigation managers, how do you do due diligence on potential lit finance partners?

A half-million for expenses and free legal advice for a high-profile criminal defendant? Hmmm, surely someone wrote it all down somewhere?

Finally, from the world of big construction projects – it’s not just lawyers whose expenses are subject to scrutiny and criticism when they include “a $70 parking ticket, $480 for golf and $900 for the company soccer team.” (sub. req’d)

I should mention two caveats. First, although for purposes of this post I’m assuming a primarily hourly billing paradigm, most of these comments apply to “alternative fee arrangements” as well. Second, I’ve assumed for purposes of this article that most of your clients have an in-house legal team, led by a General Counsel – but these principles apply equally to clients who don’t have lawyers on staff, as well as the solo practitioner General Counsel like I was at one point.

Today as I talk with General Counsels and other in-house leaders as part of my consulting practice, I continue to hear about a a fairly consistent set of correctable billing follies from their outside law firms. Based on my own experiences and those others have kindly shared with me, I have the following suggestions:

1. Input Time Daily: Promptly complete time entries, preferably by the end of each day. An in-house leader at a major tech company – who’s a really nice guy and not prone to hyperbole – recently used the word “loathe” when speaking with me about lawyers who do not input their time promptly. Being loathed can’t possibly be a good business retention or development strategy. I also believe that the longer any professional waits to record their time, the less accurate and meaningful their entries are likely to be. Finally, promptly entering billable time helps to reduce the risk of “end of project” billing surprises when a tardy timekeeper enters a material amount of “aged” charges.

2. Provide Meaningful Information: Include enough information in each time entry to allow the reader – even someone not intimately familiar with the details of the project or not expert in the substantive legal areas that had to be addressed as part of the project – to understand what was done, why it was done, and the value of the time spent doing it. Don’t follow the example I found when I reviewed a seven-figure bill for an M&A transaction: a lawyer at one of the top U.S. firms, who billed 195 hours on the deal (and had mid-deal 16% rate increase), provided the following remarkably cryptic time entries:

“Working on bid” – 8.75 hours;
“Work on bid financing” – 17.75 hours;
“Working on bid” – 5.25 hours; and
“Working on bid” – 3.25 hours.

Of course, the time required to write the entry should be proportional to the duration of the entry itself. To put it simply, more time billed = more words in the time entry, unless you’re sufficiently legendary in the legal field (think the late Joe Flom) that no one is going to ask how you spent your billed time.

3. Be Consistent: Avoid inconsistent timekeeping practices across multiple practice areas or offices. For example, I’ve reviewed bills from major law firms where some timekeepers recorded many discrete entries each day, while others consolidated all of their work into one daily entry. I’ve seen some lawyers charge for every minute of secretarial overtime, while others at the same firm viewed support staff overtime as something to be borne by the firm as part of providing “around the clock” services. And for goodness sake, have your colleagues input their time in a reasonably consistent format – it certainly exasperates me, and probably others, to see a bill that has some time entries in ALL CAPS and others in regular sentence case.

4. Don’t Be Annoying: Different things annoy different bill reviewers, but you should be able to eliminate each of these common offenders fairly easily:

• simple formatting issues (for example, failing to include the client’s internal project reference number),
• persistent failures to comply with corporate billing guidelines (whether something representing relatively small charges like per page photocopy cost limits, or something potentially larger such as billing for summer associates’ work),
• charging for project mobilization, including conflicts checks, without explaining why you think you should and confirming that the client approves doing so,
• listing partner billings first, associate billings second, and legal assistant billings third, when your client prefers the presentation of daily time entries in chronological order regardless of the status or role of the timekeeper so as to more easily understand the overall activity on each day of the billing cycle,
• unexplained billing rate increases (even if consistent with your firm’s historical practices for increasing rates annually, or upon a promotion from associate to partner), and
• one-time adjustments (even if in the client’s favor) that lack any audit-worthy explanation.

5. Keep a Watchful Eye on Billable Expenses: Closely vet any out-of-pocket expenses charged to the project. I believe expenses should be clearly stated and reasonably detailed, rather than lumped into a single line item (unless you’re sure that’s what the client wants). This is an area where it’s very easy to aggravate even the best client or embarrass them in front of their CFO with a small dollar amount, such as when a junior clerk in your client’s accounts payable department points out that your first-year associate passed through in-room movie charges or dry cleaning costs on a two-night trip to an out-of-town hearing. Also beware third party expenses that don’t show up on your client’s bill until months after the service was rendered – especially if the client thought billings for the matter had already concluded.

NEXT WEEK: Part Two, including work-in-progress, understanding your client’s needs, and coaching.

The app-ization of legal services continues, as BigLaw rolls out apps for FCPA, outsourcing, stock options and more.

DOJ’s approval of software-enabled document review for an HSR filing could save companies up to 50% for these large document reviews. (sub. req’d)

U.K. panel news: three Magic Circle firms appointed to panel by large German bank – all bidders “were asked to present the bank with a package including competitive rates and secondments…”

Do patent pools cut litigation costs or stymie competition? Former FTC official says that “While patent pools may generate some efficiencies and benefits, they may also cause anticompetitive effects like price fixing, collusion, and thwarting innovation…”

From our “how much does it cost?” files: Dewey’s advisers – 10 law, financial, and restructuring firms – submit final fee requests, and the tab is now at $23.6 million. In response to an earlier scolding from the bankruptcy judge, one firm assured the court that “mass transit has been used whenever practicable” and no expenses were for “first-class airfare, luxury accommodations, or deluxe meals.”

BigLaw links pricing analysis and project management because a “firm can’t staff a matter without knowing how much aspects of it cost and can’t price a matter without knowing how best to staff it.” (Painfully obvious yes, but progress nonetheless.)

Survey shows that 51% of U.S. companies, and 63% of U.K. companies, use alternative fee arrangements. For the rest, is it true that the billable hour “rewards unproductive behavior, invites abuse, and pits attorneys’ financial self-interest against their clients’ goals”?

Fixed-fee Australian law firm opens Hong Kong office – “core practice areas extend across corporate and commercial, technology telecommunications and IP, banking and finance, regulatory and compliance, litigation, energy and resources and property and construction.”

U.K, panel review news: insurance company invites 25 firms to pitch for corporate governance, M&A, finance, capital markets, litigation and fund management work; and large bank kicks off panel review for EMEA work, incliuding emphasis on “the importance of legal process outsourcing in the review, with law firms seeking positions on the panel required to demonstrate they had sufficient capabilities in this area.” (More on the story here.)

BigLaw focuses on AFA’s as “part of an effort to move away from traditional hourly rates and offer clients a range of prices for different aspects of a transaction, as well as bundled deals and retainers.” And: “We’re also being more systematic about secondments, supporting back offices, training and dissemination of know-how and market practices.” In-house leaders, have you seen this translate into practice, and if so, were you pleased with the results and costs?

Good news for General Counsels managing M&A deals that come under attack from the plaintiffs’ bar: Delaware and Texas courts signal great scrutiny of fee awards in “disclosure-only” settlements.

U.S.-based industrial conglomerate renews fixed-fee deal for day-to-day work across EMEA.

Some interesting data on steps your peers are taking to cut their outside spend and get lean.

Musings on measuring hours or results, and the BigLaw business model generally.