Law Departments Ill-Equipped to Manage Outside Counsel
I recently reported that many inhouse counsel lack the tools to manage outside counsel properly (The Sorry State of Law Department Legal Tech). The situation is even worse than I thought a knowledgeable reader reports.
Rob Thomas is Vice President, Strategic Development | Serengeti Law, sent an e-mail note that, with permission, I reproduce below. Some thoughts first.
Serengeti provides a hosted matter management system (including e-billing) for corporate law departments. The benefits of matter management need no explaining (if they do, I give up).
I will digress briefly to comment on hosted systems: Serengeti is the first legal web-based system I remember. What was an “Application Service Providers” is now just “hosted” (or “Software as a Service (SaaS)” if you are techie). That means a turn-key system. All the law department needs is a browser and Internet connection – no complicated installs or IT maintenance. Companies large and small use a wide range of hosted systems. They are particularly attractive for law departments, which frequently lack proper IT support. It also makes for quicker connection with law firms since there is nothing for them to install and usually no vendor charge for submitting electronic bills, status updates, etc.
Serengeti works with ACC on a survey of inhouse counsel. Here are Rob’s comments:
I wanted to let you know that the situation regarding law department use of technology is actually much sadder than the already low levels you described. When you look at a broader in-house base, which consists primarily of smaller law departments, there is even less technology used than reported in the ILTA survey (which probably covered larger, more tech savvy law departments who have the time/interest to participate in ILTA).
In our most recent annual survey of ACC members (about 80% of which have fewer than 10 lawyers), only 29% have a matter management and/or e-billing system. Another 36% manage by manually keying information into spreadsheets. So one-third have no system at all, not even spreadsheets. And, as you pointed out, even those who have systems probably aren’t using them effectively. This is particularly so for older matter management systems that require manual data entry.
Law departments can’t manage what they can’t see. With the adoption of hosted online matter management systems like Serengeti, there is really no excuse left for law departments that do not manage their vendors. It’s hard to understand how the GC can be in this position when all other corporate departments use project plans, budgets, and track of progress/results. Even the excuse that “my law firms will resist” is a red herring: we find very few law firms object because most are already using these systems for other clients.
I agree that it is time to stop complaining about ever-increasing law firm rates, and to put systems in place that require budgets, track ongoing budget performance, and assess results. Using such systems, in-house counsel can link outside counsel compensation to the value that they provide, not the number of hours that they spend. Until those who write the checks are willing to require such changes, they will continue to spend more than their activist peers.
Update (9 Mar 09): In Without spend management software, law departments get their data from accounts payable, law department management consultant Rees Morrison comments on this post. He points out that many law departments can rely on account payable for the data they need to manage outside counsel.
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