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The economics look bad for invoice review

Grab your abacus and try these assumptions. A lawyer whose full cost to the company is $200 an hour spends two hours a week reviewing law-firm invoices. That lawyer manages $520,000 of spend each year, so each week $10,000. From each week’s batch, based on my consulting experience from asking the question, that lawyer challenges 10 percent of the bills or billed amount, which means $1,000 a week.

The amount reduced? Let’s say generously, is half, without any more time or effort being expended on a call or report or delegation to someone else. That leaves the $1,000 worth of challenged (and presumably reduced) bill at $500, against a cost to the company of at least $400.

Hmmmm Scratch head. Puzzle.