A white paper by Allegient Systems dated Sept. 2001 (www.allegientsystems.com) states data for five years of its reviewing outside counsel bills. In the most recent year (2000), the firm reviewed 271,200 invoices totaling $648.3 million dollars (fees plus disbursements). The net savings the company claimed came to $70.4 million.
With the stated cost of all that reviewing and processing being $13.6 million, the return on investment for the law departments was $5.19 saved to $1 spent.
I cite these numbers to ask three questions: (1) Don’t law firms learn fairly quickly how to comply with the rules and scrutiny of such a system, so the savings the next year – ceteris paribus – will ecline? (2) Of the “savings” identified by the system, what percentage of them did the law department enforce, or is that figure the actual reduction in amounts paid on all the invoices? (3) How did the vendor charge for its services, $13.6 million (for example, based on savings, invoices reviewed, hours worked, or on some other basis)?