In the wake of the Great Recession (from 2007-2009), many companies undertook a number of cost-saving measures to reduce legal spending. These initiatives included moving legal services in-house, using alternative service providers, and demanding more value from the law firms companies did hire.
In addition, many corporate law departments began developing more stringent outside-counsel selection criteria that use metrics to evaluate firms. Companies now typically measure a variety of key attributes of their law firms, including cost-effectiveness, transparency and information sharing, and effective technology use. The 2018 CLOC survey found that 49% of corporate law departments maintained preferred-provider programs, with an average of 13 law firms on their lists. It’s a safe bet those numbers will continue to rise.
Law firms know all of this, but many remain unaware that many a growing number of corporate law departments also include bill-rejection rates in their criteria for evaluating of outside legal partners. E-billing vendors publish bill-rejection rates for law firms, ranking them and identifying the worst offenders. And unfortunately, the bad news is getting around.
According to the 2019 CLOC State of the Industry Survey, 78% of companies polled use e-billing systems, so they’re privy to those published rejection rates. Outside law firms with reputations for chronically submitting bills that get denied can find themselves passed over in the firm selection process. And many never know that their billing-rejection problems contributed to the loss. Clients are simply no longer prepared to tolerate endless streams of incorrect bills.
The data-driven evaluation and selection of law firms appears to be a trend that’s here to stay. However, firms that invest in timekeeping technology send a signal to clients that they take cost savings and billing guidelines seriously. Down the road, those reduced billing rejection rates will help ensure that timekeeping missteps aren’t keeping firms from winning business.
If your firm is facing a similar problem, I encourage you to learn how Intapp Time can help your firm get better metrics and stay within billing guidelines. Learn more, or contact us for a demo.