Author: Onit

Smart Read of the Week: A New Direction for Legal Insourcing?

Posted on September 21, 2019 by - Legal Operations

Over at Law.com, Nicholas Bruch posits an interesting theory: the long term trends suggesting continued growth in corporate insourcing of legal work — that is, hiring internally versus offloading work to outside counsel — may not tell as complete a story as the trend lines suggest.

As the graph shows, and our data cited in The Wall Street Journal confirms, the cost of doing business with Big Law is going up. In fact, it’s now about 3x the cost to work with outside counsel versus hiring in-house at a legal department. But there may be more to consider for the future of corporate counsel beyond in-house or outside counsel.

Interestingly, Bruch suggests that while outside counsel ultimately will have to adjust its outlook to deal with the rise of insourcing, a viable new option has emerged for corporate legal departments, highly correlated with the rise of the advent of big data in the legal market: alternative legal service providers.

What’s driving this trend? Costs cut by efficiency.

The ALSP operational model, which tends to be less reliant on costly lawyers, will be able to deliver services more efficiently. All of this will change the way law departments approach pricing and sourcing. Notably, it will fundamentally change the math that led law departments to in-source.

As you probably know, ALSPs help give corporate legal departments a new way to manage high-demand matters like document review, electronic discovery, research, and more.

We’ll keep monitoring developments in this space so keep looking out for more. In the meantime, we’d love to talk more about how we can help continue the trend of bending the cost curve downward, while working with your inside and outside counsel, and any ALSPs you currently utilize. At Bodhala, our data scientists built our proprietary machine learning platform to help you understand, predict, and act with confidence on your legal spend.

Shoot us an email at [email protected] to learn more.

Legal Department 2025

Get It Right The First Time

BODHALA IQ WHITE PAPER

Driving Disruption in the Legal Department Part III: What’s Ahead for Legal Operations

Posted on September 11, 2019 by - Business Process Management, Contract Lifecycle Management, Enterprise Legal Management

In part II of this blog series we discussed the joining of forces of legal operations and technology. Technology has been a key player in the unprecedented growth of legal operations in recent years, and this relationship will continue growing even faster. Now it’s time to reveal what some experts have to say about the future of legal ops.

To set the stage for what the future holds, it’s best to see the current lay of the land in legal operations. There have been some major disruptions in the legal sector in the past decade, one of which is advancements in technology. Some external and internal drivers of change have been the rising cost of legal services, the strategy of doing more with less, globalization, mergers and acquisitions, and advancements in cutting-edge technologies1.

Onit’s CEO Eric M. Elfman and Nathan Wenzel, General Manager and Co-founder of SimpleLegal have each spent almost three decades in disciplines that are now known as legal operations. Based on their experiences, these thought leaders foresee continued growth in legal ops, with legal operations professionals moving well past matter management, spend management, and the selection of counsel and evolving into more strategic roles. Here are their seven predictions for the future of legal operations:

  1. Legal operations professionals will continue to take on administrative burdens – in far more areas than spend management – in order to let lawyers be lawyers.
  2. Law departments will work to untangle overcomplexity in their enterprise legal management systems and return to basics that allow work to be done more efficiently and effectively.
  3. The use of collaboration and workflow tools will continue to grow as the legal function becomes more global and complex.
  4. More will be expected of technology vendors, and law departments will less frequently integrate a variety of tools and instead build platforms that handle multiple functions seamlessly.
  5. Legal ops professionals will engage more closely and directly with their companies’ businesses units, with a heightened focus on turn time and customer satisfaction.
  6. Law departments will build expertise to match the pricing experts that have become commonplace in law firms. Firms currently have the advantage in negotiations and AFAs because they understand the data better; legal ops will look to even the playing field.
  7. Legal operations professionals – and in-house counsel – must get better at data and analytics in order to make better decisions to behave more like business units while also better serving their clients.

Advancements in technology, process-driven service delivery and evolving and segmented roles in operations will be spearheading the future of legal operations for many years to come. The most proactive legal departments have already recognized this and are taking control of their future by taking action now.

Click here to read the white paper, Driving Disruption in the Law Department.

1 The legal department of the future: How disruptive trends are creating a new business model for in-house counsel. Deloitte, 2018.

Preparing Your Legal Team for Legal Operations Success

Posted on September 9, 2019 by - Enterprise Legal Management

Despite legal operations being a relatively established function (only 2% of organizations are not focusing on it), 44% of organizations assign legal ops responsibilities to a corporate lawyer rather than a dedicated person. However, the broader trend is toward creating dedicated legal operations positions and building teams. So how do you prepare and train your existing team for legal operations success?

WHAT IS LEGAL OPERATIONS?

“Legal operations” has been around longer than you might realize; for example, the Corporate Legal Operations Institute (CLOC) formed in 2010. Many legal operations functions have been around for years, just without the name attached. The focus is usually on driving efficiencies, controlling spend, monitoring external counsel fees, and deriving KPIs.

Generally, legal operations encompasses all the functions of the legal department that are not the law itself. CLOC breaks these areas into 12 competencies at three maturity levels; you can find this resource on their website. The typical skills and responsibilities of legal operations are to:

  • Define and drive initiatives to improve efficiency and process workflows.
  • Manage outside counsel guidelines, legal spend (visibility, control, and reduction), and department budget.
  • Optimize law firm performance for maximum value for money.
  • Implement, measure, and analyze metrics that inform decision-making, turning them into actions that deliver improvements.
  • Implement technology to achieve departmental and business goals.
  • Work cross-functionally to demonstrate the legal department’s value within the organization.
  • Understand and monitor the risks, risk appetite, and risk profile of the legal department within the organization’s framework.

So why the recent focus on legal operations? As businesses grow in scope and complexity, the volume and breadth of legal expertise required increases, and costs also go up. General Counsel are under more pressure than ever to justify their legal costs, improve the efficiency of their department, and collaborate with the broader business.

Legal operations will bring the legal department closer to the business and thus to the other specialist departments, resulting in Legal playing a different, more critical role in the company. With this demand to make the legal department act more “like a business” comes a need for cost control and process improvement. The problem with this for a traditional legal team is two-fold. First, the legal department’s priority will always be to advise on legal matters. Operations will take a back seat during busy periods or with an insufficiently staffed team. Second, achieving operational and business goals requires skills that are not necessarily part of a lawyer’s standard repertoire.

DEVELOPING LEGAL OPERATIONS SKILLS IN THE CORPORATE LEGAL TEAM

Whether your legal department has a dedicated legal operations resource, a whole team, or legal counsel doing legal operations as part of their “day job,” now is a vital time to future-proof your entire legal team and get them thinking beyond the practice of law. In-house lawyers have many skills that will enable them to succeed in legal operations, including law firm management, company knowledge, and a deep understanding of the legal department’s day-to-day operations and challenges. However, more is needed, and lawyers’ skills gaps tend to be in technology and software, change management, budgeting, and analytics.

Finding people with all these skills will be rare; whether your legal operations head should be a lawyer or non-lawyer is a matter for debate, but most agree that the end goal should be a diverse team of lawyers, non-lawyers, and specialist experts supported by the whole team having at least a basic knowledge of all the functions of legal operations.

Some of the ways to build these additional skills into your corporate legal team include:

JOB SHARING/SHADOWING

Consider placing lawyers with finance, sales, marketing, operations, product management, and data analysis – any area of the business that will broaden their skillset in a way that addresses one of the functions of legal operations. The challenge will be finding colleagues from these other departments qualified to do a genuine “job swap” into Legal. Shadowing is a desirable alternative in these scenarios. Also, try to upskill the non-lawyers in the legal operations team. Allowing them to shadow lawyers will enable them to better understand the different roles, responsibilities, and challenges facing the lawyers and hopefully build stronger working relationships within the function.

LEADING PROJECTS

It’s more than likely that your team members will have already been involved in large projects such as a merger or acquisition, but only from the legal perspective. If they lead the whole project, they will get exposed to other areas of the business and their impact on the overall recommendation and outcome. It doesn’t even have to be such a big project. An internal re-brand, product launch, or HR initiative will all work. Involvement in a software roll-out would be beneficial. Managing projects that involve stakeholders from multiple departments to deadlines and budget is a key part of legal operations, so leading any cross-functional project will build these skills.

TRAINING COURSES, CONFERENCES, NEWSLETTERS

The most obvious way to build the skills you need in your team is through training courses, but conferences can also impart knowledge and inspiration. Training doesn’t have to be an external cost as many of the skills will exist in the company already, and colleagues from other departments can help train. For example, lawyers should gain insights into data analysis, cloud, cyber security, AI, and commercials. Likewise, the business background professionals about the practice of law and the legal market so that they can provide the most value.

IMPLEMENT AND USE TECHNOLOGY

In today’s digitalized world, goals such as transparency, efficiency gains, and data analysis come through the combination of skilled personnel and software. The legal operations discipline is no exception to this; just look at the world’s leading legal operations teams. Each one relies on tailor-made legal operations tools in their daily work.

For this reason, empower your team to think about what slows them down at work daily and investigate if technology could solve these challenges. Encourage them to research and recommend software tools to help them and the wider team and lead the roll-out project.

REGULAR PRESENTATIONS AND OPEN Q&A ABOUT COMPANY REVENUE, PROFITS AND GOALS

If your company does regular “town halls” where they present financial updates and mission statements, encourage your team to attend these or start doing them just for your Legal team if they don’t exist on a company level. Get your team interested and educated in the organization’s financial health and how legal can contribute. A modern legal team must be fluent in financial terminology and confident with budgeting and reporting.

Request a demo of BusyLamp eBilling.Space today.

Four Consecutive Years on Inc.’s Fastest Growing Companies List! Onit Secures Spot on Inc.’s Fastest Growing List Four Years Running

Posted on August 29, 2019 by - Company News and Events

We already announced that Onit ranked #963 (growth rate of 441%) on Inc. magazine’s annual Inc. 5000 list, the most prestigious ranking of the nation’s fastest-growing private companies. But we thought it may be a great idea to celebrate that we’ve received this honor for four consecutive years. In 2018, we ranked #1431 with a growth rate of 327%, and in 2017 we came in at #949 with a growth of 562%. Our greatest achievement, however, was in 2016 when we placed in the Inc. 500, with a rank of #387 and growth of 990%.

“It’s always exciting when I learn that Onit has ranked on the Inc. 5000 Fastest Growing Companies list,” commented Eric M. Elfman, CEO and co-founder of Onit. “Even though we have been fortunate to receive this honor for the last four years, it never lessens the tremendous feeling of accomplishment I have for the company each time it happens. It takes the collective efforts and dedication of every Onit team member to drive our unprecedented growth in order to make the Inc. 5000 and Inc. 500 list of our nation’s fastest-growing companies.”

The Inc. 5000 is ranked according to percentage revenue growth when comparing three-year growth. Companies must be U.S.-based, privately held, for profit, and independent—not subsidiaries or divisions of other companies.

To see the technology behind our phenomenal growth, request a demo!

How Can Law Firms Benefit From Legal E-Billing?

Posted on August 29, 2019 by - Enterprise Legal Management

E-billing and its parent discipline of legal spend management came from the desire to serve in-house teams. The process requires law firms to submit invoices in a consistent LEDES format, enabling automated invoice review by the corporate legal departments and consistent data for reporting. This saves the legal department time and money by improving productivity, reducing erroneous bills, and enabling rate comparisons and data-driven decision-making.

Learn more: What is Legal E-billing?

E-billing is now well understood and not only in large firms. Over 70% of US mid-sized firms’ revenue is e-billed, and 25% in the UK. Many firms now have dedicated e-billing teams. Despite this, some firms remain resistant, mainly smaller firms processing smaller revenue amounts or unfamiliar with e-billing and LEDES, as they will have a steeper learning curve and initial cost and resource impacts. These firms can be reluctant to use a tool they perceive comes forced on them, especially in the short term; it will also mean their revenue decreases if the software spots and rejects invoices that do not meet the client’s billing guidelines.

BENEFITS OF E-BILLING FOR LAW FIRMS

The lessons will come from larger law firms, some of whom have been e-billing their clients since the 90s. While some of these firms will have also initially met e-billing with hesitation, they accept it is a cost of doing business with in-house clients, have fully functioning billing teams, and are now reaping the benefits and realizing that it can be a strategic revenue driver for the firm.

CORPORATE LEGAL DEPARTMENTS DEMAND TRANSPARENT RELATIONSHIPS

The knee-jerk reaction to e-billing is that corporate clients want to crack down on billing errors and get the cheapest rates. Instead, legal departments are looking for transparency and consistency. They want to be sure they are paying the appropriate cost, not necessarily the lowest cost. For example, this means not paying a partner for work a junior could do. Law firms unwilling to be open about line entry information may get thought of as hiding things. With so many law firms happily sharing this information, those who refuse to may need more work. With corporate legal teams looking for transparent relationships, refusal is a big risk.

HAPPIER CLIENTS LEAD TO HIGHER REVENUE

Yes, automated billing guidelines will likely result in the exposure of erroneous billing practices by the firm and a reduction in short-term revenue as these invoices are corrected. The gain for the firm is longer-term. The purpose of e-billing is not to “name-and-shame” and then fire non-compliant law firms. Billing guidelines can be complicated, and we’ve yet to find a law firm that doesn’t bill some errors. Corporate legal departments understand that this is a combination of human error and learning curves, which comes as part of the implementation process.

The benefit comes when the billing guidelines get created, reviewed, and amended so they are win/win for the client and firm. Using guidelines means that any conversations about disputed charges are less aggressive. Data can set future fees and expectations. The relationship becomes more fact-based and strategic. Happy clients that trust their firms will stick around and direct more work their way – we are seeing this trend already with many in-house teams reducing their panels to focus on fewer, higher-value relationships instead.

LAW FIRM INVOICES WILL GET PAID FASTER

Automated invoice review removes the need for manual checking of every bill. Those that meet the guidelines are approved automatically and can get paid faster. Many of our in-house customers commit to shorter payment cycles for electronic bills. This commitment can be a gesture to their firms that they view e-billing as a process that should be win/win. Some tools, like BusyLamp, allow law firms to submit “Work in Progress” or draft invoices for review or approval before submitting the invoice. In these instances, bills get paid even faster.

DATA-DRIVEN RELATIONSHIPS BETWEEN IN-HOUSE TEAMS AND FIRMS

Much of the conversation around legal spend management data and its benefits go towards the corporate legal department and the savings they can make using data analysis to inform decision-making. Law firms also benefit from this data; both parties can use spend data in negotiations, detailed matter information makes for more thorough reviews, and firms can offer different charging models, alternative fee agreements and fixed fees based on facts. With confidence, the pricing models are commercially viable. This also comes back to corporate legal departments wanting transparency; they’ll be confident and happy that the agreed charging models are fair. Taking it a step further, the law firm can set universal rates and prepare more accurate and competitive estimates by analyzing spend data from multiple corporate clients.

COMPREHENSION OF E-BILLING IS A VALUE-ADD

Law firms should see e-billing as a marketing tool and something to offer to new and existing clients. Many law firms are experienced in e-billing and can advise clients on e-billing issues, best practices, and tailoring data to meet the in-house team’s needs. Prospective clients in today’s business environment will expect and require law firms to know about e-billing and demonstrate that they can offer this service when making new business pitches. In this age of “new law,” a law firm that can provide more than just legal advice appeals to in-house teams. A lack of e-billing understanding may hurt client acquisition efforts.

IMPROVE LAW FIRM PROCESS EFFICIENCY

While the initial onboarding process may have its hurdles and learning curves, e-billing will help the law firm identify and rectify internal billing and processing inefficiencies, allowing for more time on higher-value work.

REDUCING POSSIBLE NEGATIVE IMPACTS OF E-BILLING

Despite these benefits, getting up and running with e-billing can be costly, time-consuming and sometimes frustrating for the law firm. Here are some ways the corporate legal department and e-billing vendor can help reduce and eliminate negative experiences and impacts.

  • Some legal spend management solutions have pricing models that charge the law firm up to 100% of the subscription cost with no cost to the in-house team. Since the corporate legal department (rightly, so it fits their needs) gets to choose which e-billing tool to use, we think it’s unfair to charge the firm. We also believe that if the in-house team is paying for the tool, they are more motivated to use it to its full potential, which demands collaboration with the firm and maximizing the value of data that is input, so firms aren’t wasting effort entering unnecessary data. BusyLamp doesn’t charge law firms; ultimately, it’s up to the corporate legal team which solution and pay model they select.
  • Training lawyers to use new software can be a significant, time-consuming challenge for law firms. One way around this is to set up dedicated e-billing teams – all the larger firms have these. If fee-earners are to use the tool, then thorough training and support from the legal spend management vendor are essential at onboarding and beyond. Vendors may charge different amounts for different levels of training. While “online help” is usually included, higher-value training such as face-to-face can carry an additional fee. As the in-house team would foot this bill, the corporate team needs to understand the value and importance of investing in training. However, no amount of training can rectify the frustrations that accompany a poorly designed software interface. The software buyers on the in-house side should review the user experience (UX) and interface (UI) for the law firm and the corporate side, as the law firm experience can be below par with some solutions. The BusyLamp interface is the same for law firms and corporate clients to ensure both sides have an equal experience.
  • Corporate legal teams can reduce the number of rejected invoices (and therefore law firm frustrations) by including the law firms when agreeing on billing guidelines. Even if they do not, they should make them readily available and ensure the law firm understands them. Suppose an in-house team/law firm is currently unfamiliar with billing guidelines. In that case, we recommend starting with a few vital ones, as a large list from the off is more likely to cause confusion and inaccuracy. Law firms should also note unexpected rejections and errors, and the in-house team should be prepared and open to accepting and discussing this feedback.
  • Data security is an important issue, and law firms can be understandably reluctant to start uploading their information to a system they have yet to review and select themselves. The corporate legal department should ensure they choose a vendor with comprehensive information and data security policies (BusyLamp holds ISO/IEC 27001), including GDPR.

Find out more about data security considerations in our in-house legal tech data security checklist.

Driving Disruption in the Legal Department Part I: The Rapid Evolution of Legal Operations

Posted on August 27, 2019 by - Business Process Management, Contract Lifecycle Management, Enterprise Legal Management

The pressure to run the legal department like a business has been gaining traction for several years. Driving efficiencies and containing costs are two key reasons that legal operations is important and is growing so quickly. In addition, law departments were forced to adopt a more operationally focused mindset as a result of the Great Recession. The 2008 downturn was so severe, and efficiency and cost-cutting were considered so critical to the survival of the business at large, that the balloon popped. And since it has, C-suites have increasingly been making their law departments behave more like their other business units. This ultimately led to the rise of a profession dedicated to bringing business discipline to the law department: legal operations.

Legal operations professionals handle the management of vendors, systems, strategic planning, technology, knowledge, financial issues and the myriad other tasks that can overwhelm the legal department. Legal operations is all about optimizing the legal department’s ability to help grow the company, and is a multi-disciplinary function that optimizes legal services delivery to a business or government entity by focusing on twelve core competencies. The competencies, developed by the Corporate Legal Operations Consortium (CLOC), are divided among three levels: foundational, advanced and mature. Almost every legal department function is covered, including vendor management, technology and process support, service delivery and litigation support.

Legal operations professionals are now managing outside vendors, implementing technology, overall legal spend and many other aspects of the legal department. And it’s not only happening in the Fortune 500 companies (as it was a few years ago); smaller companies are getting aboard as well. We believe that legal operations will be responsible for some of the biggest changes in the legal ecosystem in years to come.

Click here to download the full white paper, “Driving Disruption in the Law Department”

Legal Data in the Driver’s Seat at Microsoft

Posted on August 23, 2019 by - Legal Operations

  • Microsoft has agreed to join a growing coalition of legal departments looking to standardize legal data for machine learning environments
  • More and more legal departments are talking about making data-driven decisions with their outside counsel
  • Bodhala does precisely that with the power of our industry-leading data set and analytics

Over at Bloomberg’s Big Law Business, Roy Strom reports Microsoft has begun rolling out a new standard for legal taxonomy developed by the Standards Advancement for the Legal Industry (SALI) Alliance.

Although now in a pilot program, the move is an effort to standardize all legal matters facing the tech giant in hopes of taking control of legal spend.

Here’s a killer quote that caught our eye:

“We are more and more asked to think about how we enable our teams to make data-driven decisions about how they engage with outside counsel and how they do their work,”

– Rebecca Benevides, Director of Legal Business

Benevides noted that SALI taxonomy will help Microsoft legal teams by creating cleaner data models to leverage.

Preach! We hear this from clients and in discussions with industry leaders every week. And an implementation at this scale will almost certainly lead to greater adoption of a data-driven mentality across the market.

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.

We’re built on data – and how we develop it, how we 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.

Anyone who works at the intersection of Big Law and Big Business knows there’s a shift underway. Just recently the Wall Street Journal cited our data to show how the legal industry is changing at a lightning pace. Check it out!

We’d love the opportunity to help your company follow Microsoft’s lead. Shoot us a message and let’s talk about how your existing data can make sense of your spend. 

Request a custom demo here or email us at [email protected].

Onit Ranks #963 on the Inc. 5000 Fastest-Growing Company List

Posted on August 15, 2019 by - Company News and Events

We are excited to announce that Onit ranked #963 on Inc. magazine’s annual Inc. 5000 list, the most prestigious ranking of the nation’s fastest-growing private companies. Onit had a three-year revenue growth of 441 percent. This is the fourth consecutive year Onit has made the list.

The list represents a unique look at the most successful companies within the American economy’s most dynamic segment—its independent small businesses. Microsoft, Dell, Domino’s Pizza, Pandora, Timberland, LinkedIn, Yelp, Zillow, and many other well-known names gained their first national exposure as honorees on the Inc. 5000.

The 2019 Inc. 5000 is ranked according to percentage revenue growth when comparing 2015 and 2018. To qualify, companies must have been founded and generating revenue by March 31, 2015. They had to be U.S.-based, privately held, for profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2018. (Since then, a number of companies on the list have gone public or been acquired.) The minimum revenue required for 2015 is $100,000; the minimum for 2018 is $2 million.

Click here to see Onit’s press release.

The Lean, Mean Legal Department Part II: Technology to the Rescue

Posted on August 13, 2019 by - Business Process Management, Contract Lifecycle Management, Enterprise Legal Management

Cost control and cost management have, and continue to be, among the biggest challenges of legal departments around the globe. How have legal departments been handling this? By increasing the workload of existing resources, bringing on more in-house lawyers, and implementing more technology. Increasing the workload? Something employees definitely don’t want to hear. Hiring more in-house lawyers? That’s not really making things “leaner,” is it? That leaves us with technology. Let’s investigate this option a little more by first referring to HBR Consulting’s 2018 Law Department Survey:

“Law departments also continue in their efforts to streamline operations, not only to control costs but also continue to increase efficiency. Legal technology continues to be a focus of many departments and plan implementation of next generation technologies to increase productivity. Law departments continue to be interested in data-related technologies, with 28 percent indicating they plan to implement artificial intelligence technology in the next one to two years, and 26 percent planning to implement legal spend analytics. These were topped, however, by contract management solutions, which 29 percent plan to implement in the next one to two years. These new legal technologies help automate manual workflows and create visibility into workload and spending, allowing organizations to improve operating efficiency and facilitate decision making.”

E-billing, matter management, legal holds and contract management top the list of most implemented legal technology, but there are many others. Interestingly, the top two areas where customers are moving out of their existing deficient systems are e-billing and matter management. This points to an even greater demand for those cutting-edge companies who provide the crème de la crème of legal technology solutions.

Why has it taken so long for some legal departments to see the light and get on board with technology? Understandably, a lean budget is often cited as one of the major reasons for not implementing legal technology. Resistance to change is another common reason. But one of the other major reasons is a reluctance to integrate new technology with existing systems. Here’s a little secret: resistance to change is really the only thing that should be holding up progress – the other issues of budget and integration have changed considerably in favor of organizations seeking new technology. There are technology solutions out there for practically every budget, and integrations are much more seamless than in the past. Gaining the support of leadership is a big step toward solving the resistance to change. Stop dreading the phrase, “do more with less.” Instead, we challenge you to thrive on it and explore the technology solutions out there that will truly help you do more with less.

Read our white paper, “Doing More with Less: How Technology is Optimizing Legal.”

The Story of the Story: How Bodhala Shaped a Groundbreaking WSJ Analysis

Posted on August 13, 2019 by - Legal Operations

Leaning heavily on Bodhala data that exposed trends around law firm rates and accelerating shifts in law firm partnership models, a WSJ analysis highlighted the rapid weakening of partnership at Big Law firms. It’s been replaced by a culture where, in the WSJ’s words, “data and money rule” above everything else.

In this “new normal”, Big Law partners are constantly pushed toward revenue maximization as the predominant driver of the attorney-client relationship, like a doctor being judged on how many patients she can see in a day.

With its one-of-a-kind platform, Bodhala’s insights help arm clients with their own data and tools to combat this new dynamic in the legal service market.

The team had a good moment at HQ last week when WSJ reporter Sara Randazzo pinged us.

She was writing me to let me know that Saturday, almost a year since my fellow co-founder Raj Goyle and I engaged with her on a story idea, The Wall Street Journal would publish her deep-dive look at how elite law firms – “Big Law” – have in recent years begun to restructure their payment and equity plans to drive profit margins and attract and retain top talent.

It really is a fascinating read, made all the more interesting to us here in the office by knowledge that our insight and Bodhala’s data set helped drive the story from start to finish.

Let’s talk about how.

The thesis of the story is based on a trend we’ve seen play out not only anecdotally, but borne out by data measured in our one-of-a-kind Rate Index and our monitoring of firm partnership structures.

After hearing stories about changes in elite law firm partnership practices, we pitched this tip to Sara last year, who took time to develop a fascinating look at rate structures and the changing face of Big Law partners.

By combing through the billions of data points on counsel behavior and billing that Bodhala tracks, we were able to accurately assess and confirm the suspicions of the Journal in its analysis.

I worked at one of these firms, New York-based Simpson, Thacher & Bartlett, and many of the firms that I engaged with on my matters are some of those top-tier targets mentioned in the story.

WSJ frames the shift in an interesting way: trying to transition to build a business in the model of an investment bank-style approach rather than a traditional, and as many say, outmoded, law firm.

While this shift has certainly increased firm’s bottom line and tightened up processes, it changed the nature of the interaction.

A result of this? Our clients would be quick to tell you it’s made interactions less transparent, more frustrating, and certainly more expensive.

Just how expensive?

As you can see in the chart above, our data going back to 2000 demonstrates that top hourly firm rates are tracking at almost 4 times the rate of inflation, falling in line with health care cost hikes and outpacing education and housing.

Per our data, top-15-by-revenue firm street rates went from under $700 in 2000 to charging more than $1,650 per hour. Yikes. While one can argue the merits of the shifting focus toward industry profits, no one could argue this is a market-based response.

Now, we’re not suggesting lawyers shouldn’t be profitable, nor do we tell our clients that their firm’s services cannot command a premium. The premise of Bodhala is to use the power of data to make the partnership between a company and their outside firm more transparent, more equitable, and more accountable.

We’ve heard about these issues since the beginning of our company, and so when WSJ called us, we were happy to share our insights and data. We’re glad to be a resource for the Journal, if for no other reason than we hope we can help drive positive change in the industry.

The best result of our findings and investments in data science? This positive change can save a company millions. If you’re interested in learning more about how we came to our findings, or how we can help create more accountability and transparency with your outside firm, shoot us an email so we can get the conversation started.

To learn how Bodhala can help you manage your outside legal spend, request a custom demo here, or email us at [email protected].

Like what you’re seeing?

Bodhala can save your company millions in legal spend with our free billing guidelines

Free Billing Guidelines