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How to Manage Outside Counsel Guidelines According to the Experts

Posted by Gaby Isturiz on June 7, 2018 at 2:00 PM

How would you describe managing OCG at your firm?
Overwhelming? Time consuming? Elusive? Frustrating? Fun?

Probably not the last one. Managing unique Outside Counsel Guidelines (OCG), specifically, billing guidelines, for several corporate clients is necessary, but also one of the most significant challenges that firms are facing right now.

After all, most firms are experiencing cash flow delays and losing revenue because their bills are not in compliance with client billing guidelines. OCG compliance has a direct and immediate impact on your firm’s bottom line. When bills are not in compliance, invoices are rejected and money is left on the table.

In this blog post, we’ve decided to tackle the issue of managing OCG by rounding up the industry’s leading experts to share their insights and best practices. We spoke with three leaders in managing OCG: Jane Bennitt (Principal at Global Legal Ebilling, LLC), Barry Pennell (COO, Cranfill Sumner & Hartzog LLP) and Robert Karau (Manager of Client Financial Services, Robins Kaplan) to get their best advice on managing billing guidelines.

What is the biggest pain point in terms of managing and complying with the billing guidelines?

Jane Bennitt, Principal at Global Legal Ebilling, LLC
Jane Bennitt“While the volume of requirements seem impossible to manage today, client mandates will continue to grow. Today’s impossible workflow is nothing compared to what you should expect in the future.”

Robert Karau, Manager of Client Financial Services, Robins Kaplan
Robert Karau“When I look at this from an industry perspective, I see a myriad of pain points that emerge from this issue. Many of these are things that we should know about and view as opportunities versus viewing them as pain points. Sometimes, we think we have all the answers, it seems, when we have not even asked the right questions. We need attorneys and staff that are educated in the area of OCG and the business of law. If it is not possible to educate our attorneys sufficiently, or if we feel this is not something that belongs on the attorney’s plate, then we should make sure we have an infrastructure designed to enable us to comply with client OCG needs. Education and process management is needed to help everyone understand and serve the client in the manner the client has requested. Leveraging off of technology to accomplish this is a smart play.”

Barry Pennell, COO, Cranfill Sumner & Hartzog LLP
Barry Pennill“Compliance is the biggest pain point. Clients deserve the compliance but law firms are inundated with guidelines; therefore, they continue to bill their time and then rely on the client to handle compliance via the tools clients have put in place to monitor guidelines.”

What are the key issues facing firms today as they work to manage their Outside Counsel Guidelines?

Jane Bennitt, Principal at Global Legal Ebilling, LLC
Jane BennittThe biggest issue is the sheer volume of requirements that need to be managed. Requirement documents really found footing with the advent of ebilling, but clients who don’t require ebilling today are more likely than ever before to also issue billing requirements. It simply is impossible for anyone to remember all of the nuances from client to client. Non-compliance results in rejections that must be corrected and resubmitted, possibly multiple times. Every resubmission increases the cost to produce a payable invoice, and risks potential lost revenue if 'timeliness' requirements aren’t met.

Firms should also be aware that their clients are paying attention to the information in their ebilling system. In addition to using business intelligence tools to mine their ebilling data, many are also interested in billing statistics like patterns behind invoice rejections and analyzing adjustments taken. In this respect, firms don’t want to stand out.”

Why do firms continue to be reactive in managing billing guidelines and compliance, rather than proactive?

Barry Pennell, COO, Cranfill Sumner & Hartzog LLP
Barry Pennill“Law firms have always been laggards when it comes to responding to the market. They are doing a much better job, but they have a long way to go. There are at least two undercurrents that are part of this reactive stance. First, lawyers see their practices as the truest of professions with an extremely high level of ethical expectations and behavior. It’s obvious that sophisticated clients do not share this view of lawyers. Second, lawyers have been trained to measure their time while clients want lawyers to measure their value. The more lawyers hold their ground on old training, practices and pricing, the more sophisticated clients will manage that outdated mindset.”

What can firms do to be more proactive?

Robert Karau, Manager of Client Financial Services, Robins Kaplan
Robert KarauFirst, you have to choose to be proactive and cultivate an environment which elicits this behavior. To begin this process, I believe that before law firms can position themselves for current and future success, they must understand their current processes and practices. I suggest a thorough analysis of each area with a process narrative and flow chart mapping each of the processes. I was part of a group that performed this analysis for a large Fortune 100 company before I began to work in a law firm environment. It was an enlightening experience for me and also showed me that this was something that could easily be done with a minimal amount of training and guidance. Many times when a firm is grappling with keeping up with the growing volume and complexity of OCG’s, they try to find a solution without understanding where they are currently falling short. Avoid making assumptions and work to understand each element of your current client- facing practices and processes. In addition, establish some metrics for measuring current performance and your firm’s performance as you initiate any new steps, programs or automation. As our clients become more sophisticated and efficient in their analysis of firm performance regarding OCG’s and other elements of our representations, we must even be more demanding or we will fall behind.”

What is your best advice for managing and complying with OCG?

Jane Bennitt, Principal at Global Legal Ebilling, LLC
Jane Bennitt“Firms should track the number of paper billing clients with specialized requirements, the number of ebilling clients, and the volume of bills that fall into each category every month versus the overall total created at the firm. It would be helpful to also have statistics for the number of ebilling rejections, adjustments taken and write-offs necessitated by lack of 'timeliness.' Yes, this can be a lot of work, but hard numbers make the case better than anecdotal evidence when trying to demonstrate why better tools are needed.”

Robert Karau, Manager of Client Financial Services, Robins Kaplan
Robert KarauTo manage and comply with client OCG’s and related client expectations, we must educate, automate, innovate and communicate. This must begin at the very start of client engagement and should continue throughout our relationship with each client and each client matter. If you want to be a world-class firm, you need more than brilliant legal minds. You need policies, practices and processes that are also world-class caliber. It is evident to me that this is something that firms cannot do on their own. I have a number of thoughts on how many firms could better educate and communicate internally and with their clients. In the area of automation and innovation few, if any, firms have the resources and funds to engineer the consummate automation and innovation to adequately address your client needs which include OCG compliance. Consequently, you need strong business partners who have the insight, knowledge, capacity and solutions that your firm needs to successfully manage OCG compliance and enhance each client relationship. Rivers of change will continue to run through the legal industry and many firms will be washed away by the currents. The success to OCG compliance is a mixture of common sense and leveraging off the insights and technology that is available within the legal industry. Firms will either innovate or evaporate.”

Barry Pennell, COO, Cranfill Sumner & Hartzog LLP
Barry Pennill“My best advice is to comply with OCG and use technological advances to do so. But, it is important to understand that client guidelines may not align with your present or future law firm. If OCG or rates will not work for your firm then you should discuss that with the client. Firms should not be afraid to bring some client relationships to an end. Law firms work to save relationships and revenue but when firms compromise profits in favor of revenue then they commoditize themselves and place the firm in financial danger.

Clients are not to blame. They have the same economic pressures as law firms and they are merely trying to navigate a competitive environment. Not every client relationship is going to work out for law firms and clients.”

What is your experience managing OCG at your firm?
Share your comments below.