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.

 

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