LAS VEGAS – By implementing an automated tool containing its billing guidelines and disallowed costs, one of the in-house legal teams she worked for saved $2 million in outside counsel spend over 18 months, Stacy Lettie, chief of staff to the general counsel at Organon, said at the CLOC 2023 Global Institute here Tuesday.
CLOC is the Corporate Legal Operations Consortium, a group whose members share best practices in the growing legal ops profession.
“Being able to show this actually saved us money is the most exciting thing,” said Lettie, a former attorney who has been working in legal ops for years.
Law firms tend to slip in their billing discipline over time, she said, so even if they’re careful about meeting your legal team’s billing guidelines at the start of an engagement, disallowed costs can slip in as months go by.
By having software that can catch and zero-out these costs automatically, you take pressure off the reviewing attorney to catch them.
“If your billing guidelines say you’re not paying for Westlaw research or color copies, and these are automatically adjusted down to zero, you don’t have to worry the reviewing attorney will miss them,” she said. “Have your technology work for you.”
If you’re trying to build a case to get a budget allocation to start using billing software, you can create a simple report in Excel or another tool you already have and manually tabulate how much in disallowed costs are billed each month.
By showing how those costs would get instantly zeroed out, you have a good story to share about the savings the software can generate.
“Go through line by line,” Lettie said. “It’s tedious, but it gives you a sense of what law firms are charging you. With an ongoing matter, that could be $3-4 million a year.”
Using billing guidelines as part of your engagements with outside law firms, whether or not you use an automated tool, gives you something concrete to point to if a law firm is billing your company for costs it doesn’t want to pay.
The guidelines can be especially helpful by taking pressure off the in-house attorney who has the relationship with the law firm, because it allows legal operations to have that initial, difficult dialogue with the firm.
“I’m noticing this kind of stuff, things we shouldn’t be charged for,” she said.
In addition to billing guidelines, Lettie recommends setting up a panel if you don’t already have one and inviting your current law firms to submit a proposal to be included.
She creates panel tiers for each matter, like litigation or M&A, and invites firms to propose being first, second or third tier, based on their expertise and what they’re willing to bid for the work.
She expects firms that want to be in the first tier to offer the company a 20% discount. In exchange, they get the key assignments that over time will generate a lot of money for the firm.
“Because you’re Tier 1, we expect xyz rate,” she said. “All of our Tier 1s gave a 20% discount. Since you’re a Tier 1, we hope you can give a 20% discount, too.”
If they’re not willing to do that, a hundred other firms are ready to step in to fill that role, she said.
“Leverage your power as a buyer,” Lettie said. “They’re not going to offer a discount. You have to ask them. It’s rare to ask for a discount and get nothing. But you’ll never get a discount if you don’t ask for one.”