Outside counsel guidelines (OCG) for legal matter billing are failing to be heard, or acted upon, by a notable proportion of law firms, a US survey has found. This matters, as it creates work by lawyers that may not get paid for, and it also results in unnecessarily larger bills for clients that could have been avoided. One way of avoiding this problem is to have better processes and tech solutions in place, the survey concluded.
The survey by ALA, the Association of Legal Administrators, and supported by Bellefield, a timekeeping software company, contacted a wide variety of firms across the US, from small to large.
One key finding was that some ‘lawyers still believe [billing] guidelines mostly apply to the billing process and are unrelated to them’. I.e. this is lawyers saying to themselves: ‘Just let me and my team do the work how we want to, billing issues can be sorted out later.’ And that seems to be a very inefficient and back-to-front way of handling things.
The survey found that: ‘Of the 24% of firms that have a consistent process in place to review, analyze and document OCG, only 59% communicate the guidelines to partners.’
I.e. almost three quarters of firms don’t have a proper process in place to keep track of their clients’ billing guidelines. And when they do, even so, around 40% of these firms don’t get the message across to the partners.
This suggests that managing billing guidelines – which implicitly in turn means figuring out what work methodology is allowed for the client – is getting lost in the system.
Incredibly, the survey also found that: ‘[With firms that have an OCG process in place] it is estimated that 20% of the time no one communicates the guidelines to the billing attorney.’
I.e. even worse, the message is not getting through to individual lawyers who are project managing a matter for a client. In such circumstances it seems inevitable that firms will produce work and/or bill in a way that clients end up partially writing off.
That presumably can only lead to disgruntled clients and if such behaviour continues over the long term, perhaps even result in the firm losing a client. And all because the firm didn’t focus on what the client wanted – even though what it did want was communicated.
But, in defence of the law firms, many lawyers reported that the guidelines were ‘too complex’, ‘too long’ and with ‘too much information’ – this resulting in the simple, yet still stunning outcome, that ‘they didn’t read them’.
So, to be fair to the lawyers on the sell-side of the equation, clients with detailed OCG perhaps need to rethink how they design those guidelines so that the external lawyers can more easily follow them.
One other caveat is that around only one fifth of the firms surveyed were larger than 300 lawyers. Although, that said, presumably in smaller law firms, with perhaps more client-to-lawyer contact, one might expect better communication between clients and the lawyers actually handling a matter.
The survey also found that:
- The current technology of choice to communicate OCG to partners is that of an email summary (52.41%);
- However, usually the email summary does not require acknowledgement of its receipt (82.82%),
- Only half the time are lawyers monitored to ensure they follow the guidelines (55.83%).
- Half of the firms surveyed reported they do not have the staff necessary to handle client guidelines, compliance and enforcement (51.54%) – and this is perhaps related to the size of the firms surveyed – although that seems to be a bit of a weak excuse. Just because your firm is small doesn’t mean you can’t read an email from the client, or that has come from your accounts team.
In terms of providing a solution to all of this, the report suggests the following:
• ‘Automate compliance at the point of time entry.
• Notify timekeepers regarding approval rates.
• Centralize your guidelines.
• Use AI for billing guideline review.
• Use automated training programmes for attorneys.’
198 unique law firms participated in the Survey. The majority of respondents (65%) held firm administrator, director of accounting, billing manager, executive director, chief operating officer, chief financial officer, eBilling manager, control and managing director job titles. You can get the report here.
I am sure the complexities are not introduced in order to justify delaying payment, securing interest free credit.
Unless the clients actually enforce their OCGs better, this will continue to happen. The clients are in a stronger position with regard to setting the contractual terms of these engagements, but it is also up to them to ensure they’re being met or they risk becoming meaningless.
Beyond the partners supposedly not being aware of OCGs (which one could argue is an ethical failure on their part), IT and Security teams often are not, either, and these OCGs today often contain provisions specifying how their data must be handled. Firms absolutely are not following those.