Law departments today are facing a common dilemma, as they are under heavy pressure to reduce costs but often lack adequate internal resources to begin capturing operating efficiencies. Legal bill review represents real low hanging fruit when it comes to cost reduction but with in-house lawyers already stretched too thin, proper management of spending on outside counsel all too often drops to the bottom of the priority list. That’s why our outsourced solution for Legal Spend Management has proved invaluable to our clients, as illustrated by this case study.
A US based life insurance firm with a law department consisting of 15 in-house lawyers and an outside network consisting of 108 firms. The client’s spending on outside counsel averaged $4.8 million per month.
The client had outdated and inadequate guidelines for managing outside counsel billing practices and no access to useful analytics to measure outside counsel performance. At the same time, the in-house staff was seriously overburdened, which resulted in bill review being performed irregularly or not at all in the face of peak demand situations. [The department faced a mandate from senior management to reduce costs by 20 %.]
First things first. From our extensive experience as an outsourced provider of legal spend management services, we know that it’s all but impossible to reign in legal spending and maintain good relations with outside counsel without developing clear billing guidelines. So we started out on this assignment by working closely with the general counsel and senior staff to put reliable guidelines place, which were then distributed to all outside counsel in the client’s network.
Once that’s done, we turned our attention to developing a workflow and staffing plan that would provide consistent bill review services under the new guidelines. That plan was designed in close collaboration with the in-house team and specifically tailored to meet their resource needs.
We then assembled a core team of experienced audit attorneys to handle the handle the first pass review, with the capacity to scale up to handle peak loads. Under the plan, we also established a quality control team to conduct a second pass review on bills that had been flagged by the initial review team.
From the date of our retention it took us 02 months to revise the guidelines, craft the workflow and have the review teams fully staffed and ready to commence operations.
Almost immediately our outsourced review team began to deliver measurable benefits to the client’s operation:
- From the first month of operations onward we delivered business intelligence reports that provided the client with unparalleled real time metrics that supported far more effective legal spend management.
- Cenza’s bill review team identified 25% potential savings on total legal spend on an annualized basis. This resulted in an ROI of 328 % in the first full year of bill review operations.
- With improved guidelines and the outsourced review team to ensure compliance, the client experienced significantly improved relationship with outside counsel.
- The in-house lawyers were completely relieved of responsibility for the time-intensive first and second round review, enabling them to focus on high-end strategy and advisory services.
The bottom line is that we delivered another win-win situation for our client and our legal spend management team. The client has retained us to provide ongoing bill review services as a trusted outsource provider and we continue to deliver value and savings in the form of reduced legal spend and enhanced business intelligence.