Outsourcing Legal Bill Reviews

In January, I started a series of posts on the three alternatives insurers have to take to control claims legal expense.  In fact, I noted that these three alternatives are the only realistic ones an insurer has to control outside legal costs.

To recap briefly, my January 11 post was about establishing an in-house Legal Bill Review Unit (LBRU).  Most larger insurers have LBRUs.  The second alternative, training the claims staff to do legal bill reviews, I wrote about in a two-part post on March 15 and April 29.  As noted in these posts, for a variety of reasons, this is really not a viable alternative unless the staff to be trained is small.

I now come to the third alternative to saving on outside legal costs – outsourcing the legal bill reviews.  In considering this altnerative over just allowing the file handlers to do the legal bill reviews, there are a number of issues that come into play.  In this post, I will focus on what I consider to be the three principle issues: relationships, consistency, and time.

The “relationships” issue comes into play when an adjuster is asked to take “appropriate” reductions in legal bills of attorneys who also happen to be friends.  Many adjusters simply cannot do what they need to do. This is one of the major reasons why larger insurers have separated the bill review form the file handling and formed separate in-house Legal Bill Review Units.

Then there is the all important consistency issue.  To have an effective legal bill review program, you must have consistency. Management experts will tell you that you can put most any department wide activity on a bell shaped curve with some employees doing a good job and some employees doing a bad job and everyone else somewhere in the middle.  If outside law firms deal with several adjusters, they will invariably get mixed signals and legal cost savings will be minimal.  Putting the legal bill reviews in the hands of a few professionals who are trained to be consistent in their reviews sidesteps this issue and promotes more consistent savings.

Finally, there is the practical issue that it takes a lot of time for staff to do legal bill reviews correctly.  Whenever I do training for a claims staff on how to properly review legal bills, the one complaint I often get back later on from the claims staff is the amount of time that it takes to properly review a legal bill.  That is, they have the knowledge, but not the extra time it takes to do legal bill reviews properly.

As noted, larger insurers conveniently sidestep these and other issues by simply forming in-house LBRUs.  For smaller insurers, their only option to also sidestep these issues is to outsource their legal bill reviews.

Future posts on this subject will deal with the issues of what to look for in an outsourced legal bill review vendor.  Just as I cautioned in my article “Evaluating E-billing Systems” http://www.propertycasualty360.com/2010/07/19/evaluating-ebilling-systems that not all ebilling vendors are alike, so it is with vendors who do outsourced legal bill reviews.  All are most definately alike and I will give you some very practical steps to following in evaluating a vendor for outsourced legal bill review.

Lastly, I will expose some of the ethical myths and outright hypocrisy that some attorneys use to try to intimidate insurers from using outsourced legal bill reivew.  Speaking of myths, you will not want to miss my next post when I discuss the modern day myth of the ethical duty of a lawyer to be a “zealous advocate” and how some attorneys try to use this mythical duty to try and get insurers to pay for a “Cadillac” defense.

If you would like information on my outsourced legal bill review services, please visit the information I have posted on my website at http://conlonassociates.com/Outsourcing.aspx”.  Also, please feel free to contact me for more information  at jconlon@conlonassociates.com or by calling me at 317-645-0587.

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3 Responses to Outsourcing Legal Bill Reviews

  1. […] is the second of a three part post on outsourcing legal bill reviews.  The first post entitled "Outsourcing Legal Bill Reviews" appeared on July 4.  My third post will focus on the myths and the hypocrisy that attorneys […]

  2. […] more information on outsourcing LBR, see my prior posts, “Outsourcing Legal Bill Reviews” and “Focus on the Skill Set of Individual Legal Auditors to Avoid Needless Problems […]

  3. […] In the past, I blogged about the various approaches insurers can take to legal bill review.  These approaches include training the staff to do legal bill reviews, establishing an internal legal bill review unit, or outsourcing legal bill reviews. […]

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