Tag Archives: Cost Recovery

SLA Program: Cost Recovery vs. Cost Prevention

I moderated a fantastic panel at the annual SLA conference last week, and wanted to share the tips that were developed during the discussion. These tips are not difficult or costly; however, the impact on the bottom-line of the firm can be huge.

To focus more on cost prevention instead of cost recovery is to shift from a reactive environment to one that is proactive. This is something that can be undertaken by every librarian, no matter their influence or clout within the firm. Additionally, if the impact of these changes is being measured, the potential to raise the profile of the library is tremendous.

Our 5 easy tips:

  1. Get to know Accounting. If the librarian does not have full access to any and all of the data that impacts the library, how can informed decisions be made? The librarian cannot take ‘no’ for an answer when it comes to developing this relationship, and accessing this data.
  2. Manage and control the conversation around the firm’s contracts with large vendors. Another benefit to a relationship with Accounting, is finding out how much the firm spends with some of the large vendors. Imagine the bulk discounting that might be possible if the librarian could leverage the entire spend, and not just that of the library. Talk about a direct savings to the bottom-line!
  3. Education/Training. Controlling the training and education of your users is a great way to prevent unnecessary costs. Vendor representatives only train on their own products, and promote new content and services. This probably isn’t the most cost effective use of all the research resources purchased by your firm. It is imperative that training sessions be vetted by the library or conducted by a librarian, if possible.
  4. Using knowledge management (KM) to leverage internal and external resources. This doesn’t mean you have to implement some complicated KM software, it just means that you need to look for efficiencies in everything that you do. For example, the library could create an internal wiki to share answers to regularly asked questions, contacts, and/or frequently accessed internal content. This is KM, and once a small step is taken, more will follow.
  5. Creating innovative and simplified contracts. Vendors have been using the same contracts since they started offering their online services. Has anything else in your library stayed the same over all these years? How about exploring contract structures that reflect how you use the product, instead of accepting the same old, one-size-fits-all contract. Work closely with your vendor before you are even presented with a contract to let them know that the status quo isn’t going to work for you anymore.

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Cost Recovery: Ebb and Flow

It seems to me that legal research cost recovery has a natural ebb and flow; sometimes it’s the hot topic and sometimes it isn’t.

Economy bad = Recover more costs!

Economy good = Cost recovery…Eh…

I wonder if this time is different? Has the economy driven a change that has established a permanent foothold and redrawn the landscape of cost recovery, or, like many other “changes,” will we just go back to the status quo? I have to admit that I’m not entirely sure. On the one hand, this seems to be one area where many clients, especially corporate ones, have drawn a line in the sand, and refused to pay. On the other hand, it seems like we’ve been here before, and not much changed the last time we had this discussion.

What ever happens, Lexis is one company that is betting on both sides of this coin (pun intended). Yesterday I read that LexisNexis announced a strategic partnership with eBillingHub, a product that helps simplify e-billing and increase collections (Thomson Reuters also partners with eBillingHub through its Elite product). Believe it or not, LexisNexis also sells CounselLink, a product designed to “identify greater savings through superior invoice technology.”

In other words, they sell a product to law firms to help with e-billing and recovery of costs, and they also sell a product to corporate law offices designed to remove those costs. It might be interesting to know how many law firms submit bills through a LexisNexis product, with LexisNexis charges, that get denied by another LexisNexis product.

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Cost Recovery Practices Called into Question in Lawsuit

Last week a lawsuit was filed alleging that law firms overcharge for computerized legal research. You may be asking, “Are we profiting from online legal research?”

The May 7th edition of the National law Journal reports that New York’s Chadbourne & Parke faces litigation regarding allegedly using online contracts to create profits. Firms are reacting by turning to the ABA Formal Ethics Opinion 93-379 and a new tool on the ABA’s website, Cost Recovery: 50 State Survey Results (September 2008), for state-by-state rules and regulations.

However, this issue isn’t black and white and every firm is different. It takes experience, knowledge and an understanding of the intricacies involved with cost recovery issues and methodologies to keep a firm within the ethical guidelines, while meeting their goals.

Cable&Clark offers such expertise and understanding by:

1. Reviewing your current cost recovery process,

2. Recommending customized cost recovery policies and procedures,and

3. Implementing the new procedures internally and externally to clients.

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‘Alternative’ Billing? How About Information Resources ‘Alternatives’

There has been much talk lately about ‘alternative’ client billing structures. How about looking at some alternatives that will help the firm save money?

Cost Recovery
Information costs have typically been passed on to clients in three ways: retail charges, allocation and discount. All of these methods have had some success in the past, but will they work in the future? In this economy, law firms have to think outside of the box.

Information Resources
The Internet has leveled the playing field and created information alternatives that have grown in scope and functionality. The majority of legal research is conducted in primary sources; information that is created by courts, legislatures and agencies. This is government information that is free to the public.

Traditionally, publishers have taken this raw information and have added value in the form of indices, linking, annotations, etc., but at what price? What is the cost/value ratio to your firm for this content? Should you be comparing lower-cost alternatives for basic legal research?

Legal Research Skills = Cost Savings
Highly trained, confident associates are more cost effective and efficient when conducting legal research. A good legal researcher will need fewer bells and whistles to produce a superior work product.

Why not consider investing in an education program for your people, rather than sending all of your money to a vendor?

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Judge Disallows Legal Research Costs = Overhead

A Federal Judge made some interesting observations in a recent case. Class action lawyers submitted their expenses after winning a judgment against Coca-Cola (to read more about the case click here). The Judge would not allow the lawyers to recover $93,960.67 for LexisNexis, Westlaw and online library research. He wrote:

“This Court is of the opinion that charging separately for use of a research sevice is akin to charging for the use of a case law reporter. That is, the research service is a tool, much like a computer or a pen, and this Court considers the use of such a service part of a firm’s overhead. … Moreover, this Court is aware that many firms pay a flat rate to Lexis and Westlaw regardless of their usage, and class counsel cannot claim such flat rate payments as an out-of-pocket expense.”

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