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Integrated Legal Management:
A Checklist

By John W. Toothman

    Here is a summary of the attributes of a sophisticated legal management system, especially for litigation:

  • Integrate Management: Managing legal expenses cannot be segregated from managing the legal work, including strategy, tactics, staffing, quality, and other non-monetary aspects of legal work that nevertheless trigger higher bills. In short, performance and cost must be managed together.
  • The In-House Role: In-house attorneys not only manage the outside lawyers, but they may replace them by handling litigation in-house or splitting duties with outside counsel. This provides additional competitive leverage to encourage outside firms to work leanly.

    Equally important, in-house lawyers anticipate legal risks and head them off at the source, before they become problems. Preventive law provides the best possible form of legal cost containment.

    Even when disputes may be inevitable, in-house lawyers are creating ADR (alternative dispute resolution) options in agreements and providing realistic litigation risk assessments to encourage early resolution on reasonable terms.

  • Attorney Selection: Selection of firms is based entirely on merit, with cost and prior experience being factors in merit. The goal is to select particular lawyers, not an amorphous firm, with whom a long-term relationship is expected, so long as the client's own expectations are met.

    Biases favoring large firms must be overcome. Smaller, boutique firms are given serious consideration because even the largest matters can be handled by a handful of efficient, experienced attorneys (that is how matters are normally handled even in the larger firms).

    The largely irrelevant Martindale-Hubbell style biographical information (also used by Westlaw, for example) is superseded by relevant information about actual experience, past performance, and the like.

    Healthy competition among firms to better serve clients is promoted. Playing firms off one another just to get a discount is avoided as short-sighted.

  • Alternative Billing: Hourly fees are but one of many billing alternatives.

    Alternatives are designed to meet client goals, while rewarding efficiency and quality. They are not designed merely to obtain discounts on fees, but to manage performance as well as fees.

    Alternatives are tested before implementation by firm and client to demonstrate feasibility and build trust.

    The client-attorney partnership is reinforced with risk-sharing through alternative billing mechanisms.

  • Billing Agreements: Client and attorney must work as a team, with billing or performance problems anticipated early and corrected, rather than dealt with after the fact. The billing agreement establishes that relationship.

    Rather than being a list of pet peeves or do's and don'ts, the billing or retention agreement makes the client and attorney partners and creates the client-lawyer environment. The client's goals and expectations are laid out, along with standard policies and procedures to allow, for example, efficient bill examination.

    Aside from case-specific goals or expectations, the client wants optimum performance, meaning a satisfactory result for a reasonable cost. Streamlining the legal process by taking acceptable risks is encouraged, with informed client consent.

  • Bill formats are standardized, in part to facilitate bill review and in part to allow firm-to-firm comparisons.

    Task-based and project-based formats are used.

  • Out of pocket expenses passed through to the client are strictly limited to actual cost, with larger expenses controlled by a series of techniques, including direct billing to the client, prior approval requirements, and examination of underlying receipts.
  • Matter Management: Matter management and bill review are integrated. Performance, staffing, quality, strategy, and tactics are monitored through bills, budgets, plans, and work product review. Problems are anticipated before fruition or dealt with quickly upon detection. ADR is, for example, built into relationships to avoid or streamline litigation where possible.

    As individual matters arise, they are evaluated promptly for risks, options, and likely outcomes. A plan of action is formulated (and revised as necessary). A budget is built around the plan, task-by-task, then reconciled with each bill.

    The client looks beyond the recommendations of counsel for opportunities to streamline litigation. For example, even if the lawyer claims it is a "standard" to depose every potential witness, the client may decide that this is unnecessary or not worth the cost.

    Work product, bills, and attorney-client communications are exchanged electronically, in part to allow prompter management feedback.

    Second opinions, through consultants, secondary outside counsel, or in-house counsel, are used to verify important decisions, consider options, obtain independent analysis, and assess settlement value.

    Post-mortems of significant cases are conducted to extract lessons and assess firm performance. For example, fee data can be extracted to improve budgeting and settlement calculus.

    Clients maintain databases containing work product from law firms, discovery materials, and the like to be "recycled" in future cases.

  • Bill Problems & Audits: Resolving billing questions becomes part of overall matter management as the two are integrated. Instead of auditing fees alone, for the purpose of discounting, there are integrated audits of performance and fees.

    Fees are controlled through a combination of strong billing guidelines, rational alternative fee arrangements, real-time feedback on performance, streamlining of staffing, strategy, and tactics, early exploration of settlement and ADR, and so on.

    Lower fees are not an end in themselves. The questions are instead whether the results were optimized, the performance was satisfactory, and the fees appropriate given the results, quality, and quantity of performance.

Because performance, including quality, has a significant impact on fees, and vice versa, they cannot be managed separately. Moreover, arbitrary or sporadic edicts from clients, no matter how much leverage they have, may only make things worse in terms of performance, fees, or both.

Copyright   Dec-09 John W. Toothman



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