Today, Aderant, a leading global provider of legal business software solutions, published the results of its 2021 Law Firm Leader Survey on compliance and billing. The survey results offer a look into the struggle among law firms to meet increasingly complex client compliance and billing requirements, often referred to as Outside Counsel Guidelines (OCGs). Marie Burgess, Senior Director of Product Management at Aderant, stated, “Compared to the 2019 OCG Survey figures, firms definitely received a larger number of OCGs throughout 2020 and into 2021. Across its law firm clients, Aderant is seeing an increase in the prioritization of OCG compliance and eBilling driven by the customer requirements of each firm.”
The survey indicated that the volume and complexity of OCGs overwhelms law firms. Nearly half of the firms surveyed indicated that they received 10-50 OCGs from January of 2020 to March of 2021, while 35% had received 50 OCGs or more. The constant flood of new and updated OCGs creates confusion and is negatively impacting communication between clients and law firms. Almost half of firms do not have the number of staff needed to handle client guidelines. Nearly two-thirds of firms said they have pushed back on clients’ guidelines, and 37% of firms said OCGs made client communication more difficult.
Commenting on the survey results, Burgess noted, “The top challenges named by law firms in this survey confirm what we at Aderant are seeing. The OCGs are getting more complex and voluminous. Firms are dealing with more scrutiny of bills from clients and demands to provide granular detail to back up invoice charges. For example, it’s no longer enough to say a lawyer was ‘traveling’ for 2 hours – some OCGs require specific start and end times for the trip and verification in writing. Firms have to document everything, and it’s a real challenge.”
More Survey Highlights:
Firms Seek Better Technology and Visibility into Client Requirements
When asked what they needed to improve OCG compliance, billing, and eBilling at their firms, respondents ranked “better technology for law firms in order to comply” first and “more law firm visibility into what the corporate legal department really wants” second. Firms rely on internal structures and technology solutions to meet client compliance requirements, but while 90% had a process to review, analyze, and document OCGs as they come in, only 81% had a process to review, analyze, and document updates to existing guidelines.
Many Lawyers Unaware of Relevant Client Guidelines
The survey revealed a big disconnect; while the billing department was primarily responsible for OCGs, lawyers were not always made aware of what those OCGs were. Many responding firms admitted to distributing guideline summaries or posting the guidelines/summary to the firm’s intranet or document management system (DMS) “hoping” that the lawyers would read it. Only 32% of firms were confident that more than 50% of their lawyers actually know the guidelines for their matters.
OCG-Related Payment Delays Exacerbated by COVID-19
Survey respondents selected client-initiated delays in payment as the top challenge related to OCGs. A majority, 58%, cited lengthened billing/collection cycles due to OCGs, and two-thirds of that cohort reported the cycles had increased by 60 days or longer. Making matters worse, the COVID-19 pandemic correlated with increased client requests for discounts, decreases, or freezes for one-third of respondents.
Pattern of Increases in Client Billing Rejections and Reductions
Law firms using eBilling stated that the top three reasons cited by clients for billing rejections or appeals were: 1) vague descriptions, 2) multiple lawyers performing the same task, and 3) lawyers performing clerical tasks. 38% of firms said that on average, over one-fifth of their bills are rejected or reduced by clients. Half of firms using eBilling appeal over 30% of reductions and rejections, and 20% said they appeal everything. Not only are firms putting in extra work to understand and meet their OCGs, but they are also spending more time in the billing department fighting for their payments.
“Law firms are buckling under the strain of compliance requirements like OCGs, which are negatively impacting their finances and client relationships,” said Chris Cartrett, President of Aderant. “Since OCGs will inevitably increase, firms must begin to get them under control now. Aderant is focusing substantial development resources on easing the compliance burden for firms. For example, Aderant OCG Live with iTimekeep minimizes billing rejections, reductions, and write-offs, ensuring compliance with OCGs at the point of time entry. Aderant is committed to helping our clients successfully comply with OCG requests so that those firms can remain profitable and efficient.”
Click here to request the full report on the results of Aderant’s 2021 Law Firm Leader Survey on compliance and billing. For more information on Aderant compliance and eBilling solutions, visit Aderant.com.
Aderant is a global industry leader which provides comprehensive business management software for law firms and other professional services organizations. The company’s popular technology brands include Aderant Expert for practice management, Handshake and Drive for knowledge management, iTimekeep, OCG Live & Thrive for timekeeping and compliance, BillBlast for eBilling, CompuLaw for docketing and calendaring, and Expert Case for legal case management. Aderant operates as a unit of Roper Technologies (NYSE: ROP), a constituent of the S&P 500 ®, Fortune 500 ®, and the Russell 1000 ® indices. The company is headquartered in Atlanta, Georgia, and has several other offices across North America, Europe, and Asia-Pacific. For more information, visit Aderant.com, email firstname.lastname@example.org, or follow the company on Twitter @Aderant or LinkedIn.