I recently had the opportunity to speak on a panel at ILTACON 2022 regarding effectively managing outside counsel guidelines. Here’s a synopsis of my thoughts following an engaging panel discussion and related audience questions.

Law firms continue to make progress in their capabilities related to managing client commitments, and a key part of this evolution relates to prioritizing the effective management of outside counsel guidelines laid out by their corporate clients.

More than eight in ten law firms have now assigned someone (or a group of people) to review outside counsel guidelines, summarize key points, and distribute that information to relevant stakeholders, according to HBR Consulting’s 2021 Law Firm Billing + Revenue Cycle Survey. The survey also found that 94% of law firms have — or plan to have — a formal process for reviewing and summarizing outside counsel guidelines.

The challenge is that these guidelines are becoming increasingly complex and wide-ranging. The rise of corporate legal operations as a distinct team within the corporate law function has led to a greater focus on “vendor management” as a key area of risk mitigation for corporate clients. Some of these drivers include:

• The emergence of e-billing as the default process for sending and processing law firm invoices;
• Increased emphasis on information security risk management when working with law firms;
• Specific outside counsel requirements around diversity, equity, and inclusion; and
• New requirements from banks and insurers that force corporations to treat law firms like “vendors” and know more details about their business operations.

So with law firms’ client networks and engagements expanding, the complexity of managing outside counsel guidelines is also growing. As a result, many firms are struggling to comply with a surging number of unique client requirements. The stakes are high for law firms as more law departments seek to add qualitative metrics to their engagement with outside counsel, such as post-matter feedback surveys, accuracy of accruals, timeliness of invoicing, diverse staffing, and more.

In our work with law firms nationwide, here are three key fundamentals that we have found can significantly improve their management of outside counsel guidelines:

1. Collect. It is important to develop a standardized approach for how the firm goes about collecting all relevant documents and data in response to outside counsel guidelines. Firm employees should have a crystal clear understanding of where they should send the guidelines to start the review process, as well as what happens next, i.e., whether each document is loaded into an e-billing system for “confirmation,” sent to an administrative staff member, or delivered to multiple relationship partners. Mature firms ensure there is a purpose-built repository and workspace for this process rather than simply dropping files into a document management system or SharePoint site.
2. Communicate. Merely collecting the guidelines is not enough; they must also be effectively disseminated to relevant stakeholders. To create the high level of efficient communication necessary for effectively managing outside counsel guidelines, law firms must get out of their email systems. The best way to ensure a streamlined process for engaging key stakeholder groups across the firm is to rely on a standardized workflow platform that facilitates easy collaboration in a parallel fashion. This not only improves efficiency for the firm internally, it also provides the review history in a central location and enhances client satisfaction.
3. Comply. Dynamic reporting capabilities at the individual client level and across all firm clients is critical to success with managing outside counsel guidelines — they are your best weapon for mitigating compliance risks. It is no longer sufficient to simply track documents received; law firms must now be able to report granular details related to e-billing, information security, DEI metrics, conflicts and more. Solid reporting capabilities provide assurance that key requirements are extracted and reportable.

The rub in all of this is that — even though most law firms now have a formal process in place to review and understand outside counsel guidelines — most of them lack the necessary technology tools to manage and automate this process. In fact, just one in four law firms are using a tool to automate the process of managing outside counsel guidelines, according to HBR Consulting’s Law Firm Billing + Revenue Cycle Survey.

New technology solutions now available to law firms can help them easily navigate the maze of outside counsel guidelines, pricing arrangements, diversity requirements, and other client obligations. By deploying the right tools, firms can reduce invoicing errors, improve compliance oversight, and avoid process breakdowns — improvements that can deliver increased revenues and operational efficiencies.

HBR Consulting has a unique perspective on the management of outside counsel guidelines due to its dual roles as trusted advisor to both corporate law departments and law firms. We brought these insights to the development of CounselGuide, an innovative workflow platform that helps law firms ensure compliance with their corporate clients’ requirements, thereby increasing client satisfaction. For more information about how to improve compliance with outside counsel guidelines, please contact Managing Director Scott Springer.