Category: Legal Operations

Firm executives might consider themselves like professional sports teams, stacking the deck with superstars. But can they defend asking clients to pay every partner — every player on their team — as if he or she were an MVP?

Ketan Jhaveri, President and co-founder of Bodhala, shares a take on the modern-day law firm economics. Some people in a firm are that good. But the fact is, not everybody can be a unique once in a generation superstar, so stop pricing them like they are.

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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:

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It’s your not-so-favorite time of year again: it’s rate card season! Whether you are in the legal department or procurement, your frustration level is probably at an all-time high as you manually try to track your legal rates from years prior.  

The truth of the matter is legal department employees poring over data in countless spreadsheets are not going to be able to establish the baseline needed to give the GC a fighting edge in negotiations. There are too many variables for human eyes to process. But there are steps you can take set your team up for success. 

As your team is inundated with rate cards from your outside firms for their new rate cards for next year, there’s a lot of jargon and confusing variables to consider, so we’d like to set forward some guidelines — a cheat sheet — to help you understand the steps ahead.

First, let’s lay out the basic nature of law firm economics: your work over the course of a year can be done by dozens of timekeepers at any one firm and hundreds or thousands across your portfolio. Each of these partners, associates, and paralegals has a different rate.  

While you may look at a blended rate to simplify things, these individual rates matter.  Even at a more general rate card level, a firm typically has ten to fifteen different rates for the associate and counsel level and ten to twelve different partner rates, depending on firm-specific seniority.   

Misunderstanding this rate structure can make it difficult to understand the true rate you’re paying for the work being done from the start. 

On top of that, there are several levels of rates that can change depending on a number of factors, including your history with the firm, the practice areas implicated by a matter, and the internal dates of matriculation for timekeepers at firms. It creates a laddering of rates in a sense. We call it the Hidden Staircase of law firm rates.

The Importance of Data in this Process

It’s hard to overstate how tricky the process of negotiating rates can be. To help you understand where this negotiation starts, think back to how your legal department’s spend has gone throughout the year prior. In every matter, you receive hundreds, if not thousands, of billing line items.

You can look at data points to get a sense of the direction of your spend. While it’s tempting to think that poring through spreadsheets or basic eBilling platforms can uncover a law firm’s tricks, they simply can’t. While these platforms give you, at most, a flat snapshot into your legal billing, there’s a richness, context, and breadth that’s missing. And while legal departments can try and triage in search of a solution for understanding the process, it’s important and far more challenging to dig deeper and get a broader view across your spend.

Our Approach Versus the Status Quo

At Bodhala, the leading tech platform enabling corporate legal teams to analyze and optimize their spend, we unlock the power of your data to help you get a firm grasp on rate negotiations. Most legal departments keep track of billing through spreadsheets and online forms systems, and we know that getting a handle on next year’s rates requires such a level of detail and finesse that it’s nearly impossible for companies to do on their own. 

Part of our power is our unique ability to analyze and explain your spend through data ingestion. Paired with Bodhala’s world-class machine learning data analytics platform, our robust legal billing rate negotiation process helps you get the most granular view on your spend, regardless of matter type or complexity. 

Our Proprietary Rate Card RFP Platform Enables Our Customers To:

• Simulate future spend expectations against past work
• Understand the complicated modern law firm economics behind associate and partner matriculation, which adds another dimension of complexity
• Distinguish discounts at the line-item level versus invoice level
• Understand how outside counsel has billed for work done
• Get real, data-backed predictability to manage spend moving forward into next year

In the Meantime

We want to be a helpful guide on this Hidden Staircase toward next year’s legal rates as it exists today. It’s our goal to help give some clarity to these steps and make sure all sides are accountable for their claims and make good on their agreements. This process might seem frustrating, but there are moves you can make to ensure your legal department gets the most equitable and most valuable rate agreement for your money.

We lay out what all these steps mean below, but suffice it to say, some of these rate discussions can get “in the weeds” rather quickly.

Starting the Rate Card Negotiation

We’ve outlined some strategies to use with your law firms as you begin the process of your next yearly rate negotiation. The main focus should be on bringing every step on the staircase to the surface, set terms, and agree to a negotiated understanding of those terms.

Step 1) Rack Rates: Set the Baseline

First, you should ask your counsel to memorialize the currently-in-force yearly actual billing rates to your company, and what their next year’s Standard Rates (“rack rates,” “street rates”) will be. Tip: You should include a statement that “no rate increases will be accepted until there is explicit approval by the client.”

Step 2) Relationship Discounts

Maybe you’ve heard your legal department gets a discount off rack because of a long-term relationship. It’s time to memorialize that understanding: for next year, your outside counsel should provide both the proposed billing rates for your company AND the published rates in their rate card. This enables you to know the current prevailing discount percentage they are providing off of published rates at present, and for what they are proposing for the coming year.

Like what you’re seeing?

Download our free white paper report to learn steps 3-7 on how to understand, predict, and act on every step of the rate card negotiation process.

THE HIDDEN STEPS WE EXPLAIN:

• Work-Type Discounts
• Net Effective Rate for Next Year
• Volume Discounts
• Write-Offs
• Your Matter-Based Net Effective Rates

Download The Full Article

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

Bodhala works out of a WeWork, owned by the We Company. We get along just fine; it’s a good office space. In our early days, we even worked alongside founder and now-former CEO Adam Neumann in his company’s early flagship space.

Over at the Wall Street Journal, Jean Eaglesham and Eliot Brown dig into the story behind We’s failed IPO. Their story centered around Neumann, once seen as the darling disruptor of the stodgy world of corporate real estate. The 40-year-old billionaire was forced to leave We on Sept. 22.

“We canceled its initial public offering last month after concerns grew among potential investors about its finances and Mr. Neumann’s behavior—leading existing investors to force him out as CEO.”

In addition to Neumann’s outlandish public behavior, the Journal reports he had strong control over what was an incomplete, bungled investor prospectus, rattling potential buyers.

“Numerous current and former We employees believe the IPO prospectus was poorly written and delivered a muddled message about their business. They cite the document’s dedication, “to the energy of we—greater than any one of us but inside each of us.”

Among those burned by the document were white-shoe law firms Skadden Arps Meagher & Flom LLP and Simpson Thacher & Bartlett LLP, who were cited as having helped prepare the prospectus. The story goes on to say, however, “Neumann often rejected the recommendations” of experts – even legal matter experts.

The prospectus “leaves unanswered some basic questions,” with unclear revenue reports, failure to disclose major purchases (like a brand new Gulfstream jet), and no mention of Neumann’s sale of hundreds of millions of We stock. Read the rest here.

This is, of course, a cautionary tale. It’s a bummer to see WeWork paid Big Law prices and the premium advice was ignored. Now we can’t guarantee your CEO will follow good legal advice but we can guarantee that our clients pay a market price for IPO legal advice. In fact, our clients have saved millions when they used Bodhala to select IPO counsel.

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.

Our clients, corporate legal departments, come to us to solve four core problems: a lack of clarity in legal billing and rates, billing reporting miscommunications, the lack of a true apples-to-apples rate comparison for law firms, and the lack of a legal talent marketplace. Bodhala’s product addresses and creates workflows for are the following:

• 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, selection, and fit

Bodhala works with your legal department to highlight the right partner at the right firm at the right rate for all of your matters. This means serious savings in time and money for your in-house team and your budget.

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

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Our system surfaces insights on matters across the legal industry. Check out how Bodhala’s proprietary data helped the Wall Street Journal get the real story in the changing world of elite law partnerships, where data and money rule.

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It’s an eye-popping figure: since 2000, the headline reads, more than $105 billion in fines have been paid by corporations under judgment after successful cases litigated by attorneys general across the states.

Over at Law.com, writer Sue Reisinger highlights a report by the DC-based Good Jobs First, a DC-based nonprofit dedicated to government and corporate accountability. She cites a recent report, Bipartisan Corporate Crime Fighting by the States, more than $105 billion wherein the successes of state AGs are cited.

According to GJF’s intro of the document, “the report focuses on 644 cases in which AGs from multiple states took on companies over issues ranging from mortgage abuses to illicit marketing of prescription drugs and collected more than $100 billion in settlements over the past two decades.”

Among the biggest targets? Bank of America, which has paid requisite penalties to states totaling $26 billion.

For his part, the BofA spox demurred, saying “[t]here’s nothing new in the report, which simply highlights the well-known fact that we made substantial payments to resolve mortgage-related issues largely stemming from Countrywide and other acquisitions.”

That’s an interesting way to talk about $26,000,000,000.00 in fines.

One interesting observation was the bipartisan note the report rings. While many may observe the partisan rancor over suits filed over Obamacare or President Trump’s immigration policies, co-author Phil Mattera said the report “shows quite a significant history of states working together, especially in a bipartisan way.”

Mattera went on to say he expected suits and assessments like those described to grow.

What does this mean for corporate leaders? Well, if you’re GJF, probably nothing, if you play by the rules.

Every company and individual in America is entitled to a vigorous defense, with the presumption of innocence. But we all know the law and the priorities of attorneys general can change with every election year. With 2020 approaching, it’s smart for every savvy general counsel to take a look at their legal spend, and make sure they’re taking steps to maximize the value of their spend while matching matter of the highest need to talent of the highest caliber.

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.

Get in touch [email protected].

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Want to learn more about how our cutting-edge AI system can supercharge the value in your legal spend? Download this FREE whitepaper with three billing guidelines that will start you down the right track:

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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

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• 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].

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].

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

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An acknowledgment of Bodhala’s status as an industry leader driving change in the Legal Spend category for the Fortune 500.  

NEW YORK (November 19, 2018) – Bodhala, a groundbreaking legal technology platform created by lawyers to transform the half-a-trillion dollar global legal industry, has been recognized as a Financial Times ‘One to Watch’ in Legal Technology for 2019.  This was presented by the Financial Times and RSG Consulting at the 2018 FT/RSG Intelligent Business Forum. It honors Bodhala’s recent achievements and future opportunity in revolutionizing how companies analyze, interpret, and optimize legal spend using AI and machine learning. The award also recognizes the increasing number of companies who see Bodhala as the center of their entire legal technology stack.

Bodhala’s mission is to deliver groundbreaking legal solutions to empower teams to analyze, interpret and optimize outside counsel spend, trailblazing a new era of legal market intelligence with real transparency, real accountability, and real control. Its technology platform analyzes over $12 billion in invoices covering over 30 million billed line-items across 5,000 law firms. These analytics provide companies with a comprehensive understanding of market targets on rates, staffing, and billing precision for the client’s matters, so clients are not just price-takers of firm decisions.  Bodhala empowers its clients with the tools and insights necessary to take the ambiguity out of their legal spend decisions.

Bodhala’s CEO, Raj Goyle, attended the event and remarked: “It is a great honor for the entire Bodhala team. Being FT’s “One To Watch” is a recognition of our hard work developing an innovative platform that provides a comprehensive understanding of companies’ legal spend, enabling them to justify their costs with objective data.  With legal departments being asked to do more with less, Bodhala provides transparency around legal spend and empowers business leaders to make strategic decisions and justify those decisions with confidence.”

This recognition comes on the heels of rapid growth and successful company performance for Bodhala. After a seed round drawn from alumni of Microsoft, Facebook, Google, and Amazon, the company is on track to grow over 3X this year and again next year.  Working with industry-leading companies across the Fortune 500, the platform has saved clients billions of dollars in three short years.

Bodhala is among good company for Legal Technologies One To Watch including IBM Watson Legal, LawGeex, DataNovo and Nivaura.  Organized by the Financial Times, the event was hosted at DocuSign headquarters in San Francisco on Wednesday, November 14, 2018. Speakers included senior representatives from AB InBev, Nestle, PayPal, Shell, VMware, GlaxoSmithKline, as well as Kira, Exigent, Apttus, KPMG and iManage.

About Financial Times

The Financial Times is one of the world’s leading business news organizations, recognized internationally for its authority, integrity, and accuracy. In 2016 the FT passed a significant milestone in its digital transformation as digital and services revenues overtook print revenues for the first time. The FT has a combined paid print and digital circulation of more than 910,000 and makes 60% of revenues from its journalism.  For more information visit FT.com

About RSG Consulting

RSG Consulting is a research and strategy consultancy, founded in 2001. It specializes in working for professional service firms, with a special focus on ranking and assessing lawyers that dates back to the early 90s. RSG carries out commissioned and independent research on topics that include innovation, the development and future of the profession and emerging legal markets. It helps law firms and legal departments differentiate themselves, through innovation, brand or strategy projects.  For more information visit rsgconsulting.com

Admit it — GCs have few friends when the company budget is being discussed. Everyone thinks the GC is giving money away to his or her former law firm.

When the legal department is seen as a cost center, even GCs who are lawyer’s lawyers spend too much of their time playing defense on costs. This reputation as a cost center is an impediment to the GC’s ability to perform her job and a blow to her status in the C-Suite.

Legal is not recognized as a full business partner. Legal spends its time defending costs diluting its message on the value it brings and how its substantive advice supports the business goals.

As the industry rapidly moves away from the misconception that higher and higher legal costs are unavoidable and unquestioned, the risk to the GC’s job is rapidly rising.

GCs need to play offense and show that they are running their department in a business-savvy way by gaining control of the data.

Top GCs have introduced accountability and competition to their management of the legal budget by commanding a full 360 degree view of data on outside counsel spend, giving them the data to defend choice and management of counsel.

Through that control, GCs can demonstrate:

• That legal has the data and business tools to drive improvement;
• How certain costs may be driven by choices of the business rather than legal;
• That legal has the data to pursue business cases for success and improvement.

A legal department that is seen as a full business partner receives less blowback. According to former Sabre Corporation General Counsel, Sterling Miller,

“Being able to demonstrate that you are paying close attention to costs and that you are thoughtful in what you are spending and why, will make conversations with Finance (and the CEO) go much easier. In-house lawyers who run their matters, teams, or department like a business have more credibility at budget time –-and during those really tough times when the business is looking for more difficult cost cutting measures.”

The changing business model of law has focused attention on certain key metrics that capture the economic pressures that legal providers face. Now, we turn our attention to a metric — discounts on law firm rates — that is misleading as a signal of legal department efficiency.

Prior to the rise of legal spend analytics, corporate clients often relied on “discounts” from their law firms to prove to business leaders that they were getting “value” from their firms. Today, however, non-legal business units are relying extensively on analytics to show value. Consequently, legal departments are under increasing pressure to show real value with data analytics, rather than merely stating that their law firm gave them a “discount.”

Indeed, savvy in-house counsel and legal operations professionals know all too well that all law firms give corporate clients “discounts.” For example, The Wall Street Journal reported that large firms typically discount their rates by 17%, with “sophisticated” law firms using annual rate increases to make up for such discounts. As the WSJ reported, the aggregate discount increased from 8% a decade ago. Similarly, the ubiquity of law firm discounts was covered by the Economist, which noted that law firm discounts are now common even among the most prestigious of law firms. Many law firms have stayed ahead of this discounting by raising their general rate card at a higher rate than the discounts.

Thus, savvy in-house counsel and legal operations professionals are asking: if everyone is getting a “discount,” isn’t my discount illusory?

Additionally, savvy in-house counsel and legal operations professionals have realized that law firms who provide “discounts” often make up the lost profits in other ways. For example, many law firms who discount their rates will staff additional timekeepers on a matter to the point that the additional hours have erased any “discount” that the client negotiated.

Likewise, many law firms who provide discounts may work less efficiently to the point that the same work may be handled less cost-effectively. Indeed, clients who use data analytics often find that there are systematic differences in how law firms and individual partners handle legal matters.

As a result, many savvy legal departments and CFOs have concluded that while discounts are helpful, they are hardly an indication that a law firm is truly providing value.