McCarter & English restructures Support Services to Minimize costs and Maximize Litigation Support Billable Revenue
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.
Legal Management Coverage of Robinson & Cole Case Study
Times have certainly changed when it comes to managing office services at a law firm. Robinson & Cole LLP (R&C) is a Hartford-based law firm with eight office in the Eastern United States with more than 240 attorneys. The firm recently came face-to-face with the fact that it needed to modernize and consider outsourcing its office services for the first time.
Nancy Hayes is Chief Operations Officer at R&C. Hayes notes that many firms have been outsourcing office services for years, but her firm historically preferred to have full-time employees to handle such duties as hand-delivering court documents, making copies and mail routing. Over time, it was becoming clear that keeping these services in-house was not really in sync with their desire to be an efficient, cost-effective firm. “Robinson & Coles core business is the practice of law. We were spending far too much time focusing on the management of the support services,” said Hayes.
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Don’t Get Ripped Off in Your Support Services!
The biggest rip offs in support services are:
1. Offsite Storage Permanent withdrawal fees
2. Termination charges on outsourcing contracts
3. Severance pay for outsourced employees
4. Equipment return fees
In each of the above instances, there is no justifiable reason for these charges. Their sole purpose is to impact you, the client, if you want to attempt to terminate the relationship even if the service you are receiving is poor. How do you avoid them?
Here are some strategies:
1. Create a competitive situation in any contract negotiation or renewal. This will tend to point out terms and conditions that are not competitive.
2. Think “pre-nuptial agreement”. Every contract ends, make sure you address how the contract terminates at the outset when you are negotiating it.
3. Just say “no”. Refuse any term that is a handcuff that unfairly restricts you. Remember that YOU are the client!
Don’t get ripped off! For more strategies to avoid unfair contract terms, please see the upcoming Fall edition of Mattern Matters.
Isn’t it Time for a Change?
In a preliminary review of the 2010 Mattern & Associates, LLC Cost Recovery Survey, the average net realization on billable items (the amount the firm actually gets paid for after internal and client write-offs) is below 50%. In other words, the firm is only getting reimbursed for less than 50% of what they are billing their clients on soft cost items. If you factor in the non-billable amount, this amount decreases to 33%. What does this data tell us? That the traditional method of cost recovery, and support services as we know it in law firms today, is dying.
As Einstein said about insanity, it is doing the same thing over and over again and expecting different results – isn’t that that what we are doing with cost recovery and the support services?
Is it time for a Checkup?
Quality in terms of end-user-experience is best measured through satisfaction surveys. Firms often survey their end-users when it is time to renew their outsourcing contract. These surveys help to identify “pain” the end-users may be experiencing with their current vendor. Results of the survey assist the Firm in adjusting any service level agreements (SLA) already in place and developing new ones for their contract. These SLA’s also create the base for the quality of service to be measure. The SLA’s should then be developed into a scorecard for monitoring and measuring the performance of their vendor providing service to the firm.
It is important to have a “checkup” during the term of your contract. Re-surveying your end-users mid-contract assist the firm in making sure the needs of their end-users have been met and present opportunities to take some preventative measures to address issues that have changed and not wait till it’s time for their outsourcing contract to be renewed.
So, schedule a “checkup” and find out what’s going on with your end-users and not wait until the end of your contract to find out it’s too late for a cure.
