Author: Onit

In today’s economic climate, companies are increasingly focused on optimizing both internal and external resources; Legal is no exception. From simple spend visibility to cost control and efficiency, modern legal spend management solutions are helping forward-thinking General Counsels make more strategic, data-driven decisions about how they invest their outside counsel spend.

But what benefits can you expect from your legal spend management system? Let’s break them down here: 

1. Better Strategic Decisions Driven By Data 

When it comes to managing your outside counsel spend, everything (and we mean everything) starts with your data. 

Legal billing — from getting rate visibility to discount clarity — is complicated. For example, your rate card and the effective rates you actually pay may be very different. Understanding that (and many other aspects of your bills) is critical to effective budgeting, forecasting, and strong outside counsel vendor management. 

Knowing your numbers like the back of your hand won’t only help with budgeting or operational efficiency. Data will also help you make better, faster decisions. For example, which firm in a panel is most efficient for certain matter types? Are you overpaying because of inappropriate staffing decisions (e.g., partners executing associate level tasks or consistent meeting overstaffing)? 

Fast access to trustworthy data that can be sliced and diced to support your business’ specific needs and your specific questions will not only save you and your team time and money, but it will also give you the fuel you need to quickly make truly informed decisions. 

2. Clear “Should Cost” Understanding

What should that big matter you have coming up actually cost? It’s a question GCs and finance departments ask themselves all the time, with little success. RFPs are often wildly off when it comes to predicting costs. It’s common for a matter to cost 150-200% of the firm’s original bid. So, what’s the best way to anticipate what a big upcoming matter will cost? 

True, market-driven benchmarking is the only way to not only anticipate more accurate costs for upcoming matters, but also to obtain the most competitive rates or AFAs. 

However, benchmarking can be tricky. Make sure your benchmarking solution considers practice area, matter type, and tier of firm. For example, you can’t compare complex real estate litigation with standard insurance claims litigation. You also can’t compare insurance claims litigation costs for one cause of loss with another, or from one jurisdiction to another. So, make sure your benchmarks allow you to get granular; anything less can leave you holding the bag on a very big and unexpected bill! 

3. Better Governance 

Managing your outside counsel firms can be challenging. Just enforcing guidelines accountability is not only time consuming but can also be like finding a needle in an intentionally large haystack. Even getting visibility on their staffing practices can be tough. 

Modern legal spend management software can remove the headaches of guidelines compliance and provide much-needed visibility on staffing and billing practices for both you and your firms. Some solutions provide easy-to-use firm report cards that show trends over time on everything — average hours per matter, timekeeper breakdowns, rates, and more. When shared with your firms, report cards provide a fantastic basis for effective management; many forward-thinking GCs use them to drive quarterly or biannual reviews. 

4. Clean, Structured, Usable Data

Data can provide a window into performance, highlighting meaningful opportunities for improvement. Most successful businesses have leveraged data for years to inform strategic decisions as well as operational efficiency – but not so much in legal departments. 

Legal billing data is a necessity to understand all aspects of success. However, historically, legal billing data has been a mess (to put it mildly). With no standard taxonomy (way of organizing data), copious human error, and unique domain challenges led to a web of tangled data that in most cases just didn’t line up. With no apples-to-apples comparison possible, data often led to misleading takeaways and potentially poor decisions. 

But, never fear. Advanced legal billing software can help you make sense of your data. By leveraging new technologies like machine learning and AI, cutting edge legal billing solutions can not only structure the data you have but also correct errors and enhance the data to allow for deeper insights. 

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Get in touch with our team of legal billing and data experts to find out how Onit can transform your legal department.

Bodhala CEO, Raj Goyle, recently joined Legal Tech Startup Focus podcast host, Charles Uniman, to discuss his journey to becoming a legal tech startup founder, the current issues plaguing the legal services marketplace, and how data is transforming the legal industry.

“In the law, the buyer of legal services has none of the five key attributes that the buy-side deserves to have — price discovery, innovation, data, competition, & accountability to the sell-side. The entire legal system in America is set up for the benefit of the law firm vendor.”  — CEO, Raj Goyle

Bodhala’s mission is to create a transparent market for legal services. Using data to illuminate price discovery, we can drive competition and innovation not just for buyers of legal services, but for the entire industry.

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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.

Aspirin can’t fix these, but data can!

It’s no secret that legal bills are notoriously opaque and hard to understand. They can be incredibly frustrating, often subjecting in-house teams to countless hours of interpretation as they seek to clarify everything from inaccurate tagging to misapplied or missing discounts.

Here are the three most common legal billing headaches and tips for how to avoid them:

1. Inconsistent Discount Application

When it comes to invoicing, law firms don’t make it easy to understand if you’re actually paying the rates you agreed to during rate card negotiation. Discounts are often at the heart of the issue. Frequently applied inconsistently, discounts can make it a real challenge to identify the difference between gross rates versus net rates versus write-offs. 

While one firm might apply line item discounts, another might apply a bulk discount to the entire invoice. Clients are often left in the dark in terms of understanding when – or even why – these discounts are applied. Compound that with the fact that most in-house teams don’t have a real-time view into their actual rates with each firm – so forget visibility on the agreed discounts by practice area for each firm! 

Pro Tip: Require street rates, relationship discounts, practice area discounts, and write-offs to be broken out in each line item. This will prevent inconsistencies and the fuzzy math that might make a partner at a cheaper firm more expensive due to discounts being applied at the invoice level. Additionally, line item discounts will help you clarify your effective rates by allowing you to calculate the impact on a more granular basis, say by practice area or timekeeper level. 

Example:

2. Unstructured Data & Inaccurate Tagging 

Taxonomy, or how things are organized into categories and hierarchies (or in this case, not organized!), is foundational to any kind of data analysis. For example, whether a cardiologist conducts a heart catheterization in Phoenix or Seattle, it’s coded and organized the same way for any insurance carrier. 

Unfortunately, there is no universally accepted taxonomy for legal matters, and legal departments and firms can vary widely in how they organize matters. This concept is often referred to as “garbage in, garbage out”.

This is often the reason for the huge discrepancies between rates from firm to firm in what appears in legal spend reporting to be the same practice area. Aside from being just plain confusing, the resulting communication gap has created a systemic issue that makes it very difficult to confidently compare one firm to another — even when the data is telling you that the matters are similar. 

Pro Tip: Create a framework that accommodates the majority of your legal matters. Make it simple and try to apply it to every invoice you receive. A standardized matter taxonomy, coupled with accurate tagging, enables the critical apples-to-apples comparisons you need to confidently analyze everything from your rates to staffing. Plus, this will lay the groundwork you need to prove how valuable the data can be in everything from rate negotiation to invoice review automation. 

3. Missing Data & Absent Tagging

Another consequence of not having a standard taxonomy is how easily things can be missed. For example, let’s say you want to find out the effective rate by firm for all of your complex litigation matters from last year. If all your matters aren’t tagged properly as complex litigation, you might end up with effective rates much higher or lower than you actually paid. 

That kind of error can lead to pretty big consequences when it comes to setting a benchmark for rate negotiation. An inflated rate due to missing data might trick you into normalizing a rate increase. 

Missing data keeps corporate legal departments from formulating meaningful quantitative conclusions ultimately leading to uninformed decisions that can be detrimental. 

Pro Tip: Bodhala can help corporate legal departments define and collect this information and apply such criteria to historical bills to build a standard taxonomy. Equipped with this information, in-house teams can measure the variance across practice areas to determine the complexity of the matter as well as the efficiency and effectiveness of the timekeepers.

Savvy in-house teams are demanding more transparency in an effort to eliminate these billing headaches and break through the status quo. 

But do you have the data needed to lead this charge?

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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.