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Transcript of Cost Recovery and Profit Making in Private Law Libraries by LaJean Humphries Library Manager...
Cost Recovery and Profit Making in Private Law
Librariesby
LaJean HumphriesLibrary Manager
Schwabe, Williamson & Wyatt
Canadian Association of Law Libraries
May 27, 2008
Agenda Trends Policies Communication w/ firm management Ethical issues – “pitching cost recovery” What you can do Implementing successful cost recovery ERM products
Trends
Pre 93-379 library as profit center Cost recovery struggle No clear policies ABA Legal Technology Survey
Report – Online Research volume
ALM Survey http://lawfirminc.law.com/
What percentage of online charges paid to Westlaw and LexisNexis does the firm recover from clients?
2003 2004 2005 2006
40% or less 10% 3% 13% 14%
41-60% 18% 14% 11% 10%
61-80% 50% 42% 37% 38%
81-100% 29% 33% 37% 30%
Not applicable 1% 9%
We don't recover online charges 1% 7%
Source: Amercian Lawyer, Law Firm, Inc., 2004-2007
2002 2004-2005 2007
Cost inc/ in hourly rate 23% 20.1% 13.3%
Bill clients at cost 42.8% 45.5% 42.3%
Bill clients at cost + premium 5.9% 3.8% 3.8%
Bill clients at discounted cost 5.2% 4.5% 4.1%
Don't bill clients for online research 17.1% 21.3% 23.1%
Don't know 9.6% 10.2% 16%
Other 2% 1% 3.3%
Source: ABA Legal Technology Survey Report Online Research, 2002, 2004-2005, 2007
Cost recovery by size of firm
Number of lawyers at all locations Solo 3-9 10-49 50-99
100+
Bill clients at cost 21.9% 44.3% 53.5% 60% 45.1%
Bill clients at cost + premium 2.7% 2.8% 5.6% 5.6%
Bill clients at discounted price 2.7% 2.8% 5.6% 7.0%
Don’t bill clients for online research 43.8% 26.4% 15.5% 20% 5.6%
Source: 2007 Legal Technology Survey Report – Online Research, ABA.
Firm policies – most common
No markups Discounts passed through to
clients Nondiscounted databases used
only for billable work
Firm policies – frequently
Do not recoup costs where: Online replaces paper Online replaces duplicate copies Caselaw retrieval Citation verification – Shepard’s Dictionaries Some treatise collections
Firm policies – increasingly
Policy reflected in engagement letters
Transparent pricing
Communicate with management
Make friends with Accounting Expense reports Actual recovery
Make friends with Excel Make friends with group leaders Law Firm Accounting 101 (Randall J.
Thompson) http://www.aallnet.org/sis/pllsis/newslett/Spring08.asp
Online Research
No client number
89%
Billable 11%
Total Value v. Actual Cost
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
1 2 3 4 5 6
Total ValueCost
Ethical issues
Value of online research Shareholder decision Attorneys must communicate
clearly with clients
Value of online research
In re Cendant Corp.:
“Computer-assisted research is also essential to modern complex litigation.”
But, it costs so much
“We have a healthy respect for the quality of their work, but the only thing worse than passing along the sometimes high cost of CALR is the thought of absorbing the cost ourselves.” (Chicago Daily Law Bulletin, August 31, 1994)
What you can do
Law firm’s history of online research billing
Review ABA Formal Op. 93-379 Present current status of billing
procedure / policy Look at the bills
What you can do (cont.)
Cost recovery CLE Present scenarios
Collect results Present findings to management
Implementing successful cost recovery
Attorney support / buy-in Realistic expectations Client validation
Billing Get it on the bill soon “Computer assisted legal research, such as
Lexis and Westlaw, is used for the direct benefit of our clients, saving a significant amount of time required by an attorney performing the same function manually. We pass on to you only our cost of this service, as reflected above, as a substantial reduction in the overall cost of delivering our legal services.” ”Recover 100% of Online Research Costs” July 20, 2005 (AALL program, Mark Estes)
ERM Products – what they can do
Client-matter validation Site tracking ID/password management Auto-population of ID/passwords Reports
ERM products – what’s available
Cost Recovery Manager (Lexis)http://www.lexisnexis.com/infopro/training/
reference/PracticeMgt/CostRecoveryManager.pdf
Lookup Precision (Advanced Productivity Software)
http://www.aps-soft.com/Products/LookUp/default.asp
ERM products – what’s available OneLog (Info Technology Supply - UK)http://www.itsltduk.co.uk/onelog.asp
Research Monitor (Priory Solutions – UK)http://www.priorysolutions.co.uk/researchmonitor.htm
Areus (Iconitel – US)http://iconitel.com/
Lexis Cost Recovery Manager
Other tools
PowerInvoice (LexisNexis) Quickview (Westlaw) Client code, reference number
available Accurint CourtLink Dialog GSI/LiveEdgar Pacer
Thank you!
Questions? Feel free to contact me.
LaJean Humphries, Library Manager Schwabe, Williamson & Wyatt [email protected] 503-796-2071