Managing Your Legal Spend, Part 1: Timekeeper Authorizations

When it comes to managing your organization’s legal spend, it is important to set expectations with outside counsel clearly from the onset to avoid confusion and expensive surprises. Having a conversation with your law firms about timekeeper authorization is one of the most fundamental ways that you can proactively set expectations. Having a method for authorizing timekeepers builds accountability into your relationship with outside counsel, but there are three important considerations you should make.

Is paying your timekeepers an hourly rate the best way to manage your legal spend?

For some types of law, perhaps not.  Many organizations have found success with flat fees and alternative fee arrangements for transactional and regulatory matters where the work being performed has little risk of unexpected outcomes or additional legal work.  On the other hand, for adversarial litigation like auto liability or workers’ compensation, the hourly statement of your defense counsel will give you a clear idea of progress made on your case and the type of work being completed. This can be invaluable in keeping you apprised of the ongoing activities of litigation.

Are you hiring a lawyer or a law firm?

If you have a small pool of matters, there is no substitute for personally vetting your outside counsel and maintaining a long term relationship with them.  With only a few lawyers to keep up with, rates should be set individually or by position. If your attorneys are responsive and get good results, you will want your matters to continue to be handled by them.  In this instance, your organization will need to have an individual to approve rates, a process for accepting rate increase requests, and a method to monitor and track rates to insure that the approvals are being respected.

On the flip side, many organizations have high volume, low stakes matters such as small personal injury or workers’ compensation matters where the overall exposure is low, and the legal questions are uncomplicated.  In this instance, you may opt instead to work with a series of higher volume specialized law firms that focus primarily on areas like workers’ compensation and focus solely on the rates of specific positions within the firm. In this instance, focusing on rates by position and only maintaining personal relationships with a few managing partners can take some of the administrative and bureaucratic overhead off of your plate.

How much control will you retain over staffing?

Some organizations will only approve certain timekeepers for specific matters or for limited tasks, and they may even limit the number of other law firm personnel who can work on a matter (e.g. paralegals, consultants, etc.).  Other organizations may intend to closely monitor their timekeepers, but end up never exercising any control over who works on their cases. If you have found that you are never declining to hire an attorney or are always accepting attorney rates, then it may not be worth interviewing every attorney a law firm sends your way.

The most important thing to remember when considering the different ways your organization can administer timekeeper approvals is that it has to be simple enough to be realistic in your day-to-day operation. Not only does it have to be manageable for you, but it also has to be simple enough to be conveyed to your outside counsel.  It does your company no good to have a complicated system to regulate timekeeper authorizations if you do not have the ability to monitor and administer authorizations when the need arises.

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