Rob Thomas, Vice President, Strategic Development, Serengeti
In a recent ACC/Serengeti Managing Outside Counsel Survey, more than 40% of the in-house counsel surveyed indicated that they are experiencing significant savings by managing outside counsel through e-billing and matter management systems that directly connect their legal teams. The benefits include: (1) immediate savings from the automatic enforcement of the client's retention terms; (2) automated budget requirements and tracking of spending against an agreed plan; and (3) longer-term savings from improved collaboration, alternative fees, and assigning more work to outside counsel who are the most efficient and effective as shown in newly available reports.
How can a legal department ensure that it picks the right system? Numerous vendors offer various tools, but not all systems will work well for your law department and firms. Because of the significant investment of not only money but also the time that goes into implementing and using such systems, finding a system that is a good fit is one the most important administrative decisions a legal department can make. What are the key questions that you should ask vendors to find a system that will work well for you and your firms for years into the future? The following ten questions are a good starting point for the due diligence that will ensure a well-informed decision.
1) Can the system easily connect you with all of your outside counsel and other vendors worldwide?
It is essential to have not just your entire law department, but also 100% of your law firms (large and small, foreign and domestic) billing and sending other information through the system you pick. Otherwise you will have to maintain a separate system for non-covered matters, and reporting will be incomplete. Check to see how many of your firms are already connected to the systems you are considering, and talk with other companies about the connection track record of such systems. Also, find out whether the vendor will charge your firms, or require special outputs, which can present significant roadblocks to a complete implementation.
2) Will the system cover all types of legal projects being managed by your law department?
Each law department has a unique mix of legal projects, often including intellectual property, contracts, litigation, to name a few. Make sure that the systems you consider can be configured to track the specific types of information you need for the unique types of work that you have. Make sure that you will have the information that you need for each type of project, without tripping over fields of information or workflows that don't apply to other types of work. Ask about system configurability and create some new matters in the live system to see whether it will work for you.
3) Does it give you convenient ways to collect all key information directly from your firms?
In the paper world, legal departments waste significant time asking for and processing vital information from their law firms, including paper/email budgets, status updates and other key information. Even more time is consumed when in-house staff manually re-keys this information into internal systems. Your new system should collect this data online directly from your law firms, who should be able to put what you need right into your online project files. Find out whether the system provides practical ways to leverage the connection with your firms to eliminate much of the time that you currently spend processing paper and email.
4) Does the system generate useful management reports?
How easy is it to create, save, and periodically run reports showing trends in spending, budget performance, exposure, status and results? Find out whether you can mix and match information from bills, budgets, status updates, results, and any field in the system to quickly produce whatever reports you need to manage the law department, your firms, and the company's legal environment. Make sure that you can easily create and save reports so that you can with a couple of mouse clicks run those that you need on a regular basis. Finally, check to make sure that you can easily export the data to other software programs to help you assemble presentations for management and your board.
5) Does the system have practical ways to require and manage project budgets with the law firms?
Legal departments often realize incredible savings from outside counsel by requiring budgets on a more regular basis, and having a system that alerts them when projects are getting ahead of budget. Find out whether the system enforces budget requirements by holding bills until a required matter budget has been submitted by the law firm. Make sure that the system can provide the different types of budgets that your law department will need, by time period (monthly or quarterly) as well as by phase (generally for litigation and patent prosecution). Finally, determine whether the system will automatically track spending against the budget and provide alerts on those projects that need attention.
6) Does the system enforce your requirements and to ensure up-to-date information by linking law firm performance to the approval of their bills?
One of the most common criticisms of matter management systems is that the information isn't kept current. Ask vendors how their systems ensure timely compliance by outside counsel with your requirements for case plans, budgets, accruals, periodic status updates, and other information that you will need. Generally, holding a project's invoices until all required information is up to date helps guarantee that you have all current information from your firms.
7) Is the system intuitive and how quickly can it be implemented?
Most legal departments don't have the time or staff to devote to a lengthy implementation. And, most lawyers won't sit through long training sessions. It is important to understand how each vendor conducts its implementation and trainings for both the legal department and outside counsel. Is the roadmap to implementation clear, and how long does it generally take? Who in the law department will need to be involved in setting up the system, and how much law department time will it take? Will there be a single vendor point of contact that has experience in directing successful implementations? How long do normal user training sessions take and is there good online help for questions that arise? Often the length of training sessions is a good proxy for whether the system will be used by your attorneys - be wary of any vendors that expect lawyers to take more than one to two hours of training.
8) What is the overall cost of the system, and are there additional future charges for upgrades, for support and training, to your law firms, etc.?
Each vendor will offer unique pricing terms, which may involve hidden or variable future costs for implementation/training, ongoing support and maintenance, seat licenses, upgrades, etc. Some vendors charge a fixed fee for a specific term; others will charge variable fees based on invoiced amounts and other factors. You should also determine whether the vendor will charge your law firms to use the system; often, law firms will recover such charges from you, directly or indirectly, through higher legal bills. Once you have collected this information, you will need to create cost comparisons based upon reasonable assumptions for the initial costs, as well as likely costs down the road.
9) What is installed and how are we protected?
Determine whether a vendor will require you to install/maintain your own hardware and software, because most now provide Web-based, hosted systems (referred to as SaaS, or Software as a Service). If you are considering hosting your own internal system, you will need to add those costs into the above cost analysis, including costs for installing future system upgrades. Ask vendors whether they conduct periodic third-party security checks, have regular independent certifications (like a SAS 70 Type II audit), and what provisions they have for operation from another site should their primary data center be unavailable. Finally, check on the system's actual history of uptime and service interruptions.
10) How many law departments and law firms are currently using the system, and are they willing to share their experiences?
Ask each vendor for two lists: (1) customers who are currently on their system; and (2) customers who have stopped using their system and the reasons why they left. Look for those systems that are the most widely used and growing. Law departments who have actually used a system will provide the best feedback about how well it operates in the real world. In addition, check with your law firms to find out which systems they use with other clients, and what their experiences have been. Finally, seek out third-party surveys that offer user satisfaction ratings about the various vendors.
The most recent survey of ACC members who use such systems showed average savings of over 22% a year of spending on outside counsel just from e-billing. However, choosing the right system for your law department and your firms to achieve such savings will require a careful and thorough evaluation. The ten questions above will give you a solid start in selecting a system that will make you a hero and will pay dividends for your law department for years to come.
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