Cost Recovery and Profit Making in Private Law Libraries by LaJean Humphries Library 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 library as profit center Cost recovery struggle No clear policies ABA Legal Technology Survey Report – Online Research volume ALM Survey
What percentage of online charges paid to Westlaw and LexisNexis does the firm recover from clients? % or less10%3%13%14% 41-60%18%14%11%10% 61-80%50%42%37%38% %29%33%37%30% Not applicable1%9% We don't recover online charges1%7% Source: Amercian Lawyer, Law Firm, Inc.,
Cost inc/ in hourly rate23%20.1%13.3% Bill clients at cost42.8%45.5%42.3% Bill clients at cost + premium5.9%3.8% Bill clients at discounted cost5.2%4.5%4.1% Don't bill clients for online research17.1%21.3%23.1% Don't know9.6%10.2%16% Other2%1%3.3% Source: ABA Legal Technology Survey Report Online Research, 2002, , 2007
Cost recovery by size of firm Number of lawyers at all locations Solo 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)
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 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) acticeMgt/CostRecoveryManager.pdf Lookup Precision (Advanced Productivity Software)
ERM products – what’s available OneLog (Info Technology Supply - UK) Research Monitor (Priory Solutions – UK) Areus (Iconitel – US)
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