http://matternoffact.com/

Shook, Hardy & Bacon and Pitney Bowes Management Services: The Makings of a Sweetheart Deal

Tue, 14 Feb 2012 08:18:57 -0500

Consultants that assist law firms in reducing costs are often criticized for slashing and burning expenses with no regard to the firm’s long-term strategy or the relationship between the firm and the vendors involved.

The critique is based in the experience of some law firms that retain strategic sourcing or cost containment consultants that operate on a percentage of savings business model.

This is not the case with the consultants of Mattern & Associates. At Mattern, we will not only create long term strategies that will reduce your expenses, but will also maintain and improve your contractual terms, the relationship with your vendors and most importantly create a long-term strategy for these services that will maximize the net realization of your billable revenue.

Sound like a sweetheart of a deal? Read here for the whole story about one such recent success for Shook, Hardy & Bacon and Pitney Bowes Management Services

Happy New Year!

Tue, 10 Jan 2012 13:22:36 -0500

I hope your 2011 ended well and your 2012 is off to a good start.

It seems like no matter how well-prepared you are from a business viewpoint, the preparation for the New Year is at times overwhelming. Between closing the books on the past year, the flurry of year-end festivities, well-earned time-off, family commitments and the holiday celebrations, there is very little time to focus on concrete strategies your firm can implement to increase the profitability of your operation in the coming year.

To assist you in this endeavor, we developed “Law Firm Resolutions for Good Financial Health in 2012” published in ALA Currents on December 22, 2011. We hope you benefit from the specific methods we saw some of the most competitive firms utilize to achieve financial good health in 2011 for your firm in 2012.

To read the full article, click here.

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.

DLA Piper Sets the Green Bar High- As Covered in Managing Partner Magazine

Wed, 01 Dec 2010 16:18:00 -0500

In the December/January issue of Managing PartnerMagazine (wwwmpmagazine.com) which is hot off the presses, Mattern & Associates’ consultant Brady Schoenrock co-authors an article with DLA Piper sustainability experts Elaine Radford and Jeff Harper to talk about DLA’s initiatives for sustainability and to raise the point that “going green” has real bottom-line benefits that go beyond being a good Samaritan. The article is available to Managing Partner subscribers and can be found here: http://tinyurl.com/35l27tg.

To quote from the article, “DLA Piper has set the global standard for law firms, taking corporate responsibility very seriously. There are four main areas that the DLA Piper Global Sustainability Initiative addresses: Energy, Waste/Recycling, Travel and Procurement. Incorporating advice from experts such as support services consultants Mattern & Associates, the firm has aggressively mandated changes in these areas which have resulted in massive cost savings for the firm. Long-term, sustainability is a money-saver, and there is real evidence to support this fact.”

For more information about green and sustainability strategies for your law firm, especially from an operations or support servicespoint of view, e-mail Brady at bschoenrock@matternassoc.com.

The Mattern & Associates 2010 Cost Recovery Survey Benchmarking Report Has Arrived!

Wed, 24 Nov 2010 10:00:00 -0500

Do you know what percentage of Firms with between 100-149 Attorneys charge for scans in the Southeastern United States?

Or which high profile chargebacks clients are now objecting to - and what can you do about it?

Well, now we know, and so do eighty-one of your fellow law firms that participated in the survey. And we want you to know, too!

The Mattern & Associates 2010 Cost Recovery Benchmarking Report is here and ready to be distributed. If you participated in this study you will be contacted shortly to receive your login and password to this web-based report and to arrange a time to review the report with a Consultant from Mattern & Associates.

If you did not participate and would like to receive a summary of the report and/or participate in the 2012 study please contact Maria Herron at mherron@matternassoc.com. Also stay tuned for an announcement of a webinar summarizing the results in late December 2010/early January 2011.

Triple RFP Play Leads to 19% Spend Reduction for Marshall Dennehey Firm

Wed, 17 Nov 2010 14:50:00 -0500

Reducing overhead expenses is always important, though at times it becomes a major priority to approach head-on with a focused initiative - or two or three. And now is a good time to get a better deal, even from incumbent vendors, since the economy is still tight and it’s a buyer’s market.

As an example of a savvy firm that really “gets” this idea, Marshall, Dennehey, Warner, Coleman & Goggin is a large Philadelphia-based law firm with more than 500 timekeepers in 19 offices on the East Coast and in the Midwest. They reduced their support services spend on outsourcing, office supplies and off-site records storage by more than 19% as a result of a 3-pronged RFP process handled by Mattern & Associates.

Marshall Dennehey CFO Ernest J. DiFilippo consulted Mattern about helping the firm with the projects, having worked with them several times prior, and knowing this was their area of specialization. DiFilippo said, “We needed to execute three large procurement projects, which were each going to be cumbersome and time-consuming to undertake. We knew we could not do this alone. Mattern is knowledgeable about the operational and the legal cost recovery process. They have no alliance to any vendor and we knew we could trust them to get us exactly what we needed at the best possible price.”

Click here to read more about Marshall Dennehey’s road to nearly 20% cost reduction on their support services.

Things to consider for a Multi-functional RFP

Thu, 11 Nov 2010 14:43:00 -0500

For a possible upcoming Request for Proposal (RFP) project to procure multi-functionals for an AMLAW 50 law firm, the firm’s CAO asked Mattern & Associates to put together a list of things to consider in advance of sending out an RFP. I thought it was an excellent first step in starting a project such as this, and decided to share them here.

1. What is the Firm’s position on the recovery of costs (chargeback)?

As Stephen Covey states in his book – “The Seven Habits of Highly Effective People^®” – begin with the end in mind. To effectively choose and place your equipment, you must take into account what you will be able to charge back to your clients and get paid for.

2. What do End users want in regards to color output and black & white and color scan capabilities?

Based on every end user survey, interview and focus group we conduct, end users are begging for access to more color output and black & white and color scanning. Does this apply to your firm?

3. Should I standardize equipment and software platforms across all offices, even my international offices?

In order to drive the most cost-effective and competitive deal, minimize administrative headaches and standardize the end user experience across all offices, we recommend that the firm choose a common equipment platform and workflow solution.

4. How should I structure my contract?

In this economic time, every equipment contract should contain flexible language to allow you to add, delete, upgrade and downgrade equipment at any time during the contract without penalties, early buyouts or liquidated damages.

5. Should I take into account my other input/output devices when I select and place the multi-functional devices?

Yes – even though the responsibilities for these devices are usually cross departmental – when choosing speed and capabilities for your MFDs, local and network printers should be taken into account with the idea to minimize overall placements.