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The Best Legal Spend Management Starts With Good Instructions

Best legal spend management starts with good instructions
Best legal spend management starts with good instructions

When it comes to managing budgets and fees in the legal industry there can be quite diverse views about the best solutions.

Whilst many advocate for ebilling tools and adherence to billing guidelines, there is a growing number of leaders in the industry who acknowledge that this approach has limitations. It is argued that greater attention and discipline in providing good instructions up-front can improve matter scoping and the predictability and accuracy of fee estimates, leading to better outcomes and readily approved invoices.

This thinking isn’t new

Three years ago, at a legal procurement conference in Sydney, the audience of almost 100 lawyers and legal industry professionals split across in-house legal teams and private practice were asked to share what they wished the other side could improve.

After the expected tongue-in-cheek jokes about turning off the 6-minute timer, the surprising response from many in-house legal leaders was that they wished their private practice counterparts would scope matters better, as this would lead to more reliable and predictable fee estimates.

The response by law firm partners and business development leaders was remarkable – they wished for better instructions so that they would have a better understanding of client expectations and requirements.

Some felt that poor instructions left them second-guessing, resulting in a misalignment of service delivery, such as over-servicing. Or in colloquial terms, providing the Mercedes when a Ford would suffice. Some shared the sense of frustration that is experienced when a client provides limited instructions (sometimes as little as a forwarded email and the word “deal”) and then disputes the resulting legal bill.

It became apparent that much could be achieved with a structured approach to instructing, outlining and agreeing a scope of work, and the provision of a fee proposal or estimate.

Communication & collaboration

During an ACC Australia panel discussion in 2020, a senior legal operations professional at a large financial services organisation shared that improving matter scoping is a key focus and acknowledged that this is not something that can happen in isolation.

Law firms can be key strategic partners in driving change, and as such, promoting collaboration and communication is crucial.

Certainly, actively seeking feedback from firms about the quality of instructions they are receiving is an important step and this demonstrates the value of contributions from both sides.

Most law firms would highly value being invited and involved in meaningful change projects with their clients. Also, working with clients in this way provides a critical opportunity for them to give and receive feedback and demonstrate their understanding of the client’s organisation and challenges.

Technology as enabler

In some ways ebilling has been readily embraced as a technology tool because it does not actually require changing the way that matters are briefed, scoped or managed. Ebilling tools simply capture and interrogate data at the point of invoicing.

True change requires the tripartite relationship of technology, process and people.

Considering the entire matter life-cycle, identifying areas for improvement, perhaps education and coaching of key personnel, and utilising technology to enable a structured workflow with control mechanisms, are such examples. One of the roles of technology is to also capture data and metrics throughout the process, not just at the end, so that opportunities for continuous improvement can easily be identified.

Change is challenging, but worthwhile

The old adage applies: if you keep doing what you’ve always done, you will continue to get what you’ve always received. The vicious cycle of poor briefing, little attention given to scoping, criticism of legal bills, blaming the law firm and writing off work, can be avoided. It requires discipline and commitment from both sides, but the results can be incredibly worthwhile: predictable billing, more client satisfaction, less bill disputes, less work write-offs, and a better working relationship.