Two “proven” profitability techniques of law firms that law departments should refuse

An article in Law Practice, July/August 2012 at 40, describes “15 proven profitability techniques” for today’s law firms. Two of them raised my eyebrows and should do the same for general counsel.

Under the technique “unbundle operating costs from case related expenses,” the author writes that “clients should be asked to prepay anticipated major cost items, such as expert witness fees, deposition expenses, extensive travel and other case-related costs.” Law departments generally accept being billed directly for some major disbursements, notably expert witness fees, but to be asked to pay for travel expenses, and especially to pay them in advance, should meet stiff resistance (See my post of April 18, 2005: e-billing vendors paid directly by law departments; July 31, 2006: national vendors selected by a law department; Feb. 11, 2007: direct billings to the law department by vendors; Feb. 14, 2007: data on disbursements paid firms or charged through directly; Nov. 29, 2009: direct billings by law firms for disbursements should be considered outside costs; March 12, 2012: benchmark metrics influence by direct payments to vendors.).

Under the technique “New systems, methods and technology” comes this contentious recommendation “Bill appropriately for form documents. You must be paid for development efforts, and it is both reasonable and proper to charge based on what the document is worth to the client, not for the few minutes it takes you to pull it from the computer.” To the contrary, law departments do not subscribe to value billing along these lines. You should not pay for the development time of a form document, whether or not it is available to the firm in software. Others have paid for the firm’s learning curve. Now, the form is an expected enabler, not a profit center.

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