Features - Keys to Effective Cost Recovery

Mark S. Schwartz graduated from Cardozo Law School in 1981 and embarked on a career in small business. He went back to school in 1993 and earned an MLS in 1997 from Rutgers. He worked at White & Case in New York for 6 years as a reference librarian and then Assistant Law Librarian. Last June, he joined West Group as Manager of Librarian Relations. He has taught legal research for the Law Library Association of Greater New York and the Greater Philadelphia Law Library Association, and is the Vice President of the Board of Trustees of the Englewood New Jersey Public Library.

Nowadays, managing a law library is much more than just managing research resources. Strategies for efficiently managing online research and handling how costs are (or aren’t) charged back to clients are increasingly part of the agenda.

As a former librarian at White & Case and current Librarian Relations Manager at West, I have seen the library manager position evolve significantly as far as its role in helping the firm manage online research costs. Librarians are on the front lines, and as such, can have a tremendous impact on the profitability of the firm.

Law firms face Solomon-like decisions on a daily basis on charging back research costs to clients. Throw in some pressure to squeeze out more economies for the firm, minimize write-offs and maximize revenues, and the race is on to find better ways to manage research costs.

Online research is a significant cost for most firms. As a result, most firms, at least to some degree, make an effort to minimize write-offs and non-billable research expenses, and make sure research is done as cost-effectively as possible. In the interest of client service, billings are monitored to make sure clients are not unfairly charged for research that does not apply to them. At the same time, firms want to be sure that all research conducted on behalf of a client is fully accounted for and invoiced.

In working with our customers in recent years, I’ve found that the level of online cost recovery activity varies significantly from firm to firm. Some firms have major cost recovery programs with detailed policies and sophisticated use of software and other technology tools to track and monitor online research usage and billing to the Nth degree. Other firms have few policies and programs – official or otherwise – for recovering and managing online research costs. Most firms, of course, fall somewhere in between.

To what degree a firm pursues online cost recovery as a matter of firm policy is largely a result of firm management. For those that do practice online cost recovery, there are many tools and practices that can help library managers mitigate problems. I’d like to share examples of how some library managers are managing what West calls the Keys to Cost Recovery, defined by appropriate firm strategy, securing of organizational commitment, effective implementation, and ongoing management and measurement.

First Key: Setting (or Refining) the Business Strategy

Effective online cost recovery begins with careful definition of the firm’s needs and objectives.

Firms need to answer a number of important – if challenging – questions when defining (or re-defining) recovery strategies:

  • Will the firm attempt to recover all online research charges incurred on behalf of a client?
  • Does the organization expect to recover the same percentage of online research from all clients? All offices? All practice areas? All users?
  • What will be the target recovery rate for the organization, individual offices, practice areas and/or users?
  • How does the organization define “cost” for purposes of online cost recovery?

Every firm frames these questions – and its answers – differently. Defining the answers requires participation of a number of stakeholders. Even the latest cost recovery tools and well thought-out cost recovery strategies are meaningless without input, buy-in and cooperation from the firm’s attorneys – from the managing partner down to the newest summer associate.

The library managers we consulted with all agreed: the better understanding that you can provide to management, the easier it is to effectively manage research costs.

Second Key: Securing Organizational Commitment

Leadership from the very top is critical for ensuring firmwide compliance with recovery policies. “One of the most important things,” says June Berger, director of library services for Stroock & Stroock & Lavan in New York, “is an education program for the partners. This is very effective especially for the litigators since they do so much research. I make sure everyone understands our information provider contract and how we are charged for searches.”

Online reports, such as those generated by QuickView+tm, Westlaw’s cost recovery and reporting tool, can help educate users on how to make optimum usage of the contract provisions with the information provider. For example, some librarians use Account Level Review reports to provide detail on included and excluded online usage for an account group, and demonstrate the advantages of the firm’s special pricing arrangement.

At this stage, a number of additional issues can be considered to ensure the success of the implementation. For example:

  • What level of discretion will partners have to write off online charges for individual clients?
  • What action will be taken toward users billing excessively to invalid client matter numbers?
  • How will the organization promote online research efficiency? What level of training will be required of each paralegal and associate?
  • What information will be provided to the client to support cost recovery?
  • How will progress be reviewed?

The answers can help determine what support might be requested of the information service provider. For example, if invalid client matter IDs is a point of focus, the library manager might ask the firm’s Westlaw account manager to help the firm establish Client Matter Validation. Soon, West will add a fourth, Web-hosted solution to its suite of Client Matter Validation tools, making it possible to require validation at nearly every firm.

Third Key: Implementing Effective Cost Recovery Through Education & Training
Get 'em While They're New

Monice Kaczorowski, director of libraries at Ross & Hardies in Chicago makes sure that new attorneys learn the firm’s cost recovery policies, how to search efficiently and the importance of accurate billing even before they join the firm as fall associates.

“We want to hook them early on how to search efficiently,” says Kaczorowski. “We give our summer associates unlimited Westlaw usage and don’t charge the clients. Every two weeks I’ll go over their usage reports with the associate and the summer associate committee. The associate will often say, ‘Gee, I had no idea how much I was spending.’ It’s really gratifying to watch their usage of online research improve and become more efficient as the summer goes on. When the new fall associates arrive, I can tell right away which ones had our summer research training.”

In addition, Kaczorowski knows this year’s summer associate could easily become the next generation of partner. “I’ve been with the firm for 13 years,” she says. “Some of the people I trained as summer associates 12 years ago are now partners on the executive committee. They’ve been educated since day one about efficient searching, the importance of using client-matter numbers, and how research costs are priced, so they understand all these things. This makes it easier to educate management on what we’re doing.”

To make it easier to monitor usage behavior or cost recovery success for a group of users, such as new associates or a practice group, librarians can combine two useful QuickView+ features. First, they can use the TimeKeeper ID function to create a unique identifier for each user, such as Summer ‘03 or Tax Group. Librarians can then generate reports of users with certain TimeKeeper IDs. The reports can then be sent weekly, biweekly or monthly to their e-mail inbox or associated printer using the Auto Report feature of QuickView+.

An Ongoing Mission

The need for training and education doesn’t stop once a new associate settles in with his or her firm. Many firms conduct weekly training sessions, helping their attorneys become more efficient searchers. “Westlaw.com is changing on a daily basis,” says Scott Fisher, director of library services for Wilentz, Goldman & Spitzer in Woodbridge New Jersey. “The information in the databases, how to conduct the most effective searches, new features and tools – these are constantly evolving. Recurrent training is very important so that attorneys are aware of all these changes.

“In addition, our firm’s reference librarians keep an eye on what attorneys are searching for. We can see new issues as they bubble up, and which areas some attorneys are having difficulty searching in. So we also structure seminars on the changing needs of the attorneys and their practice groups.”

Fourth Key: Managing Cost Recovery Success

Successful ongoing management of a cost recovery strategy requires that the library manager don a number of hats: detective, coach and counselor.

Be a Pre-Billing Detective

Many firms receive their QuickView+ Auto Reports once a week. After removing firm charges and all other non-billable research, the library manager will look for missed opportunities where an attorney could have billed the charges to a client, or conversely, could have conducted their search more efficiently, saving the client money.

“It’s very important that we get involved in the pre-billing stage,” says one librarian for a large Northeast firm. “I use QuickView+ to spot and correct bad searches. People may log in once and then start doing research for multiple projects, or may forget to enter the client-matter number and just plug in a firm charge. I’ll send the attorney a gentle e-mail reminder saying, ‘The following search was done with a non-billable number on this date. Is there an opportunity to bill this charge?’

“We recover a surprising amount of costs this way. We’ve also seen the non-billables go down as a direct result. The attorneys know that if they’re running up big bills, they’re going to get an e-mail.”

Pre-billing analysis also allows librarians to flag partners when larger-than-average online charges have been incurred on a client’s behalf in a given week or two-week period. The partner may then choose to contact the client to explain the charges before the bill is issued, reassuring the client that the most efficient research methods were used, avoiding any unpleasant “sticker shock” over the invoice.

Be Persistent (But Gently)

From time to time, it doesn’t hurt to remind the attorneys in the firm about these practices. Once a year, the attorneys at Ross & Hardies are given an internal survey asking questions such as:

  • Do you understand how we bill customers under our online service contract?
  • Do you consult with the library about the online costs before sending out client engagement letters?
  • When conducting online client-related research, do you have a clear understanding about how much the client is willing to pay for these services?

The survey is a modest way to make sure the attorneys understand the firm’s online cost recovery strategy. “They need gentle reminders of what we’re striving to achieve,” says Kaczorowski. “You don’t want to appear heavy-handed and start demanding that they follow certain procedures. Everyone’s constantly hassling them about what it costs to serve the clients.” The survey also helps pinpoint what changes the attorneys would like, such as a new business intelligence unit the firm will soon launch.

Maximize the Firm's Cost Recover Resources

Tools such as QuickView+ can help the library manager be a valuable resource to the firm in its online cost recovery efforts. Customized, flexible reporting can provide a clear, timely picture of how the firm – collectively, by practice groups, by custom user groups, by client or by individual user – is conducting its online research and billing.

Library managers can pinpoint inefficient and incorrect searches with an immediacy and level of detail that wasn’t available before. That information can then be used to correct recurring problems, and educate attorneys on proper search techniques. It can be used to report to senior management on progress in online cost recovery and how the firm is utilizing its research resources.

“I’m a friend, not a foe,” says Berger. “I’m here to help educate the attorneys to be great searchers and to work with the partners to help meet our business goals. It’s important to educate the partners about the importance and effectiveness of online research, and show them we have a sound educational process in place.” Berger makes herself readily available as an educational resource to anyone – partner, associate or even client – who would like a discussion on anything from the firm’s overall online cost recovery procedures down to the charge for a particular research session.

Berger says, “I’m an administrative professional; I shouldn’t be hidden in a corner. I’m very happy to step into a department luncheon and explain the process so that the attorneys feel comfortable explaining it to their clients. And I’m also happy to talk with the clients to explain our research billings. It’s very important to our firm that our clients are billed fairly. Tools like QuickView+ reports help everyone understand the research and billing process.”

Some librarians have used their unique knowledge of research billings to help a firm track practice group cost recovery rates or the return on the firm’s research spending. “You have to be a fiscally responsible director to show management how their money is being spent,” says Kaczorowski. “With tools such as QuickView+, you have what you need to demonstrate return on investment. You can show management where the money is going, how it’s being spent and what they’re getting in return. For example, we can show how much research was spent on client development, and track the new revenues that resulted from those practice development efforts.”

Maximize Use of Your Information Provider Resources

Signing on with an online research information provider means having outside resources to help you. “Have a great relationship with your information provider reps,” says Berger. “We have twice-a-week training sessions set up with our Westlaw rep. It helps our attorneys know what’s out there and how to find it efficiently. We promote these heavily throughout the firm and they’re very well attended. I make sure the computers and other training equipment are set up and ready to go, minimizing any wasted time for the rep or our attorneys.” Additionally, more than a dozen states offer Continuing Legal Education credits for certain online research training, providing an additional incentive for participation.

Berger says it’s also important to encourage attorneys to use information provider resources as needed: “Our information providers have outstanding customer service departments – use them! For example, Westlaw reference attorneys are a fantastic resource – if an attorney is having difficulty with a search, they can lay out the search, run the search, and help judge what makes an effective search on that topic.”

“With excellent tools such as QuickView+, consistently skilled and service-oriented reps, excellent customer support and reference attorneys, West helps us with several key aspects of online cost recovery. These include helping everyone at the firm search more efficiently and bill research correctly, and generating timely, detailed reports so that we can work with management to align our goals with goals for the business.”

Attending a cost recovery seminar or inviting your account manager to help assess your firm’s current recovery policies can also provide a fresh perspective from an outside set of eyes on opportunities to improve online cost recovery.

Effective Online Cost Recovery Benefits Everyone

Library managers should not function as either accountants or “research police.” But library managers do have a tremendous ability to help the firm, its attorneys and its clients in making the best use of online research and, in so doing, enhance the firm’s profitability. Librarians understand better than anyone else in the firm how to conduct efficient searches in the most cost-effective manner. Sharing that knowledge through education, training and other practices can help ensure that attorneys are well educated on effective search and online cost recovery techniques, which in turn helps ensure that clients are getting the best possible service and value.

Effective online cost recovery isn’t just about dollars and cents. “As attorneys become better searchers, they have improved confidence in the practice of law,” says Kaczorowski. “The partners will recognize when they are working with associates that have been well trained. And you have improved client satisfaction by trying to do the best thing for the client.”

Berger agrees, and says the bottom line is: “I want our attorneys to be great legal researchers.”