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Using Data Analytics To Evaluate Fees In Complex Bankruptcies

Large bankruptcies like Toys R Us and Sears have recently garnered lots of attention in the legal and business news cycles with good reason. These bankruptcies are public with many stakeholders involved including creditors, employees, and law firms. The work that the law firms perform is multi-fold from transactions to advisory.

One of the areas that has come under focus are the law firm fees. Stakeholders want more transparency into the work performed and fees charged. This is where data analytics and products like Legal Decoder’s Compliance Engine can help with fee transparency and assist fee examiners who have to pore over thousands of invoice line items.

Legal Decoder CEO, Joe Tiano, and UNLV Law Professor, Nancy Rapoport, discuss how technology and analytics can help analyze bankruptcy fees. Lots of good insights from two industry experts. You can read the discussion here.

2019 Georgia State University Law Review Symposium

CEO Joseph Tiano will be discussing the subject in the article "Legal Analytics, Social Science, and Legal Fees" at the 2019 GSU Law Review Symposium. The upcoming article was co-authored with UNLV Law Professor Nancy Rapoport.

If you are interested in hearing experts discuss a wide range of legal analytics and technology topics then please make some time to attend this event.

How Do You Price Legal Services With Data? - Case Study

Pricing legal services is an ongoing topic with us at Legal Decoder. It’s an issue many more firms are starting to address head on to ensure prices are commensurate with costs and clients won’t feel they are being overcharged.

We put together a case study over at High Performance Counsel (link) detailing pricing insights gathered from our data sets using the Pricing Engine. The Pricing Engine analyzes data and categorizes work elements through the billing narrative and applies UTBMS codes (when applicable). Then, the work elements are assigned to branches and sub-branches in Legal Decoder’s proprietary taxonomy. The result is a bottom-up analysis of work elements that can guide pricing strategies and review past performance.


The case study also shows how data analytics can help with your pricing strategies. As competition increases, pricing (and cost) management WILL be a differentiating factor in maintaining or increasing competitiveness.

Download the cast study here.

If your firm or company is interested in working with Legal Decoder then contact us here.

The 8-Hour Workday

The Law of Diminishing Returns states that if one input in the production of a commodity is increased while all other inputs are fixed, a point will eventually be reached where additions to the input begin to yield smaller returns.  In other words, throwing bodies at a problem doesn’t necessarily increase output and may decrease output.  This law can be applied when attempting to squeeze in more hours to the standard work day.

Corporate law departments are increasingly scrutinizing the amount of time outside counsel bills for tasks and looking for inefficiencies.  Law firms are also analyzing time billed out to ensure they work within client billing guidelines and address any potential issues of fraudulent billing before they reach the client.

Legal Decoder’s Compliance Engine flags timekeepers who bill more than 8 hours per day (aka Hourly Max flag).  The reason behind the Hourly Max flag is a timekeeper’s efficiency level decreases when working in excess of 8 hours per day.  The way this rule works is the Compliance Engine flags all line items that have exceeded a total of 8 hours in a day.  For example, John Smith’s daily time entry for work completed is as follows:


We analyzed customer data for patterns and trends on all instances where line items were flagged as Hourly Max.  First, we wanted to look to see if there was a trend in how time reporting occurred.  Based on the data the largest spikes and dips occurred in the middle of the month and just a few days before the end of the month.


Next, we wanted to see if there was a correlation between word count and hours recorded.  Below is a graph of all line item narratives flagged as Hourly Max.  The trend is the longer the word counts the more time is recorded.  Two reasons are the work being recorded is more complex, thus, takes more time and Block Billing.   Block billing should be avoided as it combines many work tasks into one entry but makes it difficult to discern if bill padding (fraudulent billing) is taking place.


Within the data, 8.5% of narratives contain 5 words or less with many of the entries being vague descriptions (e.g. “Reviewed same”, “Teleconference with client”).  The longest line item narrative contained over 650 words.  There were several instances of Hourly Max exceeding 24 hours of work in a single business day. 

You may be asking “Why would I care that a lawyer is working more than 8 hours a day?  That’s what I pay them for.”  Lawyers are humans and humans are not machines.  After a certain amount of time of working, concentration and energy levels decrease.  Being realistic, many people do work more than 8 hours a day on billable and non-billable work while producing quality work products.  Some of our clients are fine with their outside counsel billing more than 8 hours a day especially if it is in preparation of a trial or some other important event.  Yet, for many, “powering through” can result in error-prone work products and remediation of those work products which could lead to inflated costs and decreased effectiveness.

The 2017 Year In Review

This year was a busy year for Legal Decoder.  New customer growth, a pilot program for law firms, and a new product release, the Pricing Engine, were some of the highlights of 2017.  These numbers quantify the year of change and growth for Legal Decoder:

~250,000,000 - Total $ analyzed

306,956 - Line items analyzed

103,136 - Line item narratives containing the word "Review"

8107 - Invoices processed

831 - PDF invoices converted

4 - Different countries where team members and contributors are located

With 2017 in the books we look forward to a bigger and better 2018.  Stay tuned.


Block Billing Challenge

The issue of block billing is something law firms and clients have to deal with regularly.  Clients are frustrated when deciphering a blocked bill narrative and have imposed billing guidelines to counteract the challenge.  Law firms need a means by which to unbundle a block bill narrative to gain insights for pricing and legal process management purposes.  Some of our clients have run into block bill narratives on the extreme side and bordering on the unethical.  It's a real challenge for both sides.

We've encountered instances of block billing where the narratives are paragraphs long with hundreds or even thousands of words long.  Our technology has identified block bills where 24+ hours have been charged to a single block billed line item.

The California Bar Association explains block billing as:

"Block billing is the practice of assigning one time charge to multiple separate tasks. An
extreme example would be a fee bill mailed to a client at the end of the case with a single entry for 200 hours for “work on case” without identifying, among other things, the various individual tasks performed, who performed them, and when. A more subtle example would be a 3.6 hour charge for 'review client’s e-mail, retrieve file, call with DR re same, and prepare/send reply.'"

Recently, we made some improvements to the core technology (Legal Spend Analyzer) where block narratives are intelligently parsed out from paragraphs into separate line items.  For example, if the narrative below is identified as a block bill then each sentence can be parsed out for further analysis:

"Spoke with client about updated documents.  Draft, review, and exchange emails to colleagues about documentation.  Research motion.  Update J. Smith on patent reports regarding same."

After the system identifies it as a block bill it reads the narrative as 4 separate line items and analyzes each on its own:


In one instance, our technology parsed a 2000 character blocked billed invoice into 28 separate line item parts   Ending the issue of block billing requires a change in habits and culture.  Until then, we will be continually working to improve our products to help our clients and law firms deal with these issues.

Metrics And Managing

Recently, there was a piece about what lawyers do with their time on an average day and the average amount of time a lawyer spends on billable hours is 2.3 hours per day (roughly 30% of her/his workday).  The rest of the time is spent on other tasks like administrative work or business development.  We performed an analysis of billing data using our Compliance Engine to give a picture about what lawyers/timekeepers do when they bill.

Long story short: Lawyers are busy.  They just aren't always busy with your matter.

If someone were to mandate that everyone increase their billable output by 2x each day based only on the statistic of 2.3 hours without any other data points then other important tasks (business development) will fall on the list of priorities.  This creates a domino effect which would probably lead to some unhappy employees and lost business.  It is important to drill deeper into your data for more context and a more complete picture to determine if that decision is the right one.

It also reminds me of the misquoted Edward Deming line: "You can't manage what you can't measure."  What he actually said was you shouldn't run a company or organization purely on statistics alone.  Both quotes contain good advice.  Data and metrics are important pieces of your decision-making arsenal.  Use them to prove or disprove your conclusion.  Ultimately, using that data to make the right decision for your clients and workforce is what really matters.


Security Is Everyone's Job

It seems as though each week a new security disaster or more bad news on a previous one is reported.   We take security seriously and think about how we can reduce our attack surface.  Our customers trust us with their data and we never want to break that trust.  As we are rebuilding our technology backend (more on that in the near future) we are baking in security through each step of the development process.  Security can't just be inserted wherever you want; it has to begin at the start.

At times, the security measures we have taken inconvenience our customers (and us) but it's a tradeoff we can live with.  

Security is everyone's job.

BlogJason Chisecurity, breach
A Look Into The Data

Recently, we took a look at a data set to get an idea of who did what, how long, and how much using the Compliance Engine.  The Compliance Engine "flagged" line items that triggered rules from 3 different categories: Billing Hygiene, Workflow Efficiency, and Staffing.  The flags are based on data analysis, industry benchmarks and generally accepted guidelines.

The Data Set

The data set consisted of 90+ law firms where partners and associates/senior associates consisted the majority of position as expected.  The high percentage of partners and associates also correlated to the majority of fees billed by those positions.

Timekeeper Positions

Timekeeper Positions



Total Fees by Position

Total Fees by Position


Below is a look at how firms performed on the total number of flags vs total spend (what was billed out).  



First, we wanted to see the most common flags analyzed by the Compliance Engine.  Most of the flags fell under the category of Workflow Efficiency (e.g. Increment Billing, Chipping, Office Communication) with the exception of Round Hour and Vague Entries.  


Increment Billing, the most common flag from the data set, are tasks recorded in multiple time entries usually in small increments.  Common activities include "Review" and "Prepare."  

The Skills Mismatch – Overqualified flag is applied to an activity that falls below a timekeeper’s experience level.    For example, a partner working on a draft memo for 3 hours would be considered a skills mismatch and, possibly, incur a higher cost to a client.  This is a trickier flag because some of our clients approve of Partners performing drafting activities or reviewing files despite the Compliance Engine flagging those activities.

Next, we wanted to know what the most common activities were.  The three most common activities across all matters in the data set involved "Review", "Analysis", and "Preparation".

Total Hours for Common Activities Across All Positions

Total Hours for Common Activities Across All Positions


“Preparation” activities averaged 2.2 hours across all positions while “analysis” activities averaged 1.89 hours and “Review” averaged 1.58 hours.  These activities encompassed various stages and cycles of a matter.


Some other insights we gathered from the data:

  • 30% of senior timekeeper entries (partner, senior counsel, etc.) involve an internal office conference.  Internal office conferences can include meetings and teleconferences with colleagues or other staff members.

  • 20% of all line item entries involved e-mail communication and 11% of the e-mail communications were flagged for Communication Inspecificity.  Communication Inspecificity is when outside counsel's time entries regarding electronic or telephonic communications do not identify the subject matter of the communication. 

  • Over 30% of Skills Mismatch – Overqualified flags involved “review” activities with 60% of the flags attributed to timekeepers with the title of “Partner.”  

These are just some of the insights we can surface from your legal billing data.  Quantifying work that has been performed paints a clearer picture and help inform future performance.  Our technology can help law departments and law firms make informed decisions through data analysis.  If you think we can help you with your legal spend and billing data please contact us at or go here.

The Billable Hour

The debate about whether the billable hour is an outdated unit of measurement has been discussed and still continues. More law departments are exploring options to implement alternative fee arrangements (AFA) with their outside counsel.  Microsoft wants 90 percent of its legal work performed under AFAs and 30 percent of respondents in Deloitte's Future Trends for Legal Services mentioned fixed or capped fees regarding purchasing legal services.

But the billable hour continues to be the standard because it is quantifiable and ingrained in the culture of the legal industry.  Despite all the complaints the billable hour is still the most predictable way to gauge the value and effectiveness of certain practices such as litigation.  There are risks that come with an AFA/fixed fee arrangement to both the law department and the law firm.  Firms may incur a loss if they don't budget properly and law departments may overpay when it could have been cheaper to pay by the hour.  AFAs have a place and will continue to become more commonplace particularly with more predictable matters.

Despite the disdain of the billable hour by many people it doesn't seem like it will be replaced anytime soon.  Yes, the billable hour can lead to unethical billing practices but that doesn't mean a new blanket solution is necessary.  Using a combination of technology and relevant metrics to analyze cost, value, and efficiency of services purchased or provided is a better solution before making a decision.

Law Firm Technology Use On The Rise

Legaltech News post an article about law firm technology used to increase efficiency and automate repetitive tasks.  When law firms were surveyed they stated which technologies they felt were the most effective:

"When asked what technologies provide the "greatest overall effectiveness," two-thirds of law firms picked document management, while around half chose financial planning tools. Slightly under half also chose business intelligence tools (49 percent), and matter management and case management platforms (47 percent), while 37 percent cited project management platforms."

Law firms also stated the invoice process was something they spent too much time on:

"One area that the survey found to be problematic for law firms was invoice management. Forty-four percent of respondents said they "almost always" or "often" spent too much time on invoicing, while 49 percent said this only happened "sometimes.

Specifically, 65 percent of respondents said it takes them at least over one week to publish an invoice. Among law firm respondents with over 200 attorneys in-house (45 out of the 112 respondents), that number rises to 76 percent. Among all respondents, 7 percent take longer than three weeks to publish an invoice.

Much of this delay may come from the manual workflows through which law firms have to organize, classify and submit their invoices. "You have a lot of different people physically touching [an invoice] before it gets out the door," Cartrett said. "So that will slow down the process."

People, processes, and technology will continue to evolve within law firms and corporate law departments.


This week, DoNotPay, a site that helps people with legal issues ranging from fighting parking tickets to helping with asylum applications announced it has added 1,000 chatbots to assist with a wider range of legal forms.  For those unfamiliar with the chatbot it is simply a program that helps a person using dialogue and conversation to accomplish a tasks like customer service.  Chatbots are also used in digital assistants like Siri and in major messaging platforms (Facebook, WeChat).

While Legal Decoder doesn't compete in the same market as DoNotPay it is part of the same movement of creating legal technology products that automate tasks to help customers with decision-making.  Even though DoNotPay claims to be "the world's first robot lawyer" it isn't a lawyer and A.I. isn't replacing lawyers right now.  There is still a need for lawyers to provide guidance to clients or in-house counsel to manage the legal matters of a company.  Technology won't replace these people but it can help make them more effective at their jobs.  These technologies, including ours, provide to the user with more information and insight by doing the heavy lifting in the background through automation.

Technological innovation isn't going away in the legal industry.  Law firms and corporate legal departments are adopting technologies to help automate tasks such as matter management and billing review.  LegalZoom and Cooley created products where anyone at any time can generate a legal document for a matter.  More and more technology will be introduced into the legal market.  It's just a matter of figuring out which one works for you.

A Growing Uneasiness Between Firms And Clients

Recently, there have been articles discussing the shift to alternative fee arrangements (AFAs) and whether law firms are too quick to comply with client demands regarding billing practices.  In an industry where firms have thrived on the billing hour this shift can be worrying to law firm leaders.  You can read about it here, here, and here.

The legal industry is changing with technology presenting new solutions to help law firms and corporate legal departments stay competitive.  Yes, clients are demanding more transparency and efficiency from their outside counsel.  There will be more AFAs but the billing hour isn't going away anytime soon.  We believe these market disruptions aren't problems but opportunities to add value and develop differentiation amongst the competition whether you are the law firm or client/company.

This quote best sums up how we think law firms and corporate legal organizations should tackle the changing market landscape:

"These leaders don’t shy away from market problems. They pursue the best solutions to better continue navigating their firms and law departments with fearlessness, confidence, and security."

Legal Decoder Will Be At The ACC Legal Operations Conference (June 4-6)

Legal Decoder will be attending and presenting at this year's Association of Corporate Counsel (ACC) Legal Operations Conference in Chicago from June 4-6.  Joe Tiano will be presenting Legal Decoder's technology at the "Shark Tank: External Spend Data Analytics" event.  Please stop by and say "hi" if you are at the conference.

For more information on the conference go here.


Being able to understand your data is key to moving forward in a changing legal industry.  Corporate law departments want to know how analytics can be used to help with decision-making and finding value.  Law firms and bill examiners want a solution to ensure billing compliance and get paid faster.  Finding a place to start and make sense of it all can be a challenge by itself.   

Not to worry.  For those who aren’t familiar with Legal Decoder's Legal Spend Analysis technology we have put together a 2-part primer to help take the first step in understanding your data.  Legal Decoder’s Compliance Engine analyzes line items on billing hygiene, workflow efficiency, and staffing.  This post will discuss Billing Hygiene.  The next post will cover Workflow Efficiency and Staffing

Block Billing

Good Billing Hygiene isn’t just inputting time and a short (or very long) description of the work done.  It means line item narratives are descriptive yet succinct to maintain good Billing Hygiene.  One of the most common issues we see is Block Billing.  Here’s an example of Block Billing:

“Review and final comments to plan; disclosure statement and final revisions to approval motion and instructions regarding filing and service; numerous conversations with co-counsel regarding solicitation issues.”

Here is another example of Block Billing:

“Review, analyze case law re confirmation issues (2.3); review, revise summary of same (.4); draft analysis of same (.4); correspond with R. Miller, C. Person, R. Smits, re same (.4); review, analyze precedent re same (.4); review, analyze confirmation timeline issues (.1); review, revise pleading re same (.2); correspond with F. Gore, A. Luck, C. Pagano, re issues re same (.3); correspond and conference with R. Mathis re same (.2); correspond and conference with P. George, J. Teague, M. Turner, N. McMillan, Company re ERISA meetings (.3); review and analyze issues re same (.4); conferences with T. Hilton re plan issues (.3).”

It’s easy to see what makes up Block Billing.  Too many narratives combined into one narrative.  Each mini-narrative doesn’t fully describe the work or the context of the work.  As with the second example, there are 10 narratives crammed into one narrative which makes it difficult to understand the work done.

Here is an example of a well-written narrative:

“Review and analysis of discovery requests directed at debtors regarding events leading to the Ch. 11 and post-petition operation of the debtors.”

The description of the work is succinct and, on its own, the context of the work can be traced to the matter.  Well-written narratives provide a complete picture of the work that has been done for the client and allows firms to track/manage matters appropriately.

Vague Entries

Another common Billing Hygiene issue we see are Vague Entries and they are exactly what they sound like: Entries with vague descriptions of work.

Here are some examples of Vague Entries:

“Further email updates”

“Emails re same”

Vague Entries don’t provide description or traceability to the work.  A few Vague Entries might be acceptable but when it is habitual it becomes a problem for the timekeeper, law firm, and client.  The client doesn’t know what work has been completed and what it is paying for.  The law firm doesn’t have the ability to map the work performed to the matter.  And it looks bad for the firm and the client because neither party can justify the work that was done.

Communication Inspecificity

Lastly, we see a lot of issues regarding Communication Inspecificity which just means the timekeeper didn’t properly identify the party he/she was in communication with.  Here’s an example of Communication Inspecificity:

“Participate in committee conference call.”

Not only does the timekeeper not specify who she/he was in communication with but the entry is also vague.  A better narrative could’ve been “Participated in committee conference call regarding SmithCo appeal with General Counsel.”

The ability to analyze, quantify, and collect valuable information from your legal spend data can unlock untapped value.  New insights can lead to better decisions and strategies.  Both the client and firm can better manage work-related matters, budgets, and costs using information drawn from data.  The legal industry is moving towards a data-driven model where surfacing information from data is the difference between adapting to the changing times or staying the same and watching the competition move forward.

For part 2 of this primer click here

The New!

Welcome to the new!  We've redesigned the site from front to back and moved the site to a new system.  Check back regularly for blog posts and news updates on our blog "The In-House Insider."

If you want to sign up for our newsletter you can sign up on our site here.    



Who are you and what is your role?

I am the Founder and CEO of Legal Decoder.

After practicing law for nearly 20 years, I withdrew from the partnership at Pillsbury Winthrop Shaw Pittman LLP to take on a new challenge. Our mission at Legal Decoder is to help legal ops professionals and law firm leverage technology and data to drive better predictability, efficiency and value when it comes to legal services.   My role is to work with legal industry leaders to understand their challenges and goals and develop smart technology that helps to achieve their goals.

What do you think will be the single most defining feature of the next 1-5 years in law? And then, same question – but over the next decade?

The most defining feature will be the reaction of law firms whose lawyers are being asked by clients to change behaviors. Clients are looking to their law firms for more than legal services as they have been delivered over the past 70 years.   Clients expect law firms to utilize technology, leverage data, create new service delivery models and expand core competency to include things like project management and process mapping. Change is difficult but law firms must react with a sense of urgency to client demands and sell what clients want to buy.

In ten years, many of the baby boomers presumably will have retired so the industry is really going to be shaped by millennials. Millennials are a tech savvy generation so it’ll be interesting to see how they approach the rigors of the legal industry.

Artificial Intelligence (AI) is touted as a game-changer for law. What do you think?

AI will not replace lawyers but will augment how they practice.  Technology simply cannot do aspects of what lawyers do.  AI cannot reason by analogy like lawyers do.   Software cannot account for precedential value, from a business perspective, of taking one course of legal action as oppose to another.  Technology has its limitations.  Lawyers who embrace technology and data analytics to augment their practice and inform their advice will have a competitive advantage

Cybersecurity is often quoted as being both the next greatest risk and also the greatest revenue opportunity for legal services providers. What are your thoughts?

The risk of security and data breaches is undeniable. Notwithstanding, the levels and quality of protective measures, through encryption, password protection, network security monitor and so on continue to advance counteracting the threats. LegalTech solutions providers, legal ops experts and IT professionals are smart and take data security very seriously which means that security levels and preventative measures will become even more effective.

Is Automation a “silver bullet” for law – or is law more complicated than other sectors?

Automation is a silver bullet when it comes to standardization and processing speed. Technology can augment judgment and experience, but it’s not a viable substitute.   For example, our technology can help a lawyer develop a strategy around how many key witness depositions to take in a current case by evaluating how many key witness depositions have been taken in previous cases and correlating that data to outcome.   In some respects, historical data is a quasi-surrogate for a lawyer’s experience.  Someone needs to understand the data, however, and that’s where a lawyer fits in.   His or her judgment is not replaced by a machine.

There is much more data available for both lawyers and their clients? Is more better – or just more?

If data is recent and intelligently structured to align with how lawyers work, more data is better. The challenge faced by many legal operations professionals and law firms is that the data is inconsistently categorized, mis-tagged and poorly structured.  Our technology transforms raw data into refined information upon which legal industry leaders can make decisions.

We see a push for greater “value” and “innovation” in both legal products and price levels, structures? Is there more to value than the price tag these days?

To me, value has three components none of which considers the price tag.   The first component is outcome – clients want a favorable outcome or, at least, an acceptable outcome.   Second, clients want that outcome with a minimal amount of internal friction or burden.   Third, clients expect that outside counsel deliver the outcome with efficiency. If those components are present, law firms will get paid because they delivered value.

There’s a growing trend toward litigation funding and other forms of legal financing. What are your thoughts on that?

If litigation funding affords access to the justice system to people whose legitimate interests otherwise would not be represented, that advances the cause of justice. Given the financing and underwriting slant of litigation funding organizations, I suspect they’ll be early adopters when it comes to using data and metrics to assess litigation strategy and projected outcomes.

We see more pricing data and a push for greater transparency in legal procurement. What do you see as the implications of this?

This question goes to the heart of why Legal Decoder exists.   The biggest challenge in the legal industry is pricing uncertainty.  It’s a real problem and a real big problem.  Every year the legal industry is plagued by $60 BILLION of pricing uncertainty, waste and inefficiency.   $60 billion is up for grabs as between clients and their law firms.  Because of innovations in the legal industry and other competitive forces, clients don’t REALLY know what they should be paying outside counsel and law firms don’t REALLY know what they should be charging clients.   This is the problem Legal Decoder solves.   Our software analyzes legal spend data and granularly pinpoints precise tasks handled by legal professionals – like drafting a 10-K or reviewing a motion to quash or analyzing a Phase I environmental assessment – and identifies the level of legal professional who should handle the task and how long the task should take.   Some things can never be “priced” for lack of a better word, but 70% of what lawyers do falls into patterns that can be evaluated and statistically validated.  Our software helps legal industry leaders, both law firms and clients, more accurately and predictably price and economically evaluate legal services.   Both clients and law firms want better predictability, visibility, efficiency and value when it comes to legal services and Legal Decoder’s software provides the data and benchmarking capability to drive those results.

What’s the one shift or change you think will catch the industry un-prepared in the next decade – whether good, bad or downright ugly?

The best legal industry leaders, whether law firm leaders, CLOs or Legal Ops professionals, are already thinking ten years down the road.   These are ultra-smart people who are at the cutting edge of change and innovation in terms of technology, data analytics, alternative service delivery models and so forth.   While nobody has a crystal ball, change in the legal industry is usually not seismic but instead evolutionary so the best and brightest in the legal industry are unlikely to be caught unprepared.