Category: Legal Operations

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.

Try Bodhala today!

Get Started

Like what you’re seeing?

In our first Bodhala Explainer video, Chris Bennett, our VP of Strategy, breaks down staffing ratios and what they mean for your bottom line.

WATCH NOW

Shoot us an email at [email protected], and let’s talk about how to get started.

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.

Ready to Dive Deeper?

Sign up to get our free white paper that will help you avoid 3 of the most common billing mistakes before they happen.

Download The Whitepaper

Shoot us an email at [email protected], and let’s talk about how to get started.

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.

* * * * *

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.

Tableau: A Business Intelligence Platform, NOT a Legal Intelligence Platform

With the abundance of data available at our fingertips, organizations are increasingly challenged to utilize data in meaningful ways. IT departments often overstate the utility of data visualization tools to internal legal teams to map out high-level metrics through charts and graphs – in ways that otherwise wouldn’t be apparent through traditional spreadsheets.

Tableau has been the leader among ’self-service’ business intelligence platforms — yet this popular generic data visualization platform fails to cover the nuances of legal spend management and often fall short of delivering meaningful insights.

Bodhala provides the solution through Hercules, our proprietary data tool that analyzes rates, practice areas, matter types, matter, and other factors to create peer sets that provide accurate apples-to-apples comparisons when it comes to cost and staffing. 

Let’s dig further into why Bodhala is the most powerful end-to-end legal spend management platform.

Quick and Easy Doesn’t Always Mean Insightful

Tableau is a presentation tool, not an analysis tool. Tableau gives you the “what,” but not the “why” and “how.”

With Tableau, you need to not only know where you’re starting but where you’re trying to go. While building simple dashboards on Tableau is easy if you have an admin on staff, legal spend management is relentlessly complex and requires data-backed insights to drive impactful decisions.

Bodhala is a groundbreaking 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.

Our dashboard answers the following questions that your traditional data visualization platforms can’t:

• How do firms allocate work to their associates?
• How do law firms account for different discounts?
• How much time, on average, does each matter take and what does it cost?
• How much are you paying compared to the industry rate?
• How are your rate cards impacting your total legal spend?

Utilizing Data You Trust

One of the greatest operational challenges Tableau users face is data cleanup. Although the platform was built with big data in mind, Tableau users find it difficult to manipulate and model data in an efficient manner. Some Tableau power users even recommend that data work be done outside of Tableau, and then be imported back into the platform for the best results.

On top of this, they must ensure that the imported data is clean and uniform, which is a process that requires countless hours by your data team to just make sure that everything is tagged appropriately and nothing falls through the cracks.

Bodhala removes this key operational headache with Hercules, the god of all analytics platforms. Hercules’ proprietary suite of data tools helps companies marry legal spend data in a clean, organized, and pain-free way.

Hercules uses machine learning to automatically organize, categorize, and taxonomize your legal data so you’re always working with clean data. The algorithm also detects any major disruptions in data patterns and helps you identify any anomalies within your massive dataset.

Fundamental Data Errors Lead to Bad Behavior

Law firm discounting is complex and difficult to measure through your invoicing platforms. Bodhala’s Hercules engine identifies and simplifies the following structures right out of the box:

• Write-offs and task-level discounts
• Invoice level discounts
• Line item discounts
• Relationship discounts

Leveraging Unmatched Business Intelligence

Teams utilizing data visualization tools like Tableau have traditionally relied on 3rd party benchmarks to determine the “best” rates when negotiating with their law firms. Unfortunately, this process doesn’t allow in-house counsel to go into the specifics of how those rates came to be.

Bodhala goes beyond the ‘rack rate’ and provides precise industry benchmarks that work closely with your proprietary data to identify how your legal fees weigh up to industry averages.

Our benchmarks empower teams to make true apples-to-apples comparisons. Unlike publicly available benchmarks, we provide transparency on integral factors like matter-type competitiveness, bankruptcy history, law firm financials, and aggregated client data.

Try Bodhala Today

Real transparency, real accountability, real control.

LEARN MORE
SCHEDULE A DEMO

Shoot us an email at [email protected], and let’s talk about how to get started.

Creditors and former workers struggle while Big Law firms see the softer side of the Sears bankruptcy.

Over at The Wall Street Journal last week, journalist Soma Biswas illuminated the “tug of war” between former professionals, vendors, and the teams of Big Law firms vying for a piece of the shrinking pie of Sears assets in bankruptcy.

Some of the biggest firms with the biggest price tags have charged more than $200 million in legal bills since Sears went under in late 2018. Sears’ main bankruptcy firm, Weil, Gotshal & Manges LLP, maxes out their billing at $1,695 an hour according to the article, and their total payout has been more than $65 million.

In October, a $50 million estate fund was set up to pay creditors. Akin Gump, who represents unsecured creditors, has so far billed for more than half the funds of that pot, while vendors and creditors were paid $21 million in December.

Meanwhile, more than $3 million in severance to former Sears employees remains unpaid.

While these numbers might sound shocking, it’s a trend we’ve seen growing in the legal industry over the last decade. Last summer, WSJ wrote a groundbreaking piece, based largely on data we provided, that examined the changing nature of law firm partnerships and their interactions with clients. In the span of a few decades, white-shoe law firms have transitioned from a relationship-based model to a system where “data and money rule.”

Bodhala can’t keep you out of the headlines but we can keep the headlines from covering your legal spend. 

We unlock the power of the data you already own to help your corporate legal department make decisions to keep your company’s legal billing under control – and out of the news! Our machine learning algorithms immediately identify patterns in your legal spend to give you the best three-dimensional view of your billing, giving you the confidence to negotiate from a position of strength in every interaction and enhance your relationship with your trusted outside counsel.

Our platform gives you instant snapshots of every facet in your legal matter, from the number of timekeepers to surfacing the true rate per hour, and staffing diversity.

Bodhala is the leading tech platform enabling corporate legal teams to analyze and optimize their spend. We’re dedicated to helping firms get a handle on their legal spend, regardless of the size and scope of their enterprise, or the matters at hand. 

Using the power of big data and machine learning algorithms, our proprietary system helps corporate legal departments find the right talent, at the right value. We’ve saved our clients millions in negotiation and procurement every year, and we’re eager to get to work for you.

Contact us TODAY to find out how we can help you realize more value in your spend: http://bit.ly/37zaM7X

Like what you’re seeing?

Shoot us an email at [email protected], and let’s talk about how to get started.

Bodhala hosted its first live webinar on Dec. 10, 2019

Presented by Bodhala team members across Client Success, Marketing, and Product, legal leaders from around the world joined the live webinar. The webinar covered two hot-button topics: using big data analytics to uncover best practices and pitfalls to avoid when negotiating annual rate card increases with outside counsel. We highlight many of those pitfalls in our two new white papers, The Hidden Staircase and The End Of Excel Hell.

The webinar recording and presentation slides are now available here.

“Big data analytics are revolutionizing how corporate legal departments negotiate with their panel law firms, and we’re glad to share how in this webinar,” said Bodhala SVP & Head of Client Success, John Maloney. “One of the most irritating pain points for our clients is the yearly dread that comes with annual rate negotiations. Bodhala’s free and new rate card RFP platform alleviates that pain by leveraging machine learning to surface the best possible outcome for your legal department.”

Maloney explained that the webinar stemmed from seeing countless clients struggle to negotiate annual rates with panel firms, a process fraught with confusing concepts. Recognizing this universal challenge, Bodhala developed a learning series on RFP rate card negotiation, starting with what we call the “Hidden Staircase” of law firm rates.

Still, several barriers exist to getting the best possible rate, and most of them cannot be easily overcome by legal department staff. Bodhala created a whitepaper to help professionals apply our best practices for rate negotiation and navigate out of “Excel Hell.”

Bodhala’s powerful big data analytics are designed to make these processes easier. Our platform streamlines all of your RFPs in one dashboard, giving your legal department an unparalleled, 360-degree view of past spending and unmatched projection ability for the future. 

“Today’s webinar was a huge success and very exciting for us as a business,” said Kyle Johnson, Head of Marketing. “Our unique ability to pull proprietary information out of the Bodhala platform and share it with our audience proved to resonate – as was shown through the lively conversation throughout the presentation.” 

Among the interesting questions and discussion points, here are three of the top takeaways from this discussion:

1. On average, organizations allocate 75% of their outside counsel spend to seven firms. When focusing on your rate card RFP process this year, focus the bulk of the work on prioritizing your top seven firms.
2. According to the audience polls, the majority of companies represented at the webinar did not use a formal rate card RFP process (only 30% did so). Of those that did use a formal process:
   • Over half spend somewhere between 40 – 60 hours per RFP.
   • The majority have 5 – 10 panel firms.
   • The group was split almost evenly between members of the Legal Ops and GC / AGC teams.
   • The average outside counsel spend falls into the $25m – $50m range.
3. By leveraging Bodhala’s free rate card RFP platform, companies are expected to reduce the time they spend running rate cards by one-tenth (~5 hours) with better results. Those who add on Bodhala’s analytics platform are able to experience even more positive outcomes, keeping their annual spends in check and ensuring compliance by the law firm.

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.

Navigating through confusing concepts like annual rate card RFP negotiations is just the beginning. For more information on how Bodhala can revolutionize your relationship with outside counsel, and how to optimize your legal spend, set up a demo today at https://www.bodhala.com/demo-bodhala.

Like what you’re seeing?

Shoot us an email at [email protected], and let’s talk about how to get started.

At this point, you have lined up your annual rate card notices from your panel law firms. Now it’s time to make sense of what’s there and make it work in your favor.

As we discussed in the first part of this series on RFP rate negotiations, every year, clients face complex rate schedules with budget implications that are often unclear. Starting from the street rates down to relationship discounts and write-offs, we call this process for arriving at a final yearly rate the “Hidden Staircase” of legal billing.

Even if you completely understand the Hidden Staircase, the entire process can quickly fall apart and cost you serious money if you can’t analyze the rate cards to ensure you’re getting the most bang for your buck.

And let’s face it: human analysis falls short when you’re seeking an apples-to-apples, market-based approach to the responses you receive. Even getting the data itself causes confusion – some numbers live in multiple Excel files, some arrive via PDF, and others are sent in the body of an email to one colleague, but not another. It’s a mess for legal operations to handle, but that’s where Bodhala can help. With our proprietary Rate Card RFP platform, your team can quickly collect and organize all rate cards in one place. We collect the data in minutes, giving you transparency on your past spend and the visibility to compare the rates of your panel firms. It’s the best way to ensure you’re getting market value for services.

To fully understand the rate responses from your firms, you must consider the factors that can affect your company’s spend throughout a given year:

• Practice areas – For any business, the mix of work is an important variable in understanding the impact of rate card increases. An M&A increase may have a disproportionate impact on the budget of a PE firm compared to a litigation increase – and vice versa for an insurance carrier.
• Matter complexity – Which of your corporate matters are seen as routine, like drafting a tech licensing agreement, versus more complex M&A?
• Timekeepers used – Are partners and associates being matched to their appropriate skill level or seniority across firms?

These factors are the biggest drivers of rate fluctuation. They disproportionately cause billing spikes as the year moves forward.

Historically, in-house legal teams have tried to analyze these factors on their own, losing hundreds of hours of staff time, causing headaches galore, and suffering from diminished eyesight due to countless hours staring at Excel sheet after Excel sheet.

At this point, negotiation is nearly impossible if a company is not empowered by a data-backed solution. Forward-thinking general counsels focused on corporate and legal innovation capable of meeting challenges in the market, recognize the need for a shift in the process. They understand the importance of using analytics to make reviewing rate card RFPs more efficient and to enable running accurate simulations against historical spend.

Spreadsheets and PDFs have clear and immediate limitations. When you consider the resources required to have just one staff person assigned to this endeavor plus one salaried employee – it becomes clear that the cost impacts can be alleviated with data analytics.

TAKING STEPS TOWARD TRANSPARENCY

If your team is still stuck in Excel Hell this rate card season, don’t worry, there is still light at the end of the tunnel. We’ve compiled a set of guidelines to help you understand what you need to look out for when you and your staff review law firm rate responses: 

• Practice area consumption
• Timekeeper consumption
• Rate changes
• Normalizing partner & associate definitions
• Partner & associate matriculation
• Discount normalization
• “Special” volume-based discounts

PRACTICE AREA CONSUMPTION

• Understanding the rate changes in the context of consumption of practice areas from previous years
  • Rate cards (within a firm and across comparable firms in the space) need to be applied to the volume of expected services (M&A, litigation, funds, broken deals, etc.) to understand the impact of law firm proposals.
  • In order to determine the volume expected, review the historical spend from previous years. Do you plan on this remaining consistent? Can you model known changes?

WANT TO KEEP LEARNING?

Download our free white paper to understand the rest of our data-backed and time-tested guidelines for understanding your RFP responses. You’ll also see a real-life example where our data saved a global bank millions on their rate negotiations.

Download The Full Guide

Shoot us an email at [email protected], and let’s talk about how to get started.

We all remember what impact the Great Recession had on large corporate legal departments. Like every company unit in a downturn, most legal teams felt extreme pressure to hold down costs. However, our data shows that despite a two-year dip in profits for Big Law partners, rates and hours continued to climb.

That’s why it’s interesting to see the culture shift explained over at Law.com, where Legaltech News reporter Victoria Hudgins describes how corporate legal departments are shifting emphasis and investment into legal data solutions.

“There are many ways we need to be nimble as a law department,” said James Michalowicz, senior manager for legal ops at TE Connectivity. “We need to be lean, and the technologies we’ve invested in allows us to be that way and allows for better positioning when a recession does occur.”

We agree, and we’re here to help legal teams weather any coming storm — recession or not.

Bodhala recently hosted an industry dinner that gathered top lawyers from premier private equity firms. At the dinner, a top PE lawyer with a major asset management firm told us that the cost of their premier firm partners, after years of rate increases, are beginning to be seen by the firms as problematic, even with budgets in the black. These are the best economic times possible for private equity, he said. “When things slow, legal will be viewed as a cost center that must make big cuts.  What are PE legal departments putting in place to get ahead of this so it does not present a corporate risk at that time?” 

We can help.

Bodhala, a groundbreaking legal technology platform created by lawyers to transform the half-a-trillion dollar global legal industry, was born in the aftermath of the Great Recession. While the economic downturn highlighted many needs for immediate cost controls, the advent of big data showed there’s hope to solve for many bad behaviors in Big Law: block billing, unexpected rate increases, lack of timely billing data, and inappropriate staffing decisions.

We recognized then that there needed to be a shift in the dynamic between legal departments and their outside counsel. Backed up by not only anecdotal evidence but with millions of dollars saved by our clients every year, we have already helped move the status quo forward.

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. 

Contact us today to talk about how we can be that shield for any clouds that may roll in: https://www.bodhala.com/demo-bodhala

Dive Deeper

You might have found yourself thinking outside legal bills are a pain to reconcile. You’re not alone! In the first entry in our series on the legal department of the future, we help you avoid the 3 biggest legal billing problems our clients face.

FREE WHITE PAPER

With superstar rainmaker poaching on the rise, clients of Big Law firms must adapt so as to not be left holding the bag for the new normal where “money and data rule” at their law firms.

Over at Law.com, Christine Simmons sits down with elite legal recruiter Mark Rosen, where he talks about the poaching of a top M&A rainmaker and his team from Cleary Gottlieb Steen & Hamilton.

Over the last year, our team has recognized a shift in partner compensation structures, leading to massive payouts to the biggest players at the highest level of Big Law. This trend undergirds a number of other forces driving massive increases in billing rates for premium legal talent. The Wall Street Journal described this phenomenon citing Bodhala data in a groundbreaking deep-dive article earlier this year. Get that story here.

In late October, several sources described the departure of Cleary’s Ethan Klingsberg and his $30 million book of business.

According to Bloomberg, Klingsberg’s work included leading XL Group’s $15.2 billion purchase by Axa, Staples on its $6.2 billion sale to Sycamore Partners, and Google’s $2.9 billion sale of Motorola Mobility to Lenovo in 2014.

Along with him, his new firm, London-based Freshfields Bruckhaus Deringer, picked up a team in a direct move to boost M&A business, hiring on corporate lawyers Pamela Marcogliese and Paul Tiger, and litigator Meredith Kotler.

The new compensation plans will guarantee massive rewards for the team.

“Klingsberg, the rainmaker leading the group move from Cleary, will be much better rewarded at his new firm. He said Klingsberg is guaranteed $10 million a year for at least five years at Freshfields, after making “a little more than $3 million” at Cleary. The other partners moving to Freshfields also got “substantial increases.”

Most notable is what seems to be driving the move. Rosen said he believes Cleary’s “unsustainable” lockstep compensation failed to compete with Freshfields’ desire to pay top dollar for top talent. Per Rosen:

“It’s not a fair system. I don’t believe you can compensate an attorney who is responsible for $40 million worth of business the same way you can compensate someone with $4 million in business. Five years from now or even sooner, I don’t think there will be any pure lockstep firms left.”

Our team recognized immediately that this validated what our data and analysis has been telling us. Today, white-shoe firms are creating new lateral tracks to attract the biggest players — and their Rolodexes. This change has led to massive yearly increases in law firm rates across all levels of experience.

The fact is, partners have no loyalty to the lockstep system anymore. We’re finding that elite lawyers expect to get in the range of one-third of their book in annual guaranteed comp, or more.

This trend has intensified as competition for blue-chip clients heats up. For example, Kleinberg’s move potentially puts the M&A portfolios of elite clients such as Google, AXA, Verizon, Goldman Sachs, Lowe’s, Walgreens Boots Alliance, Square, Stanley Black & Decker, Tiffany & Co., and American Express at play.

What does this mean for purchasers of Big Law talent? Superstars, whose advice is truly gold-plated, will be rewarded handsomely. However, because of the Nobel-Prize winning concept called the “winner’s curse” in economics, firms will inevitably overpay for the few partners out there that have more than a $25 million book. This market incongruity will lead to unjustifiably higher rates passed on to their corporate clients in order to finance the move of the same partner from Firm A to Firm B.

This trend will continue, and the focus on money and data will continue to grow.

Bodhala clients strongly believe that they should not pay more for the same partner who has moved from Firm A to Firm B. We arm your inside legal departments with the tools they need to control unwarranted rate hikes. Your data, powered by our machine learning algorithms, can help you analyze, interpret, and optimize your legal spend.

Our team is eager to work with corporate legal departments to help explain this trend, and how forward-thinking general counsels can navigate through this “new normal.” 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.

Using billing data you already own, we provide:

• Legal spend transparency through data cleansing and rate card discount normalization to allow comparison,
• Reporting granularity, based on information from your own data,
• Rate benchmarking, creating a true price market,
• Guided counsel identification, and selection.
• Fit of work: Bodhala recognizes that there is a time when you need the premium firm. Our platform can help you identify those times, and separate them out from when you don’t.

No matter what form a law firm’s partnership track takes, or whatever shifts in the market take place, we know the only true metric is what you can find in the data.

We’re eager to help you understand this new trend. Contact us today to learn more.

Dive Deeper

Some of your lawyers might be superstars, but not everyone can be LeBron James. Check out how our proprietary system can get your legal team’s billing right, every time, with this FREE white paper:

FREE WHITE PAPER