Recent study finds that consolidating legal work into fewer law firms & using lesser billing associates adds to legal costs.
As reported in an Inside Counsel article, a study by a legal software company indicated that as companies consolidates legal work, rates at those firms tended to increase so that overall, the consolidated legal work tended to cost more, not less. The study also showed that matters staffed by newer associates tended to cost up to 20% more.
A big caveat here.
The study focused on corporate legal work. And as I indicated in a prior blog post, corporate attorneys are not always the best examples of how to control outside legal costs.
So, at first blush, I was inclined to write the findings of this study off as having no value for claims litigation managers. I was tempted to just view the study findings as another example of how corporate legal counsel can take two legitimate cost saving measures and work hard to make them not work.
Upon further review . . .
Maybe there is something in this study for insurance claims litigation managers. In my next post, I will discuss the problems that claims litigation managers can run into when consolidating legal work and in using lower billing personnel in my next post.
A post-post script.
To close this post on a slightly different subject, I want mention that I appeared as a guest blogger this week in Kevin Quinley’s blog the Claims Coach. The piece I wrote for Kevin’s blog is entitled The Importance of a Focused Litigation Plan as I firmly believe that the only way to save consistently on legal costs as well as indemnity payments is to have and follow a focused litigation plan.
By the way, Kevin Quinley and I serve as Advisors for the CLM Advisors. In case you do not know Kevin, I can recommend him as someone to use as an expert witness on bad faith issues. Besides having significant insurance claims management experience, he is also the author of 10 books and over 600 articles. And speaking of articles, Kevin and I are working on a jointly written article on litigation planning and budgeting. I will let you know when and where it will be available.