Tuesday, March 16, 2010

E-Billing and Matter Management: Key Enablers of Alternative Fee Arrangements

In response to the March feature in InsideCounsel, “A Matter of Time: Law Firms Move Away From the Billable Hour,” Keith Brown, principal business consultant for CT TyMetrix notes:

The increased utilization of AFAs by corporate law departments has been driven by two main factors. First, the recession that began in 2008 created an environment where corporate law departments were forced to implement cost control efforts. This resulted in an economic balance shift of sorts from the large law firm back to the corporate law department. The other driver has been that in the past five years many corporate law departments implemented technologies like integrated e-billing, matter management and business intelligence. Evaluating the success of existing AFAs and determining where new AFA opportunities exist requires both e-billing and matter management, ideally in a fully integrated system. Implementation of such integrated systems has allowed in-house counsel to level the data playing field with their firms, who have necessarily had the data in their hands for years as part of their core business.

Leading integrated e-billing and matter management vendors like CT TyMetrix have built AFA solutions intended to allow the corporate law department to implement, track and manage AFAs. Many of these vendors have also invested heavily in reporting, partnering with leading third party business intelligence providers like SAP’s Business Objects to offer reporting intended to allow the corporate law department to measure the success of AFAs. Ongoing data collection and analysis through these systems enables corporate counsel to respond better to a law firm’s offer of an AFA and to also proactively identify AFA opportunities within the law department’s business - in a portfolio of similar or specialty matters or perhaps for an extraordinary matter.

Now that law departments have the data, the next phase of maturation for many of those departments will be the creation of “AFA Programs” internally. Such a program would include the designation of a program manager, the setting of goals and strategies for the department’s use of AFAs, the identification of what AFA types are to be utilized for what type of matter(s) and those reports necessary to measure the success or failure of the AFAs.