What Insurers Can learn From General Electric’s Jack Welch About Lowering Outside Legal Costs

Back when he was running GE, Jack Welch famously argued that leaders should fire the bottom 10 percent of their workforce each year. He believed that doing so was a necessary part of an orderly continuous improvement process.

So, as a part of your own continuous improvement process, you should fire the 10 percent bottom of your workforce. Right?  Okay, maybe your HR Department will not let you do that. Besides, that probably would not do much to lower your outside legal costs. But what you can do (today, even) to lower your outside legal costs is to fire the bottom 10 percent of your outside counsel. Continue reading

What Exactly Is a “Hybrid” Legal Bill Review Program And Could It Be Right for Your Company?

In consulting work I do through my role as a CLM Advisor, I work with many small to mid-sized insurers on how to better control their outside legal costs. Invariably, this includes a discussion about the various approaches the insurer can take to legal bill review.

The primary approaches to legal bill review an insurer can take are training the claims staff to do bill reviews, establishing an internal bill review unit, or outsourcing the bill reviews.  Each approach to bill review is separate and distinct and I try to work with an insurer to carefully identify the pros and cons of each approach in order to determine which approach is correct for their situation.

But in addition to the three main approaches to legal bill reviews, there is often a fourth or hybrid approach that can be taken. This hybrid approach is one in which most of the legal bill review is done in-house, but some of it is outsourced. Continue reading

How Flat Fee Billing Savings on Legal Fees Can Evaporate When Other Factors Are Considered

“When fully paid beforehand, you are more than a common mortal if you can feel the same interest in the case, as if something was still in prospect for you, as well as for your client. And when you lack interest in the case the job will very likely lack skill and diligence in the performance.” A. Lincoln

In looking back at prior posts for the past couple of years, I see that I made some promises to follow-up on some posts with some additional information or insight. So a part of my New Year’s resolutions for 2016 will be to make good on these promises. And to get a start on this resolution, I will follow-up a prior post on Alternative Fee Agreements (AFA) entitled “Alternative Fee Agreement Savings: Real or Illusory?”

In my prior post on AFA, I wrote that the articles on the successes of AFA tend to state success in a conclusory fashion and offer few, if any, details on how that success is measured. As I noted, I am left to wonder if the insurer or corporation using the AFA “actually reduced legal costs by some degree, are they still paying too much for legal expenses? (If not, how do they know this?)” Also with regard to insurers with flat fee agreements for litigated files, I wanted to know “how did the flat fee agreements affect cycle times or indemnity results?” Continue reading