Why You Need Legal Bill Review to Augment Your TPA Services

You just returned from a risk management conference and are expected to share your findings with the team in a debriefing meeting later today.  During the conference you overheard many conversations and saw exhibits on the value of legal spend management (LSM).  This is clearly a trend worth mentioning, but you’re still unsure why you need it; after all, your company partners with a third party administrator (TPA) to manage its claims.

Seriously, your TPA partner is one of the most respected claim management companies and is equipped to administer all of your company’s claims in various jurisdictions across the country.  So, how can LSM help?  Let’s break it down…

Your TPA is set up to manage claims brought against your company in a manner similar to an insurance adjuster.  Depending on the services your employer utilizes, your TPA can processes workers’ compensation, general and auto liability claims, as well as other claims in various jurisdictions.  The main goal of a TPA is to work towards obtaining your desired claim outcome while keeping the cost of the claim down.  They accomplish this by focusing on the medical expenses involved in a claim.  That means they are investigating the claim, communicating with the claimant, maintaining case notes, and sometimes even approving or denying authorization for medical needs.  Additional services offered by TPAs include reporting that will help companies mitigate injuries and reduce accidents that hopefully turn into reduced costs over time.

As a claim progresses and develops, if it is not settled in its early stages, lawyers will eventually get involved, which also adds to the overall cost of the claim.  In an effort to keep legal expenses down, many have sought assistance from legal spend management partners as well.  Legal spend management companies offer legal bill auditing and analytics that can aid in the processing of a claim.

The companies that are working with a LSM partner in addition to a TPA are seeing increased benefits from those that simply use a TPA to administer claims.  One of the most typical components of LSM service is legal bill auditing.  The LSM company will review outside counsel invoices for compliance with your litigation guidelines. If the firm does not submit invoicing in the manner you requested, adjustments will be made for non-compliance.  For example, if you have informed your law firms that intra-office conferencing will not be compensated, then when a firm submits invoicing for time spent conferencing with a partner, two associates, and a paralegal, the cost of that conference will be adjusted against the total amount billed.  This results in hard dollar savings to your company that would not be found through a TPA.

LSM can also help you when negotiating with your firms.  When a law firm requests an increase in its hourly rates, a good LSM vendor will be able to do a comparative analysis of attorney rates in the same industry and geographical area and help you determine the rates you should be charged by your firms.  You wouldn’t want to pay a Partner an hourly rate of $200 for work done on your workers’ compensation claims when everyone else is paying $175 would you? Analytics such as these can help your company ensure you are being charged a fair rate by your outside counsel.

An LSM partner can develop customized reports for you.  You will work with a former attorney that is dedicated to your business, will listen to your needs, and then create analytics that are tailored to address those needs.  Additionally, your LSM partner will work together with your TPA to obtain specific data relating to your claims that will allow you to dig deeper into the total cost of the claim.  Then you can use this integrated data to:

  1. Identify trouble areas
  2. Analyze opportunities
  3. Monitor program changes
  4. Drive the total cost of the claim down

LSM partners provide reporting that will help show your data in a way that not only makes sense for you, but will help you analyze your legal spend and lower costs.  Have you recently implemented a new change in your workers’ compensation policy?  Your LSM will work with you to track that implementation and determine if that change is producing the results you hoped it would.  If you have a hunch about which injuries or occupations cost the most, why not have that theory proved through analytics so you can begin an investigation into the reasons behind it?

Legal Spend Management partners want to do just what the name implies: They want to work with you to help you manage your legal expenses.  That can mean different things for different companies; many want to see the hard dollar savings, others want to better understand their spend, and some want actionable data analytics.  Regardless of what your motivating factors may be, LSM can help you oversee the legal component of your claims while allowing increased visibility into your claim costs in ways that a TPA alone would not be able to do.

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