Legal Decoder
Legal Spend Analysis At Your Fingertips
BACK3.jpg

The In-House Insider

Legal Decoder Blog

Posts tagged compliance engine
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:

blockbill.PNG

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.

 

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).  

 
total_spend_flag.png
 

Insights

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.  

 
flags_total_each.PNG
 

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.

 
average_hour_activity.png
 

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 info@legaldecoder.com or go here.

LEGAL SPEND COMPLIANCE PART 1

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