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Category: Fee Data / Analytics

Technology Alone is Not the Answer to Outside Fee Guidelines

February 14, 2020

A recent American Lawyer story by Dan Packel, “‘Technology Alone Is Not the Answer’ Wilmer Revisits Outside Counsel Guidelines,” reports that the number of outside counsel guidelines that attorneys and administrators at Wilmer Cutler Pickering Hale and Dorr have to juggle is striking.  In total, the firm is sitting on approximately 1,000 documents, after receiving, in 2019 alone, roughly 260 new retainer agreements or updates to existing guidelines that stipulate what clients expect from the attorneys they are hiring. 

Wilmer isn’t the only law firm dealing with heightened standards from corporate clients about what they’ll pay for and what they won’t.  A recent study from timekeeping technology company Bellefield and the Association of Legal Administrators estimated the cost of compliance with these guidelines at nearly $4 million annually for some firms.  “There are a lot of process failures out there,” said Kyle Liepelt, who was named Wilmer’s first dedicated outside counsel guidelines administrator in February 2018.  “Technology alone is not the answer.”

When Wilmer began the process of reevaluating how it dealt with these guidelines in 2017, leaders found that—unlike the majority of the firms responding to the Bellefield and ALA survey—it was over-complying with guidelines.  Instead of losing money through rejected bills, convoluted appeals and write-downs, attorneys were being overly cautious in their billing.

“We couldn’t arm our partners to the nuances of these client differences,” said Steve Smith, the firm’s director of matter management services, describing a problem of “excessive diligence.”  “That impact, both in time and money, to communicate the complexity around outside counsel guidelines, that’s time that we should have been spending adding real value to our clients,” he continued. 

Following an initial workshop, one of Wilmer’s first steps was to create the centralized administrator position held by Liepelt, who spent the previous five years as a conflicts specialist in the firm’s new business department.  Each set of new guidelines goes directly to him, and he’s responsible for reviewing their terms, looping in the relationship partner and the billing partners on a given matter.

Room For Negotiations

These conversations aren’t just to circulate the substance of what clients are demanding.  Wilmer is not afraid to push back on terms that the firm would prefer not to agree to.  Liepelt said that his conversations within the industry showed that’s not always the case elsewhere.  “A lot of firms often receive them and that’s it, there’s no real discussion about them.  They may post them, so people can see them, but there’s no discussion on substance,” he said. 

According to the Bellefield and ALA survey, 23% of firms make no effort to share guidelines with attorneys, while 24% simply post them on the firm’s intranet.  While 52% share guidelines via email, the survey did not capture whether this is the prelude to a wider discussion, let alone to a response to the client.  But Liepelt said that the reaction is generally positive. At the very least, clients appreciate that the firm is carefully considering the guidelines.

“When it comes to the recommendations that we give, it’s a mixed bag.  Some say, ‘This is what it is, and we want you to follow it,’” he said “Other times there’s a negotiation back and forth and we arrive somewhere in the middle.”  Liepelt will often handle these conversations with the client, particularly if the attorneys don’t want to get involved.  “Discussion can be a burden on attorneys,” he said.  “I try to relieve them of any potential conflict.”

Into The Database

If these conversations illustrate the human side of the process, the technical side takes the forefront once any negotiations are finished.  The Wilmer team looked to a database to help solve the problem of scale, teaming with a vendor that had its own outside counsel guidelines solution and using the underlying workflow and source code to built their own unique design.  Each client’s guidelines are broken down into a data record with component terms highlighted, and attorneys and staff can search for terms and easily access the source documents.

Smith gave the example of different clients specifying what personnel can and can’t be used.  Some bar paralegals, others rule out first-year associates, still others place caps on each category for a given matter.  “We can surface those,” he said.  “We have a standardized process to review them very quickly.”

When updated versions of guidelines roll in, Liepelt can turn to the database to identify what’s changed, then rapidly point out the differences to the partners involved.  When looking at intranet profiles for the firm’s attorneys, he and others can follow links to see what outside counsel guidelines apply to each matter they’re working on, guiding conversations about matter efficiency.  And, in the unlikely event of a data breach, the firm can quickly pull up the list of clients that need to be notified within 24 hours.

A Bellwether for the Relationship

One year into the new system, the feedback, from both inside and outside the firm, has been overwhelmingly positive, according to Smith and Liepelt.  Partners appreciate having an internal point person to whom they can direct their inquiries and concerns, while staff have the information at their disposal to do pre-bill auditing.  Turnaround time with clients has decreased by 25%.

“The delays are less on our side and more on their side,” Leipelt said. “We’re much more responsive than we were, and that leads to better relationships.”  Beyond that, the new system offers a selling point when it comes to marketing the firm.  “There’s not an RFP that we see these days that doesn’t specifically ask us what are the firm’s capabilities in innovation and improving processes,” Smith said. “How we handle outside counsel guidelines is a bellwether for our stewardship of their financial resources.”

NALFA to Conduct Hourly Rate Surveys in 5 Key Practice Areas

January 14, 2020

NALFA conducts custom hourly rate surveys for clients such as law firms, corporate legal departments, and government agencies.  Our surveys provide the most accurate and current hourly rates within a given geography and practice area. 

Starting this year, NALFA will be conducting hourly rate surveys in the nation’s 16 largest legal markets in 5 key practice areas.  These billing rate surveys will show the current average hourly rate range for both plaintiffs’ and defense counsel at partner and associate levels.  These hourly rate surveys will be conducted via email in early 2020. 

The surveys results will generate a collection of data points including the statistical variance between plaintiffs' and defense rates in a given practice area and geography, the statistical variance between partner and associate rates in a given practice area and geography, and the statistical variance of hourly rates among law firm size, just to name three data collection categories.  "This survey data may be the nation's first and only quantitative hourly rate data of its kind," said Terry Jesse, NALFA Executive Director.

The survey results will be available to survey participants and members of the NALFA network at no cost.  The following hourly rate surveys will be available to others for purchase:

The 2020 Class Action Hourly Rate Survey

The 2020 Litigation Hourly Rate Survey

The 2020 IP Litigation Hourly Rate Survey

The 2020 Insurance Coverage Hourly Rate Survey

The 2020 Chapter 11 Bankruptcy Hourly Rate Survey

Why Law Firms Struggle with Outside Counsel Guidelines

December 4, 2019

A recent the American Lawyer article by Dan Packel, “Why Firms Struggle With Outside Counsel Guidelines – and Pay the Price,” reports on a new survey that draws a straight line between lower realization rates and law firms’ failure to communicate the substance of outside counsel guidelines to billing attorneys.  The article reads:

Law firms are struggling to comply with clients’ outside counsel guidelines, leading to slower rates of realization and increasing write-offs, according to a recent report from timekeeping technology company Bellefield and the Association of Legal Administrators.  In the groups’ inaugural survey of respondents from nearly 200 law firms, they found that firms’ failure to communicate the substance of these guidelines to the attorneys who actually bill leads to invoices that are rejected or reduced.

“They’ve got to make that business case to attorneys,” said Patricia Nagy, a director at Proxy PR who helped write the report.  “Attorneys are being overwhelmed with new tasks, in terms of compliance and information governance, but this one hits directly and immediately to their pocketbooks if they don’t comply.”

While corporate legal departments have been probing the consequences of these outside counsel guidelines for several years, this is the first effort to gauge their impact on law firms.  The survey received participation from 198 firms, over 20% of which have over 300 attorneys.  Almost 35% had between 51 and 299 attorneys, and nearly 30% had between 10 and 50.

Nagy said that she was surprised to discover that nearly one-quarter of firms surveyed made no effort at all to communicate these guidelines to billing attorneys.  Over 52% of firms share these guidelines with attorneys via email, and 24% simply post them on the firm’s intranet, with the hopes that lawyers look at them.  “We weren’t surprised there were a lot of process failures,” Nagy said.  “What was surprising was the degree of the failures, and that a lot of them were using ‘hope’ strategies.”  Indeed, even among the firms that communicate these guidelines to billing attorneys, 82% do not require acknowledgment of receipt, and attorneys are only monitored to ensure they are following guidelines 55% of the time.

As a consequence, when navigating clients’ e-billing systems, firms are finding that an increasing number of invoices are being rejected, even as firms have managed to keep rates robust.  The ALA and Bellefield survey shows that 70% of firms believe that e-billing has not improved billing and collections, with billing and collection cycles expanding, for the most part by 30 days, according to 41% of respondents, or 60 days, per 29%.

Rejections are also a growing problem. Nearly half the firms surveyed experience 5% to 10% of their e-bills rejected or reduced.  And 15% do not appeal rejections, either because of inadequate staffing or because they treat them as a cost of doing business.  Nagy noted that as clients increasingly use metrics to evaluate outside counsel, firms that make less friction during the invoicing process are more likely to receive repeat business.

Asked how they would like to improve the process, nearly 60% of respondents asked for more visibility into what corporate law departments actually want.  This tracks with a conclusion that these guidelines have actually made it harder for firms to communicate with clients, a sentiment shared with 40% of respondents, compared to 11% who point to improved communications.  And 45% of respondents hoped for a technological solution that would help them make sense of these guidelines.  With different guidelines coming in from each client, automation becomes a particularly challenging task.

NALFA to Conduct 2020 Class Action Hourly Rate Survey

December 3, 2019

NALFA conducts hourly rate surveys for law firms, corporate legal departments, and government agencies.  Our surveys provide the most accurate and current hourly rates within a given geography and practice area.  We can design hourly rate surveys for specific cases.  Our hourly rate surveys assist state and federal courts in awarding attorney fees in large, complex litigation throughout the U.S.

Starting in 2020, NALFA will be conducting the 2020 Class Action Hourly Rate Survey, the nation’s most comprehensive survey of hourly rates in class action litigation.  This survey will show current, that is 2020, hourly rate data for class action litigators in the nation’s 16 largest legal markets:

1. New York, NY
2. Los Angeles, CA
3. Chicago, IL
4. Miami, FL
5. Washington, DC
6. Dallas, TX
7. Atlanta, GA
8. Boston, MA
9. Houston, TX
10. Philadelphia, PA
11. San Francisco, CA
12. Seattle, WA
13. San Diego, CA
14. New Orleans, LA
15. Tampa, FL
16. Denver, CO

This inaugural hourly rate survey will be conducted via email in early 2020.  The survey results will show the current average hourly rate range of class action litigators (plaintiff and defense) at senior partner, partner, senior associate, and associate levels in the nation’s top legal markets.  This billing rate survey may be the first ever to make a distinction between plaintiffs' rates and defense rates.  This survey will be available for purchase.

Hourly Rate Data Can Be Sealed in Army Case in Federal Claims Court

September 30, 2019

A recent Law 360 story by Daniel Wilson, “Law Firm Rates Can Be Sealed in Claims Court Army Dispute,” reports that a property owner can file under seal a comparison of law firm billing rates meant to help determine its attorney fees after winning a takings claim against the Army, as that comparison is a commercial document not based on public data, the Court of Federal Claims ruled.  A compilation of law firm billing rates by Thomson Reuters and put forward by Waverley View Investors LLC is not based on publicly available data and is protected by a contractual confidentiality clause, and therefore can be considered confidential commercial information, Judge Charles F. Lettow ruled.

"The issue in this dispute is a close one because the public's right to access to court records is strong," Judge Lettow said.  "Nonetheless, the court finds that the Thomson Reuters compilation to be provided by Waverley in connection with the present claim for attorneys fees constitutes proprietary and confidential commercial information that is deserving of protection under [the rules of the claims court]."

Waverley, which owns land in Frederick, Maryland, won a constitutional takings claim against the Army in January 2018 after the Army — looking for contamination stemming from Fort Detrick, an Army installation that borders Waverley's land — left a gravel access road and groundwater contamination monitoring wells on Waverley's land following the expiry of a right-of-entry agreement.  The landowner was awarded damages of about $56,500 in March that year.  Waverley asked for attorney fees last month after the Federal Circuit affirmed the claims court's original decision in May.

As part of that request, the landowner asked to file a document compiled by media and commercial data firm Thomson Reuters, a chart reflecting the billing rates of its counsel, Crowell & Moring LLP, and five other peer firms in the Washington, D.C., market — Akin Gump Akin Strauss Hauer & Feld LLP, Arent Fox LLP, Arnold & Porter, Pillsbury Winthrop Shaw Pittman LLP and Steptoe & Johnson LLP.

It urged the court to allow it to file that billing rate compilation under seal as confidential commercial information, but the government pushed back, arguing billable rate comparisons aren't protectable as either confidential business information or trade secrets.  The disputed rate compilation is based on law firms' own data, self-reported to Thomson Reuters, and "is available for purchase by anyone willing to pay the price — including competitor law firms," the government said.

The government noted the claims court had previously rejected an effort by the plaintiff in another case to file a billing rate document under seal, as those rates — self-reported by the relevant law firms to the National Law Journal and to professional services firm PricewaterhouseCoopers — were "easily obtained from public sources" and wouldn't result in any harm to the relevant law firms.

But the document Waverley wanted to file under seal was different, the landowner said.  Only law firms that want to participate in, and pay for, the Thomson Reuters platform — providing access to their own financial data to gain access to other law firms' data — can access that data, it noted.  And it is "unvarnished" data collected directly from law firms' billing systems, unlike the self-reported data law firms provide to the media, according to Waverley.

The nature of that nonpublic data, as well as the related contractual pledge of confidentiality that participants in the system must agree to, are key differences compared to that earlier case involving publicly available billing data, and therefore Waverley had met its burden to justify a protective order, Judge Lettow said.