Reproduced with permission from Copyright © 2020 The Bureau of National Affairs, Inc. (800-372-1033) www.bloombergindustry.com.
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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
Not all in-house lawyers handle discovery work. But the reality is that every in-house lawyer needs to take on some discovery work, no matter their area of expertise. Price discovery, that is.
The opacity of the legal services market has led corporations – especially large ones – to be routinely overcharged by their AmLaw 200 outside counsel. Not only are corporations being overcharged, their firms’ rates are growing year-over-year at an unprecedented rate. To put it in perspective, only healthcare premiums have grown more rapidly — with legal nipping at their heels.
But why? The answer is simple: the legal services market is not an efficient economic market. In fact, you’d be hard-pressed to classify it as a functional economic market at all.
Governed by supply and demand, a functional market economy is squarely grounded by the ability for participants to have price discovery. This allows them to assign a value to the product or service they want to purchase – and determine if the price matches that value.
This isn’t rocket science. This concept is implicitly understood by everyone — whether they know it or not. And yet despite being a long-standing profession central to the economy, there is no true price discovery for legal services. Buyers cannot assess price in terms of value (perceived or otherwise). They cannot compare their options. Competition is restricted. It’s a mess – a mess that buyers of legal services have to wade through constantly, trying to make the best of it.
As a result, in-house teams are left at the mercy of their law firms who cite the prestige of their brand and established client relationships as justification for their ever-increasing legal fees. In-house legal teams have little choice but to build “partnerships” with outside counsel and trust that those firms are doing right by them.
Law firms might insist you’re getting the best price – better than everyone else – but can they prove it? Rate discussions often leave in-house teams feeling uneasy and left wondering if they’re really getting as good of a deal as law firms claim – or if law firm antics are at play.
Law firms obsess over their realization rates. So if you’ve come to an agreement on rates and think you’re getting a good deal, chances are you’re not receiving any deal at all. Why? Because law firms will do everything in their power to manipulate the realization rate for their benefit. By jacking up the number of hours recorded to yield a higher realization rate, law firms give themselves an unwarranted raise year over year.
While it has made things complicated and costly for the buy-side, law firms have thrived on the fogginess of the legal “market”. Even when met with indisputable data and pushback from their client, a leading partner at an elite law firm claimed that they could not believe the data. An for what reason? Simply because other clients were paying the firm’s rack rates, proving that “invisible hand of the market” was at play. The murky relationship between price and value and the lack of true competition on much else other than brand and reputation has certainly padded their wallets.
But despite their hefty bank accounts, it isn’t all roses and lollipops for law firms either. The lack of price discovery in the market has its ramifications for firms, directly correlating with their constant pushback on technology and change.
The constant influx of cash incentivizes firms to maintain the status quo, stifling competition, and cutting innovation off at the knees. To say that the legal industry is in the late majority of technology adoption would be generous – they’re laggards. This has allowed new business models to start infringing on traditional law firm turf.
Seeing an efficiency gap and firms’ unwillingness to innovate, ALSPs (Alternative Legal Services Providers) have not only cropped up but gained mainstream acceptance. Tasks – and some types of matters – that used to be billable hours for law firms are now being allocated to faster, more cost-efficient resources.
The gravity of market inefficiency has been heightened recently due to the global economic crisis caused by Covid-19. Historically, top tier firms have continued to enjoy constant and sometimes accelerated growth during economic downturns. But with balance sheets under more scrutiny than ever, legal spend is starting to be examined in earnest.
GCs and CFOs across industries can no longer afford to tolerate idle price-taker behavior.
C-suite mandates to cut costs are straining internal relationships between legal and finance, forcing legal departments to find opportunities for potential savings in each line item of their budgets. Law firm relationships are no exception.
It’s fair to say that the legal services market is broken, hurting on both the buy- and sell-side. Corporate legal departments are saddled with year over year rate hikes well above inflation, without the tools they need to understand the value they’re getting. Work that used to constitute billable hours for law firms is being siphoned off to more economical service providers. Overpriced and stagnant. But does it have to be that way?
The simple answer is, no. There’s a treasure chest just around the corner — full of 0’s and 1’s. No, it’s not a special edition of Lucky Charms. It’s data.
Data has the power to turn in-house teams from price-takers to price-makers. Data puts them in the driver’s seat, giving them the transparency they need to understand the value they’re getting from their firms and optimize from there – be it with rates, efficiency, or stewardship.
Based on Bodhala platform analytics, our legal experts predict that in-house teams have the opportunity to realize between 15-30% in savings by leveraging their own data. Data is the key to unlocking competitive, market-based rates. But to truly understand if those rates are delivering the value necessary to justify the price, companies need evidence. Data is that evidence.
The legal services market is one in which nearly all buyers underestimate their leverage. In-house teams have the ability to drive real change and break through the status quo on everything from fair market pricing to increasing diversity in the industry. The buy-side is now in a position to use data to incentivize accountability and innovation from the sell-side. If your firms don’t fight for your business by pushing themselves to change, then they’re not a critical partner to your business.
The reluctance to provide transparency and adopt technology has created a distinct advantage for the sell-side. Continuing down that path puts industry incumbents in a precarious position.
Disruption is already here for the legal services industry. We need a functional, transparent market for legal services. Advocating for transparency and the active use of data will be the difference between those who succeed in riding the wave of change, and those who drown fighting the tide.
The question is this: Will you embrace data and transparency before it’s too late?
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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
eBilling systems are expensive. And while necessary, they can entangle legal departments in a web of data that is difficult to unpack – and even harder to leverage for analysis and optimization.
From insurance to financial services and private equity, Bodhala has seen corporate legal departments invest millions of dollars in eBillers with the intention to not only simplify paying their bills, but also to support data-driven decision making. Unfortunately those investments are often hampered by serious issues, including gaps in legal billing data (e.g. classification conflicts on firms, practice areas and matter-types) and the subsequent inability to cluster matters and tasks accurately.
These pain points are not the result of not having the “right” eBiller. Data issues are at the core of every eBiller. To maximize your eBilling investment, it’s vital to have an analytics layer that leverages actionable insights.
Legal-specific analytics solutions, like Bodhala, can work in conjunction with your eBiller to exponentially increase the value of your investment. Instead of spending countless hours buried in layers of spreadsheets, legal analytics tools can surface your spend narrative in a matter of seconds — enabling your team to quickly deliver value on mission-critical work.
Forward-thinking legal departments have realized that eBillers and legal analytics tools are not one and the same. Here are just some of the benefits of using legal analytics software in unison with your eBiller:
As companies grapple to get a hold of their legal spend and budget ahead of a new fiscal year, the need for data and actionable insights has never been more urgent. Analytics tools, like Bodhala, can enhance your eBilling investments and turn your data into strategic planning gold.
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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
Earlier this week Bodhala CEO, Raj Goyle, joined the “Eye on the Industry” podcast hosted by Jon Cooper, CEO of Industrial Exchange, to discuss Big Law’s Lebron James problem. Because of the opacity of the market, law firms are able to price lawyers as if everybody is LeBron, but data can change this.
“There’s an old saying in the law – if you flip a coin – heads the lawyer wins, tails the lawyer wins.”
Take a listen to learn more!
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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
This week Bodhala CEO, Raj Goyle, sat down with Nasdaq Trade Talks host, Jill Malandrino, to talk about the opacity of the legal services market. Covering everything from the role data plays in legal spend optimization to how Covid-19 is affecting the legal landscape, it’s a great listen.
“We believe in the very important relationships and collaborations between our clients and their outside law firms, but we also believe that there’s a market that must exist so therefore those services can be valued and optimized.”
– Raj Goyle, Bodhala CEO & Co-Founder
Check it out!
Bombarded with law firm rate increases? Think twice before giving your law firm what they want.
The past year has brought unprecedented uncertainty to economies around the globe. Most businesses have been dramatically impacted, leaving their bottom lines in far different shape than last year. Along with financial instability comes the pressure to cut costs and evaluate each budget line item with heightened scrutiny. Your law firms’ rates should be no exception.
Historically, law firms have sheltered themselves from the crushing economic impact of past crises — even profiting in some instances — all while the companies they serve suffer. Though you might view certain firms as paramount to your business, complying with rate increases that reflect above-market fees shouldn’t be a knee-jerk reaction…especially during a global pandemic.
Regardless of how effectively your legal department has operated in the past, it’s clear we all need to rethink our strategy going forward. There’s no time like the present to determine what brings value to your business and what’s draining your bottom line.
It’s time to move from a reactive state to a proactive state when it comes to law firm pricing.
There’s just one way to get there — data.
Shed your reputation as an idle price-taker. Sophisticated legal-tech solutions, like Bodhala, offer data-backed insights that can strengthen your negotiation power with your law firms.
By leveraging data, legal departments can surface granular analyses of their spend and insights on how their law firms’ rates stack up against others in the market to keep their rate increases in check.
Don’t have the data to execute this just yet? We’re here to help.
In addition to aiding your cash conservation efforts, this request allows your legal department to identify which firms are truly critical partners for your business. Which law firms are willing to put their egos – and paychecks – aside to help their clients in an urgent time of need?
Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
As companies continue to grapple with the economic distress presented by COVID and think more strategically about their operations, many are turning to their outside counsel for rate relief.
If you’ve taken the step to negotiate discounts or rate freezes with your law firms, it’s likely you’ve been met with some pushback leaving you to ask – now what?
Negotiations can be prolonged and intimidating conversations if you’re not prepared. Wouldn’t it be helpful to know what’s going on behind the scenes at the other end of the negotiation table?
Well, you’re in luck!
When initiating rate discount conversations with your law firms, it’s critical to keep this in mind in order to yield the best results for your company.
To help you further navigate your negotiations and conversations with your law firms, Bodhala has compiled a set of common law firm objections and suggested responses that will assist you in asserting a value-driven conversation that leads to positive results for your business.
Law Firm Objection/Assertion #1: Since the start of the pandemic, we’ve had our top tier partners and associates handling your urgent legal matters. We’ve provided you with our best minds and have proven our sincere commitment to your business during these challenging times.
Client Response #1: While we appreciate your commitment and your top attorneys, we are under significant pressure to contain costs and cannot justify paying these premium rates during such economic turmoil. We are expecting all of our business partners to share in the economic burden Covid has presented.
Law Firm Objection/Assertion #2: If our rates were truly too high, we’d be receiving discount requests from far more clients. Our clients have realized that they need our help more than ever during these difficult times. Because of this, they have accepted the rates we have charged – in fact, those rates are higher than yours.
Client Response #2: Certain clients may be willing to pay above-market rates, but we cannot do so as we look to contain costs during this economic crisis. Each business is different and how some clients handle the burden Covid has presented is not a catch-all solution for the rest of your clients.
Law Firm Objection/Assertion #3: Your business is already getting a good deal on your rates as our realization rate with you is low versus our other clients. We understand the economic stress Covid has presented, but we simply cannot justify reducing your rates even further. It would be detrimental for us to do so.
Client Response #3: Your firm has been a critical partner for our business for several years and we value the relationship, but how you handle the relationship during our most significant time of need also matters to us. If our CFO and GC thought our business was truly getting a good deal, we would not be asking this of you. We agreed to pay the rates you are referencing during a time of economic stability, but due to Covid, that is no longer the case and we are asking you to realize that.
Law Firm Objection/Assertion #4: Our law firm has struggled throughout the pandemic as well as we’ve had to deal with the challenges of remote work, furloughs, court closures, and more. The rates we are charging your business are within the market.
Client Response #4: We understand that Covid has presented challenges for all businesses, but we are also aware that in past crises, law firms have remained stable, even experiencing profits while other industries struggle. We are asking you to share in our economic pain as there is no reason for above-inflation rate increases – especially during this period of distress. We are aware of similar clients in the market that have been granted rate freezes and discounts by their law firms. As a valued business partner of ours, we are expecting the same from your firm.
As you optimize your spend and drive value from your outside counsel relationships, Bodhala is here to offer real transparency, real accountability, and real control.
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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
Whether to optimize legal spend or drive diversity efforts, legal operations professionals are leaning on data to accelerate their department’s key initiatives.
Without data, legal operations teams are left at a standstill, unable to make strategic decisions that create meaningful impact, such as:
The need for clean, actionable data has never been more significant as companies grapple to get a hold of their spend after the economic distress Covid has caused and the urgency of diversity initiatives in the vitally important era of Black Lives Matter.
Bodhala CEO, Raj Goyle, led legal operations professionals from Fortune 500 companies through insightful discussions on the power of data this afternoon during Consero’s Virtual KnowledgeBridge.
In-house teams need to allocate their resources towards significant value-drivers.
That means no more surprise invoices, no more paying A-team prices for C-team legal talent, and no more hiring firms that do not deliver the quality of work or expertise your legal matters need.
As we heard from attendees, there’s a burning desire to eliminate these issues, but they struggle to wrangle clean data needed to make this a reality.
One attendee shared that they are hard-pressed to get any data that can help inform decision making.
Though other professionals need to meet certain standards to get a raise in pay, it seems that companies have no choice but to shell out more and more money each year to compensate their legal counsel.
But legal operations professionals are looking to change that.
They want to leverage the power of data to drive law firm negotiations, instead of being idle price takers that are subjected to consistent rate increases.
Companies are holding a magnifying glass towards the diversity of their external partners as a result of the overdue and important conversation on racial injustices in America.
In-house legal departments are looking for concrete data on timekeepers and allocation or origination credit from their law firms that demonstrates their true, honest commitment to diversity and inclusion.
But it’s not an easy road to obtain this information.
Due to the limitations of their tech stacks, legal operations professionals must rely on their law firms to provide their diversity data — a request that’s almost always refuted.
This leaves legal operations teams struggling to control law firm behaviors and set specific guidelines on outside counsel diversity.
With unparalleled data-backed insights, Bodhala can be a critical partner in guiding your legal department’s key initiatives — from diversity to spend optimization, law firm management, enhanced reporting, and more.
As the leading legal technology platform, Bodhala is 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.
Bodhala’s legal market intelligence arms legal departments with the ability to: initiate data-driven negotiations with outside counsel, set outside counsel guidelines that align with the businesses’ core values, benchmark their law firm rates to understand what they’re paying compared to peers in the market, and search data categorized by firmographics.
The combination of our analytics and legal market intelligence has made us experts in diversity spend data. As a result, we’ve helped our clients direct spend to diverse attorneys, monitor origination credit and relationship partner data, and identify diverse counsel for individual matters.
Real transparency, real accountability, real control — that’s what Bodhala is all about.
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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
In recent months, companies have accelerated their diversity and inclusion initiatives as a result of the Black Lives Matter movement and the overdue conversation on racial injustices in America.
While companies have realized the work must start from within, they’re also holding critical external partners – including law firms – to higher standards.
This afternoon Bodhala CEO, Raj Goyle, led General Counsels and Chief Legal Officers across multiple industries through insightful conversations on the critical role data plays in driving diversity initiatives during Consero’s Virtual KnowledgeBridge.
As the leading legal technology platform, Bodhala is 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 analytics and market intelligence have made us experts in diversity spend data as we have helped clients:
Throughout this afternoon’s discussions, Consero attendees expressed their desire to get beyond the virtue signaling and window dressing that law firms so often display when it comes to diversity.
Though legal departments are at various stages in their innovation journeys, attendees shared the following actions their legal departments have taken:
Law firms will not change their antics unless they are held accountable by their clients. Companies can no longer rely on obsolete numbers in a survey or empty law firm promises when it comes to diversity. After all, you cannot manage what you don’t measure.
To ensure accountability, companies must leverage data and monitor origination credit. Origination credit determines who at the law firm gets a significant percentage of money for a client’s work. No progress can be made on diversity initiatives without the client’s understanding of the critical role origination credit plays in diverse lawyers achieving equity partner status within their firms.
Is your organization equipped with the data you need to initiate change and tip the scale on critical diversity efforts?
Bodhala is your partner for generating data-backed insights that can accelerate your company’s diversity journey.
With over $15 billion in legal invoices from over 235,000 timekeepers spread across over 30,000 law firms, Bodhala equips you with the data needed to hire the right lawyer at the right law firm at the right price.
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Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.
Innovative legal ops professionals are changing the landscape of legal spend management. Here’s what they’re doing:
Leveraging data: If your legal department is like most, anecdotal commentary reigns supreme. However, it’s the data that is most effective in evaluating your outside firms and identifying those most integral to the business. Highlighting your top performing law firms, your most utilized timekeepers and the practice areas with the highest spend is the first step to driving tangible discussion with your stakeholders. Data is the language of your CFO and board, and it speaks volumes about the details of your legal spend at large.
Driving the details that matter: Law firm annual rate increases are routinely scrutinized by legal ops professionals, but these details are superficial and only tell part of the spend story. Leveraging modern technology that surfaces the granularities of your department’s outside counsel utility and spend will provide insights that:
Detailed analysis that considers both quantitative and qualitative variables is an indication of a performant legal operation and enables you to present opportunities to the GC and CFO with credibility.
Partnering with finance: You might work for the GC, but the CFO should be considered a strategic partner. The most highly functioning legal departments are viewed as strategic spend centers, not cost-centers, and shifting this perspective is the first step to aligning with your CFO. Developing a data-backed spend framework that accurately tiers your legal matters and enables you to leverage your top legal talent with efficiency sets the foundation for outcome-based collaboration and long-term success.
How is your legal department driving change?
