cost recovery : the basics

1. Cost Recovery: The BasicsA NPCI Webinar
February 12, 2009

2. Todays Speaker
Nina Platt
Principal Consultant
Nina Platt Consulting, Inc.

3. Agenda
Trends in Cost Recovery
Budget
Electronic Resource Management (ERM) Tools
Disbursement Management
Tracking Progress
Communicating to Firm Leaders

4. Trends in Cost Recovery
Movement towards not charging clients
vs.
Firm decision to continue charging

5. Current Trends in Cost Recovery AmLaw 2008 Survey
Recovery of online research costs increasing

6. Current Trends in Cost Recovery AmLaw 2008 Survey
3% of firms do not recover online costs

7. Trends in Cost Recovery ABA Survey
39.7%
35%
21.4%
5.2%
2.1%

8. Trends in Cost Recovery Expert Interviews
No significant change in the near term
Movement to not charge for online services over time (10-20 years)

9. Trends in Cost Recovery The Value of Online Research
What contributes to the devaluing of information?
Lawyers arent taught to value research in law school
Lawyers want to be seen as experts who have the answer
A whole lot of waffling on the decision to charge clients

What contributes to the devaluing of information?
Law firms dont communicate openly with clients about the value
Clients have no trust in how the research is being invoiced
Clients wont pay for services they dont value and invoices they dont trust

How can lawyer behavior be changed?
Discussions with leadership team with group leaders
Creation of transparent pricing policies
Individual discussions with lawyers
Presentations at practice group and team meetings
Lawyers providing message to clients

How can client behavior be changed?
Partners having the value discussions with their clients
Engagement letters that include transparent research pricing policies

13. Budget
Face the responsibility w/o authority dilemma
Budget your projected recovery against expense to create the % of costs you hope to recover
Depending on individual firm needs and vendor bill groups, this budget may be split out by office, practice group, etc.
Set up accounts for each service where you plan to recover costs

14. Budget Example
GL for use in paying expense and another for dispersing costs

15. BudgetExample
Percentage expected to recover

16. Budget
Set up two accounts
The two accounts should be related to be able to report on the recovery against cost
Work with your accounting department may have alternative ways of setting this up depending on software and firm processes, policies, and procedures

17. Budget
Work with Pro Bono to budget use of research services
Handled differently at each firm
ProBono team may have their own budget
Lexis vs. Westlaw

18. ERM Tools The Players
Lookup Precision (Advanced Productivity Software - US) This is not a West product.
OneLog (Info Technology Supply, LTD UK)
Research Monitor (Priory Solutions UK)
Cost Recovery Manager (LexisNexis US)
Research Agent (sold to nQueue and taken off the market)

19. ERM Tools Market Penetration
Survey of NLJ 250 with 100 firms responding regarding the use of cost recovery tools
37 out of 100 firms have purchased the software
51 out of 100 firms plan to purchase in the near future
If other NLJ 250 firms follow suit, 88% of that population of law firms will be using this type of software.

20. ERM Tools - Market Distribution

21. ERM Tools The Features and Functionality
Site tracking
Client/matter validation
User id and password management
Auto-population of user ids and passwords
License management
Reports
Usage reports
Cost recovery reports

22. ERM Tools Past Issues
Difficult to set up
Limited reporting
Desktop plugins

23. ERM Tools Use in Practice

24. Disbursement Management Vendor Tools
West Quickview +
Lexis Power Invoice
PACER
Dialog
Others?

25. Resources
Westlaw Cost Recovery Solutions
Lexis
Lexis Power Invoice
Library Relations Article
LexisNexis Cost Recovery Manager

26. Disbursement Management - Vendor Tools
Use of macros
Uploading files to Accounting
Cost recovery vendor solutions e.g., Equitrac Online Services Module
Providing backup
Power Invoice Enhanced report
Quickview + - Target options

27. Tracking Progress Reports, Reports and more Reports
Internal library reports
Maintain payment history in library system or spreadsheets
Report on how payments were broken out from month to month (e.g., out of contract vs. in contract)
Report predicted recovery based on billable vs. non-billable in usage reports

Internal accounting reports
Reports for each unit (office, group, etc) and resource being tracked - monthly
Clients who are not charged or where research has been discounted - quarterly
Write-offs and non-billable charges in spreadsheet format with clients, lawyers and practice groups included in report quarterly
Exceptions report - monthly

Vendor reports
Quickview + and PowerInvoice reports
Outside of contract details monthly, quarterly and annually insist on spreadsheet format
Use to determine what resources to add to contract
Do not add outside contract content that can be passed on to client (e.g., briefs)

30. Communicating Recovery to Firm Leaders
Dont be surprised
Call leaders or accounting to discuss issues the reports unearth
Call group heads to discuss non-billables or exceptions
Treat write-offs with care

31. Conclusion
Cost recovery is here to stay for now
If beliefs dont change, we will continue to struggle in recovering costs
If we do change beliefs, we will be contributing to the firms bottom line

32. Questions? Need Help? Contact Us
Nina Platt, Owner, Principal Consultant
[email protected]
Carrie Long, Research Analyst
[email protected]
Emily Harder, Office Manager
[email protected]

33. Contact Us for More Information
Nina Platt Consulting, Inc. (NPCI)
[email protected]
Call us: 612-235-7485
Visit us on the web: www.ninaplatt.com
Read our blogs:
http://strategiclibrarian.com
http://lawfirmintranet.com
http://electronicresourcereview.wordpress.com

cost recovery : the basics

Business