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How to Enable Value with Clients: Part 2

04.15.20 | Susan Duncan

In our March 4th post, How to Enable Value With Clients: Part 1, we discussed the need for law firms to build and deliver more innovative and efficient service to clients. Part 1 addressed the first two components of innovative, value-enabled service delivery: knowledge management and process/project management. In this article we will address data analytics, scoping, staffing, budgeting and billing.

Soon after we published Part 1, dealing with the COVID pandemic became the number one priority for businesses, law firms, employees and families. We suspended publishing Part 2 of this two-part series so that we could provide some helpful insights on how to be trustworthy to clients during this crisis and how to actively attend to your business development and practice strategies going forward.  These posts can be viewed at Be Trustworthy to Clients During the COVID Crisis and Don’t Quarantine Your Business/Practice Development Strategy!

The basis for both the first post and this one is “Unless You Ask: A Guide for Law Departments to Get More from External Relationships” authored by Casey Flaherty and sponsored by ACC’s Legal Ops External Resources Interest Group. It is a comprehensive guide for in-house lawyers and their legal ops professionals for asking thought-provoking (and to many lawyers scary) questions of their outside law firms in an effort to push them toward better alignment with client goals and needs.


Implementing Data/Analytics

Clients are looking to law firms to use data in ways that will help them provide better service, value and efficiency. They are accessing publicly available data on billing rates and costs for types of matters across jurisdictions and then combining that with their own analysis of data histories on cases, costs, firms, timelines and outcomes. Clients want firms to be able to better predict the cost and price of cases/matters/transactions at the portfolio, matter or task level.

In addition to more common use of data analytics to negotiate flat or alternative fees and prepare budgets, clients and firms are using data to help with predictive analytics on outcomes of cases, verdicts, and the amount of time a case is likely to take. But clients are frustrated with how long it has been taking law firms to embrace the use of data. According to a 2018 CLO Survey conducted by Altman Weil, 72.2% of clients’ top law firms had NOT provided an analysis of spending data that was useful to the law department.

Source: Altman Weil


In order to implement disciplined and effective data tools and utilization, law firms should:

  1. Define what the goals for collecting and analyzing data are, e.g., to analyze costs and profitability, develop AFAs, staffing, budgets to actual, staffing scenarios and impact on pricing, etc.
  2. Determine tools and types of data they currently have available and identify additional data that is needed as well as tools to monitor and flag data points.
  3. Find out where data currently resides in the firm and who else you can partner with to retrieve and analyze data, e.g., HR, IT, finance, billing departments.
  4. Assess the quality of the data and how it is received including the format, accuracy, accessibility.
  5. Talk to your clients! Be sure that you and your clients are tracking similar data and that you understand what the client is doing with the data and how they are using metrics to measure their own costs as well as performance of their law firms.
  6. Use the right technology and process/project management (see prior post) to collect the data you need; evaluate the data to measure metrics and manage for better efficiency and outcomes.
  7. Train your lawyers in how to use data for their matters, pricing, scoping, risk assessments, outcome scenarios and also how to communicate about data/metrics with clients.


ACC’s “Unless You Ask” Data/Analytics Questions

If your client followed the ACC’s Guide for Law Departments to Get More from External Relationships, could you and how would you answer/respond to the following suggestions the authors make to in-house lawyers to ask of their outside law firms:

  • Select two of the recent matters you have done for us, one opened and one closed, and provide copies of the firm’s standard matter reports
  • Explain what task, matter and portfolio data the firm tracks, how firm analyzes data, when/where firm uses that analysis to inform decisions or projections
  • Identify the categories of data and analysis that could be made available to client such as projected costs, outcome, staffing, turn-around time, time to resolution, etc.
  • Describe what projections firm makes re: client matters and how firm tracks performance against those metrics
  • Summarize firm’s KPIs at the matter, portfolio and client level
  • Explain how firm’s use of data and analytics fits into the workflow of attorney’s handling client matters
  • Outline projects firm is currently working on (with timeline of start and finish) and projects you have completed over last 3 years that improve the utilization of data/analytics within firm


Implementing Better Scoping, Staffing, Budgeting and Billing Practices

In our prior post, we discussed project and process management. A critical component of effective project management is the development of a proper scoping plan right at the outset of an engagement. It is critical to clarify the project goals and scope to ensure that the engagement doesn’t experience too much scope creep or worse, go off the rails.

SCOPING. During a kick-off meeting of the client and the outside lawyers, a plan should be developed that addresses and documents the following:

  • Background on the matter
  • General and detailed (broken down by task) description of the project
  • What success/the desired outcome will look like
  • The deliverable
  • The goals and metrics that will be used to measure progress and success
  • The client’s expectations for the engagement as well as the assumptions, risks, unknowns and potential roadblocks
  • Early case assessment if a litigation matter
  • The scope of legal work to be performed
  • Staffing (see below)
  • Steps and phases of work and person responsible for each
  • A timeline to completion with milestones and critical benchmarks
  • A system to monitor and report on progress

STAFFING.  Once the project is well-defined, the next step is to determine how to best staff it for maximum efficiency and effectiveness. This will include consideration of expertise needed, whether that can be provided by a client’s in-house lawyers and paralegals, outside law firms, ALSPs, experts and other outsource options. In addition to lawyers, there are many additional professionals that often can or should be considered for supporting the execution of a project, e.g., consultants, patent agents, data analysts, eDiscovery contractors, paralegals, etc. The ideal team will structure work being done by the least expensive resource who has the experience and skills to complete their part of each project effectively. Once the team is selected, there should be an organizational chart that breaks down roles, responsibilities and reporting structure, with an identified project leader.

ACC’s “Unless You Ask” Staffing Questions

If your client followed the ACC’s Guide for Law Departments to Get More from External Relationships, could you and how would you answer/respond to the following suggestions the authors make to in-house lawyers to ask of their outside law firms:

  • Explain how you track who is handling client’s work, including non-billable staff and provide a chart of who has handled client’s work in the last two years including position and number of hours recorded (both to client and overall)
  • Calculate and explain how your staffing ratios have changed over the past decade
  • Summarize how, if at all, you incorporate low-cost resources into your delivery  of legal services from (1) your own near- or off-shore delivery center(s) to (ii) affiliations with legal process outsourcers and alternative service providers
  • Explain what impact your answers have on delivery of legal services to client
  • Detail your staffing and delegation protocols and explain how they affect the handling of client’s work

BUDGETING. Preparing a well-scoped project plan should make budgeting for the matter easier. In many cases budgets estimates will have been developed during an RFP process or even a less formal proposal/engagement process. Initial estimates should be revisited and revised once the preliminary scoping meeting has occurred to ensure more thorough assessment of staffing, timelines, other expenses (eDiscovery, experts, travel, etc.) and scope. This then becomes the project budget.

If flat or capped fees have been agreed to, it is critical for the law firm team to develop systems to manage against the budget and to monitor in real time the actual time and costs against the budget. If the fee is a finite fixed fee with no ability to “true up,” firms will have to focus on leverage, delegation to make work profitable. Out of scope requests or deviations should be addressed early and often to avoid budget overruns or any billing surprises.

There are many software tools available to structure matter budgets, but budgeting for any legal matter can be easily set up and managed using readily available spreadsheet software such as Microsoft Excel or an electronic billing system which incorporates a budgeting feature. The advantage of using spreadsheet software over an electronic billing system is the greater degree of flexibility in designing a budget template in a spreadsheet format that meets the needs of a particular client and a specific legal matter, while still retaining them.

BILLING. The majority of law firms use the billable hour as their primary tracking and billing model. Fortunately, time-keeping methods and applications have improved significantly with the use of recording time in real time and using passive mechanisms to track time. Clients often require the use eBilling technology and Outside Counsel Guidelines have made it much more difficult for firms to bill for time that is not well-defined or allowed for in the guidelines. Unfortunately, many lawyers are in firms that don’t mandate the use of automated time tracking technology and online time recording, so they often are reverse-engineering their time at the end of every month or week. This results in uncaptured time or inaccurate data. With so many technology tools available, clients have little tolerance for firms that are not tracking time in real time. This data becomes critical to the data analytics component discussed above in helping clients predict costs going forward.

ACC’s “Unless You Ask” Billing Hygiene Questions

If your client followed the ACC’s Guide for Law Departments to Get More from External Relationships, could you and how would you answer/respond to the following suggestions the authors make to in-house lawyers to ask of their outside law firms:

  • “Provide the median and mean number of days between date billable activity was performed and the date on which the time was recorded for client’s matters last calendar year. In other words, how long are timekeepers waiting to bill their time?
  • List the technology tools the firm utilizes to generate time records for client, including time capture, time recording, and invoice review with a particular emphasis on mobility, passive-time capture, text expansion and algorithmic review of entries
  • Identify any technologies the firm makes available to client to give client a real-time view of the time being recorded on client’s matters
  • Attach the firm’s billing protocols, including mandates related to the timeliness of entries and enforcement mechanisms thereof

As with most engagements, setting expectations and communicating effectively are critical to satisfying the needs of clients. It is essential to develop good project and scoping plans and budgets, but these are not enough. Frequent communication about the status of matters, real time spend versus estimates, any delays or other concerns/developments should be part of weekly update calls and emails with clients.

RainMaking Oasis provides consulting, training and coaching services to law firms and lawyers in the areas of business development and growth strategy, innovation, client retention and expansion, succession planning and leadership and personal effectiveness skills. Please contact Susan Duncan at [email protected].