Outside counsel guidelines propel business acceptance adaptations

Something quite significant has happened over the last ten years in client-law firm relationships. Spoiler alert: Clients no longer give law firms carte blanche to solve legal problems. Outside counsel guidelines (OCGs) ended the “pay whatever is needed attitude” that permeated the relationship between corporate law departments and law firms for decades. Corporate procurement departments now pack devilish details into OCGs on how legal services will be delivered, billed, and staffed. Insights from former big-law attorneys now working in-house guide the new normal for law firm pricing, billing, and expense parameters.

How are law firms dealing with OCGs? The track record is mixed. We believe law firms must adapt their business acceptance processes to account for OCGs upfront and during matter execution. Here’s why.

OCG data is overwhelming firms
Nowadays, OCGs and engagement letter terms runs the gamut from bill description specificity, allowable expenses, and security to a host of other topics. For large firms with thousands of client OCGs, the data management challenge is huge. Firms need technology to organize, analyze, store, and communicate OCG terms if they are to have any chance of complying with the growing volume.

Compliance cannot be half-baked
Don’t be fooled into thinking clients will make you agree to all these terms, then forget about them.  Clients use e-billing systems to identify noncompliant billing items. For example, clients will reject overly broad time and billing entries if the OCGs require detailed descriptions. Typically, firms end up writing off these noncompliant charges. After all, how can they argue when they agreed to the terms? And imagine how that OCG-related revenue leakage can compound over time.

No glossing over in new business analysis
Your firm needs to analyze OCG terms during business acceptance. If you don’t, you’ll quickly end up out of compliance. You have to know the details of all these OCGs to build operational compliance protocols, right?

Technology that classifies and categorizes OCG terms gives firms the ability to analyze upfront OCG risks and put compliance measures in place from the get-go. For example, an effective matter set-up process should connect time, accounting, and OCG systems to ensure OCG compliance during matter execution. Learn more about OCG compliance and business acceptance here.

Don’t leave timekeepers in the dark
Many OCG stipulations center on permissible time and expense billing. Accordingly, you will find many OCG risks lurking in lawyer time entry. Lawyers’ minds are alive with legal analysis, strategies, and client development. Administrative detail is not their forte. Firms need a way to communicate OCG billing details to lawyers. Today, many lawyers remain in OCG darkness and inadvertently violate OCG rules. Firms have to find a way to alert lawyers to OCG requirements in a manner that aligns with lawyers’ work habits.

Do you need to adapt your business acceptance to account for OCGs?
Many forward-thinking firms are reevaluating how they approach OCG compliance today, and it’s well-worth exploring. Does compliance start at business acceptance? Do you feel your firm is on top of all its OCG commitments and is consistently complying?  Have you ever seen bills rejected for OCG problems?

As you do some self-assessment, you may find it helpful to take a look at this ebook, which further explores the big trends impacting law firm business acceptance and discusses how new approaches can help.