Sharing Comparative Data on Law Firm Compliance With Company Billing Guidelines

Once upon a time (or about 25 years ago), insurers began to use electronic bill review software to audit their attorneys’ compliance with their billing guidelines. In addition, many insurers established dedicated legal bill review units or used outside legal bill review vendors to audit legal bills.

As audited legal bills started coming back with deductions for numerous violation of insurer litigation and billing guidelines, a positive thing occurred. Attorneys actually began to read their clients’ billing guidelines. And what they found was numerous variations of essentially the same billing rules as well as many vaguely defined guidelines and rules.

Attorneys pleaded with insurers to come together to agree upon a uniform set of guidelines. But for anti-trust and anti-competitive reasons, that plea fell on deaf ears. Undaunted, Bob Scott, the then President of the Defense Research Institute (DRI), an association of insurance defense lawyers, appointed a special “Blue Ribbon Committee” in 1999 to try and address the wide inconsistencies in all the myriad of insurer billing guidelines that were causing their members considerable angst.

The Committee’s mission which was to come up with a uniform set of litigation and billing guidelines to be recommended to insurers to use.  The end product of what was called “the Blue Ribbon Committee” was the “DRI Recommended Case Handling Guidelines for Law Firms.” The DRI Guidelines were quickly adopted by a number of companies in whole or in significant part. Although newer model litigation and billing guidelines have since been developed by the CLM, the Guidelines are still in wide use throughout the insurance industry today.

I was proud to have been able to be a member of that Blue Ribbon Committee as the insurance industry’s sole representative on the Committee.  One of the important take-aways for me in working with attorneys on the Committee was how interested they were in hearing from insurers about how they were doing – especially in comparison to other attorneys.

Thanks to e-billing programs, companies now have a dazzling array of data and metrics to use to evaluate litigated files and regularly provide feedback on how well the law firm is doing in complying with company guidelines. Not only that, but the metrics can also show how well individual attorneys within the law firm are doing. Similarly, law firms can see how well they are doing when compared with other firms and attorneys handling similar cases.

Of course, very large companies have litigation managers/analysts who do this type of comparative analysis as their main job. But for smaller companies, that do not have this luxury, I am regularly called upon in a consulting capacity to provide them with the analysis. In this capacity, I regularly provide comparative analysis reports with tables that include various measurements for law firms (and even individual attorneys and paralegals) on overall percentage of reductions, reductions for clerical tasks, block billing, etc. I also provide analysis on certain key drivers of legal expense for certain companies such as time billed to prepare mediation statements,  time billed to prepare Answers or discovery, ratio of paralegal billing to attorney billing, etc.

I have seen how sharing data with attorneys to see how they stack up with their peers can be an eye opening experience for law firms as well as lead to better performance. Thus, if you are not doing so already, I encourage you to share whatever you have in the way of comparative analysis with your attorneys.


Lack of “Strategic Focus” A Top Concern in CLM Litigation Management Study

The CLM recently released its third in a series of litigation managements surveys the organization has done over the years. In the 2019 survey, some 80 litigation management executives were surveyed on a variety of litigation related topics. The comments to various questions in the survey revealed a number of interesting findings and concerns.

One of the top concerns expressed by survey participants was a “lack of strategic focus” on the part of outside counsel. Unfortunately, the CLM survey did not define what was meant by it use of the term “strategic focus.” To me, the term means simply an upfront focus on what needs to be done to achieve a favorable result sooner rather than later. Continue reading

Research, Research and Even More Research – Part II

In my previous post, I noted that overbilling for research is regarded as one of the most “egregious” forms of overbilling by law firms. And while I tend to see it more often in larger firms who often view research as training projects for newer associates, I noted that overbilling for research can occur in any size law firm. As to what type of research should be billed to a client, I had noted that case law as well as the ethics of the legal profession provide that “general” or “background” research should not be billed.

In this post, I will cover what research can be billed to a client as well as who should do the research. Finally, I will provide a list of things that should be included in a company’s billing guidelines or a negotiated fee agreement on the subject of research. Continue reading

Research, Research, and More Research – Part I

“One of the most egregious forms of overbilling in many law firms is the almost infinite amount of time that is expended upon research into even the most minute legal issues.”  William G. Ross, The Honest Hour, (Carolina Academic Press) at p. 113.

Have you ever assigned a matter to a lawyer based upon the lawyer’s claimed expertise in the law involved in the matter and then gotten a big bill for research into the same law in which the lawyer had claimed an expertise? If you have, you are not alone.

Overbilling for research is one of the most common issues I come across in legal bill audits. And it seems to be the larger the law firm,  the greater the likelihood there is for overbilling for research. But overbilling for research can occur in any size law firm. Continue reading

For Attorneys Only! How to Avoid Legal Bill Disputes.

As all of my posts to date have been for the benefit of clients of lawyers, I thought it about time to write a post for the benefit of lawyers. And since lawyers like to get paid for their services, what better topic to write about than how to significantly reduce, it not totally avoid, the changes of becoming embroiled in a dispute over your legal bill.

In my CLE seminars on ethical billing practices for attorneys, I give 4 main tips on how to avoid disputes with clients over legal bills. These tips also mirror an attorney’s ethical obligations when it comes to dealing with clients on fee billing. Continue reading

Be Wary of First-of-the-Year Requests for Rate Increases . . . The Rest of the Story

In my previous post, I left hanging the question of how a firm’s charges for fees could increase if you denied the firm’s request to raise their hourly billing rates?  In one word – promotions.

That is, the first of the year is when many associates are promoted to partners. Thus it is that although the associate who was assisting the partner on a matter may still be assisting the same partner in the same manner, he now will do so a much higher billing rate due to the fact that the associate is now a partner.

Of course, who is promoted and when are internal law firm matters that are not subject to discussion with the client, let alone client approval. And that is the way it should be. But what is subject to client discussion as well as approval is how the client’s matter is to be staffed, specifically with regard to the appropriate mix of staff. Continue reading

Be Wary of First-of-the-Year Requests for Rate Increases

Ah, the start of  a new year.  Out with the old and in with the new. And some of the new things you often get at the the start of a year are requests from your attorneys for hourly rate increases.

In a prior blog piece, “A Primer on Increasing Hourly Billing Rates During the Course of a Representation,” I discussed applicable factors that should apply when an attorney notifies a client of a rate increase. Simply put, case law and the ethics of the legal profession dictate that timing of the notice to the client of a rate increase as well as the rate increase itself must be “reasonable.” However, this mainly address those types of situations in which the attorney and client have a written fee agreement whereby the attorney may have a contractual right to increase billing rates from time to time during the course of the representation. Continue reading