Aderant just released its 2021 Law Firm Leader Survey on Outside Counsel Guidelines and while the whole report is worth checking out, the outside counsel guideline issue can be summed up in one short list:

The top five challenges respondent firms faced when managing outside counsel guidelines were:
#1 – Clients use them as a method to delay payment
#2 – They’re getting too complex
#3 – TLDR (Too long, too much info, didn’t read)
#4 – Clients change the rules and billing guidelines without telling you
#5 – We are losing revenue while we try to comply

These are features not bugs of the outside counsel guideline process. In-house lawyers will act like their arcane guidelines — rules that require firms to deploy an entirely different vocabulary to perform the same task for two different clients — are key to effective bookkeeping, but no one honestly believes that. Back in 2019, 81 percent of clients reported using outside client guidelines as a tool for controlling costs so there’s no confusion over what’s going on — it’s make work for attorneys.

And maybe this is the price the legal industry must pay for years of billing process neglect. In a bygone era, law firms got away with billing to “further work” and clients kept uncritically footing the bill. The balance of power needed to be tipped back toward the client somehow. But this feels like a massive overcorrection.

While grappling with these challenges, it is not surprising that nearly two-thirds of clients have pushed back on guidelines. Additionally, 37% of firms said OGCs make it more difficult for the firm to communicate with clients.

Firms surveyed used a variety of methods to deliver OCGs to their lawyers, though the disappointing truth is that only 32% indicated
that more than half of their lawyers know the guidelines for their matters.

Guidelines aren’t effective if the firm can’t follow them. They’re also not producing reliable data for benchmarking when they’re so complex that outside counsel is just as willing to write off the work as fuss with logging it correctly. At the end of the day, these “billing bibles” are just ploys to make it harder for law firms to get paid.

When asked what they would like to see improve with OCG compliance, billing, and eBilling at their firm, the top two answers were:

#1 – Better technology for law firms in order to comply, and
#2 – More law firm visibility into what the corporate legal department really wants.

From a technology standpoint, there has been an expanding number of solutions developed in recent years to address guidelines and compliance challenges. Several survey respondents commented that they needed more than just one piece of software to assist them with the many faces of OCG compliance. Modern systems comprehensively integrate time entry, billing, and OCG compliance which will be an immense help to firms. More legal administrators are finding systems to help cure many of the OCG compliance afflictions mentioned in the survey.

I’ve admittedly been impressed by some of the solutions out there to help law firms automatically comply with increasingly complex guidelines, but when firms need “more than just one piece of software” just to get their bills paid, there’s a problem.

I don’t know what the answer is, but something needs to happen. There must be a better way to control outside counsel spend besides “make the process more onerous for everyone involved” and the fact that we’ve gotten to this point is a great example of why lawyers can’t have nice things.

Earlier: In-House Counsel Make Increasingly Arcane Billing Demands And It’s Costing Firms Money

HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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