Staffing and resource optimization as a component of outside counsel management

Up-to-date technology should be an important component in staffing and resource optimization decision-making

In my last article, I discussed how an eBilling system supports core components of an outside counsel management program. Today, I will be discussing how technology can support staffing and resource optimization decisions.

An important component of an outside counsel management program is to consider what work should be sent to outside counsel and how it should be staffed. Philosophically, most departments will send work outside in one of three scenarios: when there is a need for special expertise, when there is overflow work and/or for routine work that could potentially be managed more efficiently by an outside organization because the organization has effective tools or processes. Some law departments are using data from their matter management and eBilling systems to analyze these situations and to determine if further refinement to outsourcing and staffing strategies can be made, thereby achieving greater cost savings or additional value for services retained.

Staffing Based on Matter Type & Risk Profiles

Departments seeking to exercise more rigor around matter staffing have constructed methodologies for determining when to send work outside. One approach is to formally consider the risk or significance of certain types of work. As part of matter initiation, a matter management system can prompt the user to consider elements that make a matter riskier (e.g., reputational risk or the amount of exposure) and ultimately help the user to assign a significance rating to a matter. Though most lawyers have a gut instinct for the level of risk involved in a matter, providing a framework that enables a lawyer to systematically demonstrate a matter is low enough risk that sending work to a lower cost resource is acceptable usually results in more of the appropriate work being transferred to lower cost resources.

Staffing Mix/Pushing Work Down

Another philosophy is to push work down to the lowest level thereby freeing more senior resources to work on higher value activities. Departments often request that their vendors follow this philosophy. Tasks such as document editing or routine data collection can and should be pushed to lower cost resources when possible.  Departments that have asked their outside counsel to utilize UTBMS codes to categorize the tasks on which they are spending time can look at large volumes of outside time to see which vendors are more effectively pushing routine tasks down to lower levels. Departments that reward vendors for following this philosophy tend to experience overall cost reductions over time (holding all else equal).

Cost Projections

Once a department has built a history of invoices containing information about staffing levels and hours spent on matter tasks, it is possible to begin predicting costs for similar future work. Hours spent on tasks can be trended over time to understand averages as well as variability. Assuming the department has negotiated rates, it is then possible to project matter costs and validate budget estimates submitted by outside counsel. 

Tracking Outcomes

Though all of the aforementioned activities should encourage practices that result in lower outside costs, the net benefit may be less if service quality and matter outcomes suffer as a result. It is important for departments to consistently track matter outcomes to ensure that staffing and resource optimization measures are in fact “optimizing” results. At a minimum, departments should monitor the percentage of matters that end favorably to ensure that percentage at the very least stays steady.

Next month’s article will talk about summarizing a vendor’s performance within a scorecard and preparing for the annual rate meeting.

Contributing Author

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Rebecca Thorkildsen

Rebecca Thorkildsen is a director of legal solutions with Pangea3. Leveraging more than 17 years of experience consulting to the legal industry on technology, management...

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