http://matternoffact.com/

Opting out and outsourcing – Is the fear factor making you miss out?

Wed, 30 May 2012 21:43:37 -0400

Here at Mattern & Associates, we are communicators. Time and again, one of the highest compliments we hear from our clients is our ability to communicate effectively and openly. It may sound like a matter of course, but it is not. We all know that effective communication is an art as much as it is a skill, and certainly one of the key ingredients in everything that we do here.

So, we extend this philosophy beyond the negotiation tables and communicate through brief emails, the bi-monthly Mattern Minute, and our quarterly newsletter, Mattern Matters. As with everything we do, we develop the content with best practices in mind providing useful information to the people who know us and, in keeping with the CAN-SPAM Act, providing easily accessible opt out buttons.

What is interesting to me these days are those who choose to opt out of these communications. As a professional communicator, sometimes I just don’t quite understand.

Last week, for instance, we sent out our Mattern Minute highlighting how the firm of Kaye Scholer outsourced certain aspects of their operation based upon the firm’s principles, and specifically how they wanted their employees treated. The project was a success from all aspects – operationally, financially and most importantly from the employee aspect. You can read the case study here.

Occasionally, then, what will happen is that someone will hear of a recent success story or will hear of a complimentary outsourcing contract review we may be offering and express a regret and not being aware. After a brief conversation, it usually happens that they had opted out of receiving one of the email updates.

Well, communication is a two-way street.

Now, I am as tired as the next person about the emails from the King of Nigeria wanting to recover his fortune, and wish there was, in fact, an opt out button for that. And sometimes, when I click on that little Microsoft Outlook icon in the morning and there’s a deluge of emails before I have a cup of coffee, I may want to lessen the load. But I am personally hesitant to opt out of emails because of this very fact that I may miss something that could benefit my business, my clients or me personally.

I say, don’t be afraid of your email inbox. There’s a delete button, too.

Outsourcing can be great a management tool if done right and used in the right situation as Kaye Scholer illustrates. Too many firms “opt out” on this management tool because of preconceived notions, false perceptions, and the mistaken belief that they are protecting their employees. Whereas, if done right, the employees benefit, the firm benefits and the end users benefit.

That’s the kind of communication we’re opting into.

Cost recovery: 450% more important than expense reduction

Wed, 16 May 2012 13:41:47 -0400

Our 2012 Cost Recovery Survey is wrapping up shortly and promising to be the most rewarding to since its inception. It is interesting how different people and firms react when they learn that we conduct a national survey every two (2) years. Some can’t wait to participate and share in the results; some show absolutely no interest, indicating that they believe cost recovery is dead—or at best dying—in the near future.

There is no doubt that soft cost recovery is under siege; however, it is not only not dead nor dying, it can be a powerful tool if used properly. Here’s how.

Many firms have focused lately on expense reduction instead of increasing their billable percentage of the expense. The smart firms have focused on both. As an example, take overnight deliveries. Say I am spending $250,000 per year and billing 70% of those costs to my clients. If I am focused solely on expense reduction and am able to reduce this expense by 10%, I will save a total of $25,000, with $7,500.00 in savings for the firm. This is because the non-billable 30% and $17,500 of the total savings goes to the client, whereas the billable 70% is a direct pass-through of the firm’s cost. As a result of the 10% expense reduction, then, the firm’s overhead impact is reduced to $67,500.00 from $75,000.00.

However, if I am able reduce my costs by 10% and increase my billable percentage to 85% from 70%, then the overall savings picture is as follows:

Total new annual cost:                      $225,000 ($250,000 x 10% price reduction)

Client (billable) impact:                     $225,000 x 85% = $191,250.00

Firm (non-billable) impact:                $225,000 x 15% = $33,750.00.

The additional impact of the increase in the billable percentage is an increase of $33,750.00, a 450% increase over the $7,500.00 achieved through cost reduction alone.

Pretty amazing, isn’t it? The message is simple: expense reduction is important, expense recovery and realization is 450% more important.

Just like starting a diet, the initial step is to weigh yourself to know where you are at. The 2012 Mattern & Associates Cost Recovery Survey is that 1st step in improving your cost recovery process. If you have not signed up to participate, please do. The 2012 Cost Recovery Survey will close May 30^th; simply email Charlene Hagerty at chagerty@matternassoc.com for the required link.

I promise you, it will be highly valuable.

Go ahead, make my day: Some thoughts on a recent RFP

Wed, 02 May 2012 17:37:43 -0400

I know what you’re thinking: “Did he fire six shots, or only five?” Well, to tell you the truth, in all this excitement, I’ve kinda lost track myself. But being this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you’ve got to ask yourself one question: “Do I feel lucky?” Clint Eastwood, Dirty Harry, 1971

Recently while discussing with an AmLaw 25 firm a potential outsourcing project, the team—and, specifically, the project manager—stated at the outset the following goals:

The project team was under a mandate by management to think “outside the box”
The firm wanted to be “cutting edge”
No solution was “off limits”
Everything was “on the table”

The project manager, however, provided a request for proposal with very limited parameters that, based upon my experience, would unnecessarily narrow the scope of the project for the firm as well as have a significant negative effect on the firm’s ultimate cost savings and efficiency. For the most part, the RFP as it was detailed was for a support role to supply some benchmarks and proof their RFP.

As Henry Ford once said, “If I asked my customers what they wanted, they would have said, ‘a faster horse’.”

I took a moment to consider. First, I considered that the goals stated at the outset were not given as mere buzzwords, but that, in fact, the intent of the firm was to think outside the box. Second, I had to consider my position as the expert on the outsourcing project; I had to consider that I could, because of my experience and expertise, foresee consequences and outcomes perhaps not foreseeable to those who don’t manage these types of projects on a daily basis.

I asked myself: Is it wise, however, to deliver more information than is requested? But then right on that question’s heels: Is it wise to deliver less information than I know to be available and effective? There was risk in either direction.

And then I asked myself, Do I feel lucky?

We responded to the limited RFP exactly as requested. However, with the firm’s permission, we additionally included a separate option to attack the project based upon the breadth of industry expertise and experience available to my firm. In this separate option, the end result would have provided for the firm’s project team to invest less time, saving hundreds of staff hours; would, too, have created a more competitive RFP which would then simultaneously have opened up the scope of options available to the firm; and, it would have included some key functions that the firm agreed should be examined, but had decided to not include in the limited RFP.

And, perhaps most importantly, this second separate option would have cost the firm less than their original, limited, scope.

We didn’t get the project.

If a competitor beats my firm on merit, I would be the first to tip my hat. However, in this case the reason given was that the project lead felt that the other consultant would be easier to work with because they had only bid on the original, limited RFP.

Easier? What I had heard at the outset was: think “outside the box,” be “cutting edge,” and put all solutions “on the table.”

There was risk in either direction and perhaps we lost the draw in the short run, but not based on merit. In the long run, I am willing to bet that a year from now when this particular firm signs their next deal, they will still be spending too much, the services will be the same, and their cost recovery revenue will still be declining.

In the end, between the two choices of offering more than was requested or less than what we what we knew was in the firm’s best interest, we had to stand by our principles and offer what we knew was in the firm’s best interest. And, given the same difficult choice, we would do it again.

So, go ahead. Make my day.

When it comes to output management, don’t sully the data

Wed, 18 Apr 2012 17:46:00 -0400

In a guest column today for LegalITProfessionals titled “Output Mangement: The Nirvana Strategy,” I put forth the argument that, in light of increases in output volume law firms are experiencing, this actually ushers in a key opportunity for firms to increase workflow productivity and capture cost-efficiencies through output management.

The overall volume of output (copies, prints and scans), in fact, in the legal community is increasing at a rate well over 10% per year. The opportunity for law firms comes as a result of situating them with the optimum configuration for multifunctional and standalone devices, with ‘optimum’ defined as interdependent upon three important factors: physical layout, culture and cost recovery strategy of the firm in question.

At the article’s end, I received the following comment from someone named Sully:

“One point to consider when comparing costs of printing to a [multi-functional device] MFD or a stand alone or networked group printer is employee time. If everyone is using the MFD for everything all of the time you will need more MFDs so that waiting in line doesn’t impact billable time. Robert may be using old numbers when it comes to the cost of printing from a copier versus a printer. Typically these days service organizations will maintain printers on cost per page model that is the same as or in some cases lower than copier output. YMMV depending on your location of course.”

This is the kind of scare tactic I am most accustomed to hearing from companies which sell printer maintenance contracts. Sure, Sully is right —if you have employees standing in line at an MFD, this will impact efficiency and billable time of the firm. However, Sully seems to misunderstand the meaning of ‘optimum’ in the article as a strategic placement of printers to maximize the usage of MFDs.

If the MFD is procured properly and the maintenance is structured properly and is competitive, MFD output is almost universally less expensive than local or networked printers when service and supplies are factored in. And when optimally configured, there are no apocalyptic lines.

Most importantly, when reviewing your firm’s output management, make sure your information source doesn’t have a vested interest in your firm’s decision outcome and won’t, therefore, sully the data. Engage with a firm that will provide unbiased benchmarks and data to ensure the outcome is in your firm’s best interest overall.

Click here for the full article.

What do Evan Chesler of Cravath, Swaine & Moore LLP and Rob Mattern of Mattern & Associates have in common?

Wed, 04 Apr 2012 17:57:00 -0400

This past November, Mattern & Associates were sponsors of the Hildebrandt Institute’s 16^th Annual Law Firm Leaders Forum in New York City where Mr. Chesler was one of the featured speakers. Overall, the program was excellent, informative and forward-thinking with many outstanding speakers; however, Mr. Chesler’s comments regarding law firms’ predominant method of billing based upon an attorney’s hourly rate as in conflict with defining a successful relationship with their clients were, to me, the defining comments of the conference.

The significance of the remarks struck me, that the presiding partner of a major New York law firm should advocate for the dismantling of the attorney-focused, hourly rate structure for their legal services and, in its stead, putting in place a client-focused fixed fee business model which included potential bonuses for the hard working attorneys if that success—as defined from the client’s point-of-view—was ultimately fulfilled.

What struck me even further is that this is the way we structure our engagements at Mattern & Associates.

So, what exactly do Evan Chesler and Rob Mattern have in common? Besides our shared, striking good looks, we agree on the way fees should be structured when outsourcing expert services.

I will call it the fairness factor.

At Mattern & Associates, we have extended this straightforward logic to the pain point of legal billing known as soft cost recoveries. This fairness factor when applied to soft cost recovery was the precipitance of the Mattern Plan B™ Cost Recovery model in which we structure onsite and offsite support services operations as a hard cost pass through to law firm clients. In this way, the client pays what you pay—and just as with Mr. Chesler’s fixed fee model he advocates for in his article, “Kill the Billable Hour,” what could be fairer than that?

To read Mr. Chesler’s article in Forbes, “Kill the Billable Hour,” http://www.forbes.com/forbes/2009/0112/026.html.

To read about Mattern Plan B: http://www.matternassoc.com/services_cost.html.

Is your firm part of the current state of cost recovery? Discover the answer in the 2012 Matter & Associates Cost Recovery Survey.

Wed, 21 Mar 2012 16:22:00 -0400

Of all the areas that we consult in, the soft cost recovery area is the one undergoing the greatest amount of change both from an internal viewpoint and, most importantly, from an external one. Clients are on the offensive to reduce or eliminate soft costs, internal constituents are fighting them, and the whole support service workflow is going through dramatic changes as a result of decreases in copy and increases in scan, print and litigation support.

Well, we are about to get the answers. It is time for the bi-annual Mattern & Associates Cost Recovery Survey. The comprehensive information collected in this survey lays the groundwork for many firms’ cost recovery strategies for the coming years.

This is what Nicholas J. Willmott, Chief Financial Officer of Kirkland & Ellis LLP, says of the value of participating in the Survey:

“The Mattern & Associates Cost Recovery Survey is the most comprehensive snapshot of cost recovery trends and practices available in the legal field. Kirkland participated in the Survey in 2008 and 2010 and will again in 2012. It is well worth the time and effort, and benefits our firm.”

In 2010 we had responses from 81 Firms; this year, we expect to double that response. Everyone participating in the Survey receives a customized, web-based summary of the Survey results along with a non-obligatory debriefing from a Mattern & Associates consultant.

We hope to see your firm participating in the Survey—and becoming part of the answer.

Do you fear your vendors?

Mon, 07 Nov 2011 08:49:00 -0500

Quite often when we meet with a potential new client, the discussion will come around to analyzing the performance and pricing of one of their vendors. Surprisingly we will get the response from the potential client that goes along these lines – “Oh – I can’t do that, that may get XYZ vendor upset” or “Geez – that may upset Bobby (who works for the vendor)”

Typically when I hear these comments, two thoughts come immediately to mind – 1) Who is working for who here and 2) what would the managing partner think if heard these comments? I am also thinking we have no chance here but that is secondary.

Vendors sometimes get in position, and the firms let them, of running the show. I am all for partnerships but when you feel threatened by a vendor or held hostage, it is time to put them in their place. No vendor is irreplaceable. There have been many times that clients we have worked with have replaced supposedly “irreplaceable” vendors with new vendors who offered the promise of better performance, in addition to improved pricing and terms. No one or vendor is irreplaceable. Remember that the next time you feel trapped.

What is the oldest legal document?

Fri, 07 Oct 2011 12:16:37 -0400

Rob Mattern with The Code of Hammurabi in Louvre, Paris.

It is widely believed that the oldest legal document known to mankind is the Code of Ur-Nammu, created in 2050 BC by King Hammurabi. This is not entirely accurate. In truth, the oldest legal document known to mankind is the off-site records storage contract that was created in order to store the code off-site from King Hammurabi’s palace. Rumor has it the Sumerians are still negotiating reboxing fees.

For anyone who has ever dealt with off-site records and negotiated the contract for these services, you may recognize the truth in the hyperbolic jest. Off-site records storage is an industry based on antiquated policies and terms that may present issues resulting in, if not the world’s first epic poem, epic financial penalties and other costs if you are not careful.

Here are some negotiating strategies to help you be careful and achieve the contract that most benefits your firm.

To read the article click here.

I don’t know if E-Discovery killed Howrey but it didn’t help it!

Wed, 07 Sep 2011 10:50:17 -0400

In the July 2011 issue of Legal Technology News under Action Items there was a piece written by Monica Bay titled “Did E-Discovery Kill Howrey?” The gist of the piece was how Howrey created a wholly-owned subsidiary called Capital Litigation Support to provide litigation support services to the firm’s own clients. The problem was, as reported by a former employee named “Paul W” on the WSJ blog, was that this wholly owned subsidiary was significantly more expensive than many third party vendors providing the same service. He closed his blog with the comment “Corporations are demanding reasonable fees that are comparable with other firms in the practice type”.

Now I don’t know if E-Discovery killed Howrey or not, but I do know that unfair cost recovery practices do damage client relationships and leads to questions about fees, hours and a whole host of other areas. Firms that do charge non-competitive rates may think they are making out but in the long term there will be consequences. A fair, verifiable cost recovery strategy will not only lead to sustainable recoveries, but in the long term, prove to be much more client advantageous.

The Impending Demise of Cost Recovery

Wed, 27 Jul 2011 10:18:00 -0400

By Rob Mattern

This article was first published in ILTA’s June 2011 issue of Peer
to Peer titled “Law2020TM: One Year In”

The recovery of costs associated with managing a legal matter is as old as the legal profession itself. However, as we sit here in 2011, changes to the traditional model are already taking place, and by the time 2020 arrives, law firms will have completely changed their approach to cost recovery.

My company has conducted the Mattern Cost Recovery Survey for the past six years, most recently in 2010. Shared here is information based on the results of that survey and on my daily interactions with law firms on an operational and strategic level.

Click here to read the full article.

Maximizing the Efficiencies of the New Office Designs

Wed, 27 Jul 2011 09:26:00 -0400

By Rob Mattern, Published NYC ALA May-June 2011

Office Design: This article will focus on the structuring of the support services to maximize the efficiency of the new wave of the legal office environment. Areas of focus will be deployment of multifunctional equipment, exploration of the services that should be offered and the concept of off-site services.

The role of support services in the new wave of law firm space design is critical to the success of maximizing the efficiencies and effectiveness of the new layouts. Equally, if not more important, is the technology utilized to support these services. The move to dedicated conference center floors, increased usage of print and scan technology, flex space, and the use of pod type layouts necessitates a thorough understanding of the new role of the support services in supporting these initiatives. Another role is the firm’s strategy on cost recovery and the relationship with the support services.

To read the full article click here.

Output Management – what is it and what does it mean?

Mon, 20 Jun 2011 14:13:00 -0400

I don’t get it.

The price of black ink contained in the ordinary ink cartridge costs in excess of $4,731.00 per gallon. Color ink is in excess of $7,000 per gallon. But we have people all over the United States rejoicing because the price of gas has dropped to less than $4.00 per gallon (even though last year it was less $3.00).

Hewlett Packard’s profits, according to their latest quarterly report, are up over 15% from last year. Output (printed pages and copies) is increasing at over 7% per year with all the growth in the areas of print.

Granted, not many firms are using ink cartridges but toner prices are not much better as compared to the other commodities.

In spite of these costs, most firms lack a comprehensive plan on how to manage their black & white and color output. They are over-equipped with their end users printing to the most expensive devices with over 50% of firms lacking a cost recovery strategy for their print.

To answer my original question – What is Output Management? It is creating a comprehensive, firmwide plan to produce printed output in the most economical way possible while not inconveniencing the end users. And what does it mean? From a financial point of view, a fifty percent (50%) reduction in your output costs.

Now let’s go get some of that profit back from Hewlett Packard.

As with Little League baseball, the pendulum is now swinging the other way on soft cost recovery.

Fri, 03 Jun 2011 12:09:43 -0400

On May 11^th Daniel Fischer in his blog Full Disclosure (http://blogs.forbes.com/danielfisher/page/3/) writes about a gentleman David Paige and his company Sterling Analytics that audits law firm’s bills for companies such as Regions Bank and Avalon Bay and KB homes. He lists none (9) different ways” law firms pad partners’ profit-sharing at the end of the year but don’t pass the legal or ethical smell test”.

In summary these nine (9) areas are:

1. Grazing – this is where high earning partners spend time with lower-ranking Attorneys to discuss their cases

2. Conference rooms – Some law firms bill out their conference rooms under separate LLCs

3. Pyramiding – Firms charging 2^nd year lawyers to make copies, etc.

4. Piling on – Multiple partners billing for the same task

5. Photocopying – Should all be overhead

6. Billing preparation – Even though this was allowed under the Bankruptcy code, Mr. Paige says no client should put up with it.

7. Unspecified Expenses – Billing a percentage of the fees as a miscellaneous expense

8. Paralegals - He contends they should not be used for routine tasks at $100 - $300 per hour

9. Partners – Rainmakers at $750 per hour billing for routine work

While I cannot comment intelligently on every one of his nine areas, I can say that I think he is wrong about number 5 photocopying and number 6 billing preparation. As with most commentaries of this type, Mr. Paige is trying to justify the use of his services and his claims do pass the “smell test” of reasonableness.

In regards to photocopying – if the copies being made are part of the actions of the case and are “priced” fairly or they are hard costs pass-thrus from a third-party vendor, then why are they not justifiable and reimbursable? To label all copies as overhead just shows a poor understanding of the legal process. That is not to say that there are firms out there that charge excessive rates for in-house copies? Absolutely but let’s target them and not paint the whole industry with the same brush.

The example he uses to justify his claim is Baker & Hostetler charging $2,000 for photocopies on a $43.2 million dollar bill – what is wrong with that if the copies are justifiable and the rates reflect the firm’s costs?

In regards to billing preparation, if it is allowed under the Bankruptcy code, why shouldn’t a firm bill for it.

McCarter & English and Marshall Dennehey increase billable cost recovery revenue with a change in strategy

Wed, 18 May 2011 00:00:00 -0400

As mentioned in out Mattern Minute of April 29, 2011, the 2010 Mattern & Associates Cost Recovery Survey has generated quite a bit of media attention and justifiably so. If a Firm takes the benchmarks and industry trends that the study highlights and applies them to their support services operation, they will be able to make a significant impact on their billable cost recovery revenue. As I blogged on March 16^th, McCarter & English is using the increased realization of hard costs through the implementation of Mattern Plan B Cost Recovery™ for its Lit Support department. Another one of our clients, Marshall Dennehey is starting to capture and charge for black & white and color scans. This additional cost recovery revenue will equal the current billable recoveries for b&w copies. In other words, by capturing and recovering the current scan volume, the Firm is positioned to double its monthly billable cost recovery revenue. (yes, that is correct). This engagement is detailed in the case study listed on our website under the media section titled Triple Play. (Click Here).

Many Firms that we speak with are caught up in the “antidotal” world of cost recovery. They won’t even discuss changing policies based on a singular event such as a client pushing back or refusing to pay for soft cost recoveries. Our recommendation is to examine the facts and trends, gather unbiased data, and apply your firm’s experience to develop a cost recovery strategy that will maximize billable revenue in the new legal economy.

“Controlling Library Costs - Creating an Information Strategy”

Wed, 30 Mar 2011 10:05:35 -0400

It is very rare that we encounter another consulting company that we are comfortable recommending to our client however; Cable&Clark is one of them. Since one of the hottest areas in support services from a cost and cost recovery viewpoint are library costs and legal research, we have decided to host a webinar conducted by them.

We are proud to announce “Creating an Information Strategy to Control Library Costs”

If you have been asking yourself?

· Why are library costs so high?

· What should I cut?

· How do I clear the fog on information services contracts?

· Why are Library contracts so confusing?

· How I can find the true value of my library contracts?

You don’t want to miss this webinar conducted by Colleen Cable, JD MLIS and Sarah Clark Kavanagh, JD of Cable&Clark (www.cableandclark.com).

They will explore strategies to assess your current library needs and ways to reduce and control costs.

It will be held on Wednesday, April 13th at 1:00 P.M. to approximately 1:45 P.M. (EDT) for all Firms.

To register, please contact Maria Herron at mherron@matternassoc.com.

McCarter & English restructures Support Services to Minimize costs and Maximize Litigation Support Billable Revenue

Wed, 16 Mar 2011 08:45:00 -0400

As with many firms, McCarter & English, has begun to offer more and more litigation support services to their staff through their outsourcing provider Williams Lea. The only problem was that the staff was not actually using the on-site services, due to issues with quality and the rates the firm had to charge for these services to cover costs. Compounding this was the fact that a large percentage of the staff received better quality and pricing from a local overflow vendor.

Mattern analyzed McCarter’s outsourcing/litigation support situation along with the firm’s cost recovery strategy as it related to the litigation support area.

Our recommendations were as follows:

1. Instead of having the cost of the litigation support department part of the outsourcing agreement as a fixed cost, turn the litigation support function into a transactional priced model.

This accomplished the following:

o Lowered the firm’s overhead costs

o Forced the vendor to improve quality and services since it was no longer “sheltered” under the firm’s outsourcing agreement

2. Because of the transition to the transactional model, the firm also changed the way they recovered these costs. Instead of the traditional method of cost recovery, we structured the contract so that these costs were billed directly to the client as a hard cost (Mattern Plan B Cost Recovery™ - US Patent Pending). This resulted in a lower cost being charged to the client and higher realization of these costs for the firm.

In summary, McCarter & English took a cutting-edge stance on their litigation support and how they recovered their costs associated with this function.

Based upon the data in the 2010 Mattern & Associates Cost Recovery Study, more and more firms will be choosing a similar strategy as their realizations continue to decrease.

For more information about the Cost Recovery Study or how Mattern can assist your firm, contact Maria Herron at mherron@matternassoc.com.

LegalTech Highlights:

Fri, 04 Feb 2011 08:11:00 -0500

This year’s LegalTech was the best in a long, long time. Attendance seemed to be up in spite of the lousy weather. In speaking with the vendors there was overwhelming feedback on great traffic and interested contacts.

Some of the highlights for Mattern & Associates were:

· The press release announcing the release of the results of the 2010 Cost Recovery Survey. We have been publishing this survey since 2004 and by far the latest version is the best we have ever done. The report is actually web-based and the participants can refer to it for the next year. If you are interested in the Overview of the study please contact Maria Herron of Mattern at www.matternassoc.com.

· Bloggers Breakfast – We had a chance to discuss our Blog – www.matternoffact.com to other bloggers and had a chance to receive a lot of great feedback. Ed Poll of LawBiz Forum www.lawbizforum.com had some great input along with Robert Ambrogi of www.lawsitesblog.com.

· Interview with Editors – Christy Burke of Burke & Company who handles our public relations set-up a lot of great meetings with the editors of the various legal/IT publications. Universally they expressed interest in our research and survey results in regards to cost recovery and wanted to publish our findings so stay tuned.

All in all a great show and a real feel that the economy is picking back up.

What’s the Bottom Line? Rob Mattern Interviews Legal Business Expert Ed Poll

Fri, 14 Jan 2011 17:00:00 -0500

Attorney Ed Poll is a nationally-recognized law firm management consultant and author who has coached and consulted with lawyers and law firms in strategic planning, profitability analysis, and practice development for over 20 years.

Most recently, Poll was the recipient of the Lifetime Achievement Award from the State Bar of California (LPMT Section), is a Fellow of the College of Law Practice Management, Board Certified Coach to the Legal Profession, SAC, and a Member of the Million Dollar Consulting ® Hall of Fame, and just released his book, Growing Your Law Practice in Tough Times.

Recently, Rob Mattern asked Ed for his views on today’s biggest business challenges for law firms, including efficiency, technology, sustainability efforts, and cost reduction.

Here’s what Ed told Rob:

The biggest challenge facing lawyers is that they focus on the top line, business development, and neglect the bottom line: collection of billed fees, realization rates, retention of talent, succession and business continuity planning.

Technology is integral to better management of the bottom line, making law firms more efficient in both the delivery of legal services as well as the management of clients’ expectations. However, it is also a double-edged sword as it is creating a more sophisticated and demanding clientele who are more knowledgeable of the legal process and have increased expectations of information turnaround time.

The economic downturn has prompted more cost recovery programs, though also prompting questions of how or when to pass the incurred costs associated with a matter onto the client as opposed to the firm absorbing these costs.

Sustainability is a societal trend; law firms aren’t ahead or behind on that one. Technology assists firms in using more emails and less paper. Other firms will see the light on sustainability only when they can see a return on their investment.

Larger law firms are already responsible on the corporate level and seek awards from Bar Associations to prove it; however, there is still room for improvement.

A penny billed is a penny earned?

Wed, 05 Jan 2011 08:23:52 -0500

In the December 31^st posting to the blog “Above the Law”, Elie Mystal writes about how Hughes Hubbard (a Mattern Client) has just implemented a new policy as of January 1^stthat implements a 5% pay cut for the first time an Attorney is late entering their time. This increases to 10% for the next instance and 20% for the third time. Lateness is defined as more than five (5) days of time prior to any pay date. The reduced salary will continue in effect until the timekeeper is no longer five (5) days in arrears. There is also no retroactive payment for the salary reductions. Hughes Hubbard is not the only firm attacking this problem, Simpson Thatcher and Akin Gump are also taking steps along the same lines?

Is this harshness necessary? According to an Adam Smith and Smart Webparts survey in May of 2010, the average Attorney underbills anywhere from $20,000 to $40,000 annually. So a firm with 100 Attorneys this underbilled amount could equate to $2,000,000 to $4,000,000 dollars per year. In our 2010 Cost Recovery Survey, one of the most astonishing bits of data that came out was the amount of internal write-offs (amounts deducted from the bill by the billing Attorney) . For example, in the case of black and white copies alone, for a 100 Attorney firm the amount that does not even make it to the invoice ranges from $195,000 to $477,000 per year. Keep in mind this amount does not factor in what the clients are not paying. Granted this is not in the same neighborhood as $2 to $4 million dollars but it is still a chunk of change. In addition this is only black & white copies, if we added in color copies, prints, scans, etc. this amount would easily exceed $1 million dollars. Again in my world, quite a chunk of change.

Is it good that Firms are addressing this issue and taking such drastic steps to do so? Is the stick better than the carrot? Should the same steps be taken to address the internal write –offs of soft costs?

400+ Lawyer Firm McCarter & English Saves 23% on Support Services

Wed, 08 Dec 2010 16:52:00 -0500

Why pay more than you have to for support services? McCarter & English agrees.

McCarter is a firm of over 400 lawyers with offices in Boston, Hartford, Stamford, New York City, Newark, Philadelphia and Wilmington. In continuous business for more than 160 years, they are among the oldest and largest law firms in America.

The firm will reduce its support services costs by 23 percent in the initial year of the new contract and 14 percent in subsequent years without reducing services or switching providers.

Mattern, which handled the support services RFP processes for the firm, applied its three-phase approach Mattern Method® to assess McCarter & English’s costs, utilization of labor, equipment, supplies and services against industry benchmarks and best practices. The firm also implemented Mattern Plan B Cost Recovery™ - patent pending- that allows McCarter & English to pass litigation support project invoices directly through to its clients to recover more of their costs.

Ask yourself if you would rather pay your support services vendors an extra 23% or put that money into the firm’s coffers or the partners’ pockets? It’s not a tough decision, right?

Click here to read more about how McCarter & English’s saved big - and you your firm can, too.