Author: Onit

One thing’s clear: legal tech is being catapulted into the legal industry at a staggering rate. It is bringing about changes that will forever transform the practice of law and the delivery of legal services. The question you should be asking yourself is this: “Does my legal team have control over where our legal spend is going and why we’re spending where we are?”

1. Are your legal bills going up year over year? 

If your legal bills are increasing, you’re not alone.

Transparent information about legal spending has become increasingly hard to find. Our data shows hourly firm rates are tracking at almost four times the rate of inflation. The industry is clearly shifting towards a boost in annual profits for law firms, but little has been done to hold them accountable for their rapid rate increases.

Today, law firms are operating like sports teams – gathering the top athletes and pulling them together. Ultimately, this can get extremely expensive. 

We all agree that if you find and recruit LeBron, you should pay him LeBron wages. However, it is likely that only 5-10% of your firm’s partners are classified as top-tier talent, and within those firms, they charge Lebron rates for every other 2nd and 3rd-tier partner. 

Bodhala helps you unbundle pricing and pay partners appropriately, based on their capabilities and the matters they work on. 

At the end of the day, we’re advocates for data-driven solutions that improve the relationships, accountability, and transparency between legal firms and in-house counsel. 

Now that we’ve got that out of the way, let’s continue to explore other factors to consider when purchasing legal tech solutions.

2. Identify your key challenges and bottlenecks

Committing to a new tech solution undoubtedly requires a certain level of internal due diligence. In order to get the most out of your investment and work towards your desired outcome, your in-house legal counsel must first identify its key challenges and bottlenecks to set clear criteria. 

The truth of the matter is, no tech solution can solve all of your problems. The challenge is finding one solution that best addresses your core issues. 

Begin the auditing process by holding internal discussions about the tasks that are taking up the majority of each employee’s time. This discussion may reveal budgeting issues or a lack of internal processes to manage rate card RFPs. Take note of all the issues at hand. 

Once you identify the gap in processes, acknowledge the skills that you have on the team and the level of effort required to complete each task. Be sure to note any opportunities to improve efficiency. 

Why stop there?

Some tech solutions are designed to help you become more efficient, while others provide capabilities that you could not handle on your own. Bodhala can do both, so let’s now explore how this materializes.

3. What systems do you use to ensure your data is clean and accurate?

While most legal-tech solutions tout analytics and reporting capabilities, few do it well. Effective solutions go beyond reporting and help you gather insights that inform key business decisions. The legal industry, in particular, faces complexities that are not often addressed in catch-all reporting and data-visualization solutions such as Tableau.

Further, e-billing platforms have also failed to efficiently analyze spending on a larger scale. E-billing may give you insight into what you’re spending your money on, without giving you the “why” or “how.” 

The main reason for discrepancies and irregularities in your legal data is the fact that taxonomies vary across legal practices and firms, which complicates datasets and provides inaccurate results. Complexities in discounts applied, inaccurate data entry, and many other factors also contribute to the issue.

Bodhala’s Hercules database provides source-of-truth data sets that help augment and enhance line item data. Hercules provides data around firms, timekeepers, practice areas, anonymized street rates, and domain-specific measurements that provide unprecedented transparency.

Supplementary to Hercules’ QA rules, Bodhala’s Data Ingestion Team also guarantees that your data is clean and consistent across the board. 

4. Capabilities that improve visibility and transparency

The lack of clarity, visibility, and transparency has allowed legal firms to get away with being big black boxes, complete with messy billing, hidden charges, and inconsistent rates. These factors have made accurate billing nearly impossible to track. 

When shopping for a legal tech solution, identify unique offerings like Bodhala’s standardized rate cards.

In the past, rate cards provided little to no explanation on industry rates, net effective rates, relationship discounts, and the practice area discounts that were being applied to your invoices. Bodhala consolidates and standardizes all your rate cards in one place, which provides details on discounts and write-offs in every line, allowing you to dive into the details and uncover where your dollars are going. 

5. Take data security seriously

Legal and financial data is comprised of personally identifiable and proprietary information that can put your business in danger if compromised. While basic security protocols may seem standard, it’s simply not safe to assume that your data will be protected.

When looking for your next legal tech solution, be sure to ask questions about the prioritization of data security, data encryption, backups, and other strategies that are being employed to keep your data safe.

6. Ease of implementation: integrations with your current workflow

Before you pull the trigger on finding the right legal tech solution, you must evaluate your onboarding process and how it affects your workflow. The last thing you need is an onboarding process that takes 10 times longer than expected and completely reorganizes the way you work. The time and resources that you lose implementing this new technology is too costly and must be considered when calculating the total cost of ownership.

Tech platforms are inherently complicated, especially when dealing with tremendous amounts of sensitive legal data. To better predict your success with a legal tech platform, look for a solution that works with you and your external teams. You want something that is easy to onboard, but is also easy to educate your team on. Don’t be afraid to ask questions about a dedicated account manager, training programs, reference materials, and communication channels.

7. Tracking and measuring your desired outcome

Set SMART (specific, measurable, attainable, relevant, time-bound) goals in the beginning of your tech evaluation process. Refine those as you make your vendor selection and hold both the team and platform accountable for them. Remember, if you set goals together, you’re sharing the responsibility to extract success from your new investment.

For example, you can set KPIs around time saved on RFPs or the percentage saved on outside legal spend. Whatever it may be, ensure these goals are baked into regular touchpoints with your account team during your QBRs.

8. Meaningful client support

Finding success on any tech solution requires a proper onboarding and training process. Adopting a new solution is rarely plug-and-play and requires new workflows, internal product experts, and comprehensive training.

As we like to say, garbage in, garbage out. You’re more likely to find success with your new platform if your team has the foundational training to use it correctly.

A dedicated client success manager is also integral to your success. A product expert can help you maximize results with the least amount of effort possible, so you’re not stuck wasting time on a product that you purchased in order to save time and money.

9. Leverage referrals to find the right solution for you

While online review sites like G2 and Capterra can provide a general sense of a product’s core capabilities, there’s no better way to see if a solution may be right for you than to obtain a word-of-mouth referral. 

Ask for a reference and take some time to speak to current customers of the tech solution. Come prepared with questions and get an honest understanding of both the good and bad of the solution you’re shopping for.

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Our clients tell us every day about their challenges budgeting for outside legal counsel. Every year their law firms impose higher rates causing our clients to find more money to cover the increased cost.

Law firms have historically had overwhelming pricing power in the market — far out of proportion to what they deserve in a properly functioning market. They have been able to set their prices and demand clients pay their rates.

It’s evident this power has been wielded irresponsibly. And it’s gone on for decades.

Since the financial crisis in 2008, law firm partner rates at the most prestigious firms have increased more than 72 percent, according to Bodhala data.

With increased pressure to control operating expenses for high-stakes legal matters, corporate legal departments are forced into acting like Sisyphus, pushing a boulder uphill every year trying to stay under budget with little control over the rates they pay to outside firms.

Law firms have justified their rate increases with a series of talking points related to the cost of goods sold — increasing real estate costs, higher salaries to associates, lower realization rates, and fear of losing their partners, among others. Firms have claimed that they are passing the costs of their business onto their clients. But when you look at the data, there is no justification for price increases other than to boost firm profits.

We were interested in this reality and dug into the market looking for trends. What we’ve found validates our assumptions.

We researched law firm billing rates from the turn of the century to now and compared it to the market at large. Interestingly, the findings revealed that, relative to inflation, law firm street rates have greatly outpaced hikes in the costs for college and average rent, and only barely lagged health care premium increases.

The Bodhala Big Law Partner Index

As you can see, these elite partners have seen their rates increase dramatically, right through the Great Recession. Has this been the case in any other market? Other than in monopoly or other non-competitive markets, do CEOs get the power to increase prices by 5-12 percent every year as a matter of course?

The Current Market: Compounding Rates
Albert Einstein called compounding interest the 8th wonder of the world. “He who understands it…earns it. He who doesn’t pays it.”

Law firms have used compounding interest to generate record profits even as they claim to give clients meaningful discounts. Here’s an anonymized representation of a real firm’s increasing rates to a client between 2015 and 2018. Note the trends behind those stated rates:

As a result of this shell game of sorts, the market itself is murky. Those in legal procurement wonder, what is the ‘true’ cost? Indeed, who sets the rates? Where do these market pressures lead?

It’s the same answer year after year: costs go up and clients foot the bill.

The Future: Resetting of a Broken Market
At its basic level, a market of any kind should reset itself when the supply outnumbers the demand. The legal market has been unable to arrive at this market-clearing event due to the enormous pricing power of law firms. And law firms have that power in part because of the absence of a “source of truth” — a comprehensive dataset that gives the demand side an understanding of how law firms are price-takers in the market.

Enabling the demand side — corporate legal departments — to have verifiable, accountable data on their consumption of legal services will enable them to become active participants in the price market, and not just be passive price-takers.

This is the future we’re looking to build.

The Bodhala Difference
Bodhala is a groundbreaking legal technology platform created by lawyers to transform the half-a-trillion dollar global legal industry. Our platform refines organizational processes by empowering your legal team with deeper insights that allow you to better analyze, interpret and optimize outside counsel spend, trailblazing a new era of legal market intelligence.

With our technology and expert guidance, your legal department’s budget — that Sisyphean boulder — gets easier to understand, predict, and manage. It’s our goal that you can end this cycle for good. But it takes the power of Big Data to take on the power of status quo systems.

We’re built on data – and how we develop it, utilize it and how we analyze it for the benefit of our customers sets us apart. Our proprietary benchmarking metrics and rate review algorithms generate detailed insights into every aspect of legal spend. An intuitive dashboard puts the information you need to make more cost-effective decisions about legal service providers at your fingertips, effectively boosting efficiency and reducing your bottom line.

Bodhala’s clients understand the complexity of their work, where the market trends are, and what the next steps need to be — based on market-wide benchmarks for legal spend.

Let’s talk about the process. Bodhala takes the data you own, along with our proprietary industry data, and delivers insights into efficiency levels, law firm leverage ratios, current rates against similar firms and industry-wide averages, average matter cost, and much more.

This trove of information makes a general counsel’s team much more effective at legal spend management and getting the best outcomes from that spend. What’s more, it’s configured to help you understand precisely where your spend is and should be, compared to others in the market.

To get started, head on over to https://www.bodhala.com/demo-bodhala. We’re eager to help your legal department push that boulder.

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If your legal department has an eBiller, great! Your team has taken the first step to move your legal department out of the dark ages…but don’t stop there. eBillers help tell you what you paid, but not what you should spend.

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CURRENT STATE

For over two decades, corporate legal departments have turned to eBilling platforms out of necessity. The processing and managing of bills and legal spend with their outside firms have become far too cumbersome without automated assistance, and the work and payment structures have grown increasingly complex as the years go on.

Many companies already have and rely on eBillers to manage basic legal spend needs. Wolters Kluwer’s Passport, Thomson Reuters’ Legal Tracker, and LexisNexis’ CounselLink are just a few of the major players in this legacy market. Despite this abundance of companies addressing legal administrative tasks, there is a lack of innovation addressing the strategic and analytical initiatives of legal departments. This innovation gap results in an overworked in-house legal team, spiraling costs, inaccurate reporting, and an inability to make data-driven decisions.

FUTURE STATE

Why is a change needed now? The average rate per outside counsel hour across the AmLaw 200 has gone up 30% since 2014. With legal rates increasing every single year, and with fee arrangements and billing structures becoming more and more complex, there are problems E-billers just can’t recognize or solve. Even the most advanced e-Biller’s core function is to process an invoice, and that’s their technological ceiling. What’s lacking is true, market-wide data analytics to give in-house legal teams total control of their legal spend and distinct measurement of historical deal spend to untangle hidden aspects of legal tasks.

The Bodhala platform is designed by lawyers for lawyers to go beyond eBilling. Our proprietary platform gives GCs, CLOs, and their teams the tools to not only ingest and clean up their eBilling data but understand the nuances of their spend and make confident decisions with outside counsel. Using revolutionary machine learning algorithms designed to surface and correct the most complex of legal billing situations, Bodhala is able to sort out blended billing rates to identify the best talent for a matter.  Our platform offers groundbreaking legal technology solutions that empower teams to analyze, interpret and optimize outside counsel spend — trailblazing a new era of legal market intelligence. Real transparency, real accountability, real control.

Learn more about the key differences between Bodhala and eBillers.