In life, it is often the smaller things that matter most. And so it is in saving outside legal costs. Often it is the cumulative savings of eliminating the smaller billing errors that can save the most money. Here’s how.
Do Not Pay for Tasks that Take Less Than .1 Hour.
One of the biggest things you can do is to not pay for a task that takes only a few seconds or a minute or two to do. This is why most insurer billing guidelines provide that attorneys can only bill in .1 hour (i.e., 6 minute) increments. However, billing guidelines often fail to provide that tasks that take less than 3 minutes should be rounded down to “0.”
As an example, you should not pay for “form” cover letters sent to court clerks with documents to be filed, form cover letters sent with medical records subpeonas, or non-substantive cover letters sent with documents. All of these cover or form letters usually take less than a minute or two to produce. (Of course, pulling documents to go with the letters is a non-billable clerical task.)
Also do not pay for attorneys (or paralegals) to “review” (i.e., read) documents that take less than a few seconds to read. This would include such things a signed Order of Dismissal that was prepared by the attorney or an acknowledgement of receipt of a document.
Do Not Pay for Initial Reports That Regurgitate Everything That is Already in the File.
While attorneys do not bill by the pound, many do bill by the page. It is common for attorneys to bill up to .5 hour per page. Billing guidelines should specify that in providing initial reports, attorney should not specify what is already in the claims file. Eliminating (and not paying for) a page that goes into detail summarizing what is already in the claim file can save .5 hour or more.
Eliminate Rote Reporting.
Eliminate rote reporting every 30 days – especially is nothing has happened. Billing guidelines should eliminate rote reporting requirements and provide for milestones at which reports are to be made (e.g., close of discovery). Billing guidelines also should provide that any other reporting should be “event driven” in that reports should only be made when events dictate.
Tightening Up on Use of FedEx.
In the expense area, tighten up enforcement of when firms can use FedEx or overnight mail. Most billing guidelines specify that FedEx or overnight mail should not be used except in extraordinary circumstances not of the attorney’s own making. I have found, though, that some firms – particularly larger firms – use FedEx instead of the USPS. They think it more impressive to do so and, more importantly, it helps them get around using billing guidelines that require them to pay for using regular mail.
I have found that eliminating smaller billing errors can add up to over $2,000 per file. Thus, an insurer with 1,000 litigated files can save up to $2,000,000 in legal expenses. But the accumulative savings is a two step process. It begins with clearly worded billing guidelines and ends with consistent enforcement of those guidelines. Unfortunately, the latter is where many companies or their legal bill review vendors fall short.
Are your company litigation and billing guidelines up to date? Are they compatible with an attorney’s ethical duties under the ABA Rules of Prof. Responsibility? If you are unsure, contact me for a free evaluation of your litigation and billing guidelines. Contact me at john.conlon@theCLM.org.