Risk Update

Outside Counsel Guidelines — Latest Industry Insight, News and Discussion on OCGs

Last week I heard talk of outside counsel guidelines in the wild in excess of 300 pages in length. (I guess this could have been timed as a Halloween update with that metric…)

On that theme, it’s always interesting to keep an eye on how law departments and those who advise and influence them think about key matters like OCG creation and management. Here are a few recent stories on that theme, starting with: “3 Can’t-Miss Best Practices for Outside Counsel Guidelines”  —

  • “Since that time, CLDs and law firms alike have grown exponentially, creating an opportunity for in-house counsel to manage OCGs in a way that can generate a level of compliance and savings that is anything but boring. In addition to saving millions, OCGs are a way to improve both law firm billing practices and the underlying behavior they represent.”
  • Ensure the guidelines are received and understood by the right person at the law firm. It may seem obvious to say billing guidelines must actually be read in order to be followed, but the reality is they often go unread. To remedy this problem, organizations must first figure out who at the law firm is in the best position to receive, understand, and implement the guidelines in question.”
  • “In addition to sending the guidelines to the right person, you should document that they were received and agreed to, ideally using e-signature. But even then, you’re not done because e-signature does nothing to guarantee actual comprehension occurred.”
  • Make the guidelines simple and unambiguous. Stylistic questions aside, organizations still have to decide what requirements belong in the guidelines vs. what ones are not practical to comply with or unlikely to be enforced.”
  • Enforce the guidelines. If you don’t take your guidelines seriously, nobody else will, either. With this document, you are drawing a line in the sand, but that doesn’t mean law firms won’t cross it. No matter how clear your guidelines are, law firms will violate them—sometimes knowingly, but usually by accident because the task gets deemphasized in favor of other priorities. Without monitoring and enforcement, there is no motivation to read these hideously boring guidelines and put in the effort to comply.”
    “Enforcing guidelines is easier with advances in technology like AI-assisted invoice review, which increases the ROI of the bill review process. Additionally, legal spend and matter management platforms can help with everything from smarter staffing to streamlined communications.”

Legal Department Challenge: E-Billing Can’t Fully Automate Guideline Compliance” —

  • “Using e-billing tools to help manage expenses and track outside counsel’s adherence to guidelines is now pretty much par for the course inside corporate legal departments. But technology alone may not be enough catch errors in law firm billing, a reality that may lead more departments to supplement e-billing solutions with a review by an alternative legal service provider.”
  • “From a technology perspective, some of those challenges often have their root in the set of uniform activity codes that law firms enter for different services, such as e-discovery, for instance, and an e-billing system that flags for potential violations of a company’s billing guidelines. Those codes are developed by the Legal Electronic Data Exchange Standard, and are updated to reflect tasks centered around emerging practice areas such as privacy.”
  • “‘Some GCs may be more welcoming of ‘Our law firms are our partners and yes, we’re absolutely going to pay for first-year associates because we want them to develop.’ Other people may say ‘I’m not paying for training and development,’’ Clem said.”
  • “Clem also doesn’t think there’s much of a chance that a more universal and uniform set of billing guidelines would emerge, especially as businesses adapt to the individual hardships caused by the COVD-19 pandemic. Still, not all billing policy violations are strictly accidents.”