The drive toward business efficiencies is something that has long been standard in other service industries. Yet, the legal services industry has been slow to adopt similar best practices. Because of factors like recessionary pressures, the legal services industry is finally seeing meaningful trending in this area.

We can all see and feel the changes occurring in the business of legal services. As the landscape shifts, firms have an opportunity to share in the success of the business of the law as it evolves. In order to do this, firms can participate in developing meaningful metrics and seeking more creative and better solutions for clients.

The billable hour has been dominating the discussion, and frankly, taking quite a beating. This billing methodology has been debated at length against the movement toward alternative fee arrangements. It seems as if every conference that I have attended over the last couple of years has a roundtable or panel discussion dedicated to the topic.

HITTING TO ALL FIELDS EXPANDING THE FOCUS

With the home stretch of the baseball season upon us, I can’t help but frame the focus on the billable hour in relation to my unrealistic hopes for my Los Angeles Dodgers being able to jump back into the race for a pennant this year (it’s been a tough season). Attacking the billable hour is a bit like me saying that if the Dodgers change ownership they will start winning and game attendance will go up. A change in ownership is a start, but the Dodgers need to add the right talent at multiple positions and improve the fan experience to achieve these results.

A panel session at the USLAW client conference in April touched on this popular issue, but had a refreshingly broader focus. Instead of only concentrating on how services are billed, the panel expanded the discussion to include cuttingedge techniques for client partnering, legal services outsourcing and law firm management. In a buyers’ market for legal services, law firms that offer creative solutions in more areas than simply the way that they bill services stand to distinguish themselves as better partners.

So, why does the attention remain on the debate between the billable hour and AFAs, when other creative options exist, like shifting legal services work to outside companies? The discussion about billable hour versus AFAs is prevalent because the billable hour is a metric that is easily measured by law firm clients, absent other available metrics.

SCORING RUNS AND WINNING WHO, WHAT AND WHY MATTER MORE THAN HOW

Sabermetrics, developed in the 1970s, is the analysis of baseball through objective, empirical evidence. The introduction and use of Sabermetrics questioned historic measures of baseball skill like scouting players based on physical tools and traditional statistics. For example, batting average is thought to be an important statistic, but Sabermetricians argue that it provides a relatively poor indicator for team runs scored. Because scoring runs is what wins games, Sabermetricians put more stock in metrics that measure a player’s ability to help his team score more runs than the opposing team.

Coming up with new ways and methods to monitor and measure categories of legal spend is not easy. Until recently, clients were only measuring the one metric they have: how they are being billed. Changing billing structures places the burden for finding cost effective litigation service alternatives on law firms, as sourcing experts. However, as Ron Gruner, President of the Vallex Fund observed in David Galbenski’s book, Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today, "…[I]nevitably the lawsuit’s lead attorney, rather than a separate manager, is managing the entire lawsuit. It"s like having the brain surgeon manage the nursing staff and stock the operating room…projects need two bosses, a creative expert and a project manager."

Identifying who is performing certain tasks, what those tasks are and the costs for those tasks is becoming more important. Evaluating the who, what and why are tasks better suited for those with "the necessary business and process skills to analyze…focus exclusively on process and efficiency and defining what value is," notes James Potter, General Counsel, Del Monte Foods in Unbound.

Outsourced litigation service providers like Med Legal will benefit from these trends, but so can our clients. Med Legal is partnering with those that understand our value proposition as an alternative resource to realize business efficiencies and better results, whether law firms, corporations or insurers.

DESIGNATED HITTERS LEVERAGING SPECIFIC TALENTS AND EXPERTISE

Unbound explores trends emerging in the delivery of legal services against the backdrop of interviews with various law firm leaders, legal entrepreneurs, and in-house counsel for large clients of law firms.

Along with other outside litigation services providers, Med Legal is experiencing tremendous growth because insurance companies, corporations, government entities and law firms are beginning to realize that our services represent areas of legal spend that can be achieved with better results, faster and more cost efficiently. Med Legal delivers better expertise than non-medically experienced in-house personnel and at a lower cost than highly paid experts. The tools provided reduce redundancies, increase communication, provide a more thorough understanding of critical issues in medical records and better identify opportunities for mitigating damages in the areas of past medical billing and future care costs.

Legal process outsourcing (LPO) was a $400 million revenue industry in 2010 according to a June 2nd article in the New York Times written by Heather Timmons. Still, this number represents only a fraction of what is estimated to be a $200-billion-a-year legal market, Timmons wrote. The LPO industry share of the legal market is predicted by The Datamonitor Group to grow to $2.4 billion by 2012.

Outsourcing carries a negative connotation for some, because there is a perception that it means "off-shoring" and represents a potential for losing control over quality. But outsourcing is only a subset of other options (e.g. downsourcing and in-sourcing) for transferring work to other modalities. Outsourcing does not necessarily mean "off-shoring." In particular, in the area of knowledge process outsourcing (KPO), where services are dependent on workers with greater skill, it may be a better idea to on-shore to prevent omitting critical details that can sometimes be lost in translation, like the language of medical records.

GENERAL MANAGERS EVALUATING YOUR MEASUREMENT METHODS

A study published in March 2011 that was commissioned by The Council on Litigation Management and conducted by Revere Advisory last year identified specific External Initiatives that are on the rise among Litigation Managers and Executives. The study participants were 47 senior litigation executives from a broad cross-section of the litigation industry. The group surveyed was diverse by organization type, legal spend, line of business and litigation type.

The findings of the study reveal that 74% of study participants rated the quality of their litigation metrics as "Fair," "Poor" or "Very Poor." While this is a representation of the status quo, the study further indicated that these same individuals will be dedicating more time to strengthening these metrics. The efforts to better measure and quantify litigation spend represent a significant trend toward more client controlled litigation spend.

The study makes it clear that litigation management effectiveness has high-level attention and decision makers within organizations are pushing for metrics and analytics that allow for clearer measurement of effectiveness and success. Specifically, the study identified five most penetrated external initiatives along with 10 emerging external initiatives. The list of emerging initiatives included services like E-Discovery, Copy Services and even (gasp) Medical Records Review!

The findings of the study reflect what I hear more and more from clients about the trend toward more client control. Our law firm clients are those that already understand the benefits of seeking better and more cost effective solutions for their clients. They have changed the conversation away from how they are billing. Instead, they introduce alternative ways of doing business that result in mutual benefit. Clients appreciate the effort to find better ways of doing business and having a clearer understanding of what they are getting for their dollar.

THERE’S NO “A-ROD” IN TEAM ASSEMBLING THE RIGHT BLEND OF RESOURCES

Assembling teams with the perfect blend of specialized expertise in the most cost effective way is what every ball club in MLB strives for (maybe not the Yankees!). Even in baseball, the evolution toward more specialization didn’t occur overnight. In the early days of the sport, the best all-around athletes dominated the sport and played multiple positions. Babe Ruth, one of the greatest hitters of all-time, was also one of the game’s greatest pitchers.

Now, baseball teams are assembled with specialized needs in mind: lead-off hitters, balanced lefty/righty lineups, closers, etc. Each position is sourced and paid accordingly. Occasionally, we see a Texas-sized deal for a player like Alex Rodriguez, but it always becomes clear that allocating too much spend to one superstar is not the most efficient way to produce wins. The only measurements that matter in tracking a team’s success are wins, losses and World Series titles.

Until recently, the return on investment for utilizing outsourced litigation services has revolved around anecdotal evidence and case studies. For Med Legal, it’s because the metrics are lacking for who is reviewing medical records for a client at their firms is it a generalist like paralegals and attorneys, a highly paid specialist like in-house medical personnel or someone else?

Great attorneys are the All-Stars of litigation and compensating them appropriately is important. They are best suited hitting in the clean-up spot in the lineup, hitting home runs by attacking high level tasks that justify their billable hour rate. The trouble occurs when you are counting on them to score from first on a double in the late innings to tie or win a game. This task is better suited for a pinch runner, one that specializes in speed and happens to also not carry the same price tag as your slugger. As corporate and insurance carrier clients drive the momentum and efforts continue to develop better metrics around external initiatives we know what they will reveal Med Legal and other litigation services partners, like a pinch-runner in the late innings, can offer a better level of specialized expertise and for less resulting in the only thing that really matters, better case outcomes.

THE DIVISION IS UP FOR GRABS WHO WILL PUT TOGETHER A RUN?

Law firms currently have the opportunity to assist in creating these metrics, bringing solutions forward and sharing in the resulting profits from enhanced relationships with clients. But it may not be long before they lose more and more of an opportunity to do so.

Firms and organizations like USLAW are distinguishing themselves as World Series material by adopting new methodologies and sourcing the best players at each position. Doing so ensures an inside track to maintaining better relationships with clients and in return, prospects for profitability. Yet, focusing the conversation on the billable hour versus alternative fee arrangements ignores the most important task at hand defining metrics and uncovering inefficiencies. The winners of this race will be best poised to grab the lion share of the litigation spend whether law firms or outsourced companies.

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Kyle Mason is Med Legal’s Director of Business Development and has experience establishing and growing business relationships with well-known corporate brands in various industries. Kyle holds a J.D. from George Washington University. Med Legal’s medical record, bill analysis and future care cost evaluations reveal opportunities for mitigation in BI liability cases.