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The In-House Insider

Posts tagged legal spend analysis
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.

How Legal Decoder Is Used - Argonne National Laboratory

Argonne National Laboratory is a non-profit, research laboratory operated by University of Chicago for the United States Department of Energy (DOE). Argonne’s mission is to develop and discover innovations in energy. An organization of Argonne’s scale and complexity requires the support of outside counsel. As a quasi-government entity, Argonne must be mindful of the public’s fiscal interest in executing its mission. Argonne’s business ethos is to consciously control expenses and the legal department is no exception. Reviewing outside counsel bills before approving them for accounts payable is a painstaking task for any legal department. Being a part of the DOE also requires compliance with federal regulations such as the Prompt Payment Act. Argonne needed to properly review bills and gain insights into their legal spend data while maintaining compliance so it turned to Legal Decoder’s technology for help.

Argonne’s main goals for using Legal Decoder’s technology were to identify bad billing practices, better predict legal spend and budgets, and drive efficiencies in workflow processes. Legal Decoder’s Compliance Engine, which uses natural language processing (NLP), analyzed line items for compliance with billing guidelines and issues with efficiency, staffing, and billing hygiene. The Compliance Engine aggregated the results to identify which invoices should be paid and which require further review. As a result, Argonne has seen its outside counsel improve billing practices and lower costs.

Argonne now compares firm versus firm and timekeeper versus timekeeper performing the same task at a granular level to assign work to the right firm. Argonne did not know how long or how much a task such as filing an application cost but is now able to compare between firms using Legal Decoder’s technology. For example, Firm A took 30 hours on average at $X to perform a filing, Firm B took 13 hours at $Y, and Firm C took 20 hours at $Z when data was analyzed. This information is powerful when pricing out work and predicting costs or budgets.

Since using Legal Decoder, Argonne has driven efficiencies and cost savings by making sure that work is correctly assigned, managed and completed. For FY16, Legal Decoder's Compliance Engine surfaced 16% in unrealized savings across all matters and Argonne is using this information to better control and manage costs. Argonne also has insights into areas where outside counsel is strong when it comes to staffing mix and workflow efficiencies. Using this newly discovered information has given Argonne an improved awareness of its outside counsel effectiveness.

If you think Legal Decoder can help you with your legal spend analysis, please email us and we will contact you shortly after.