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Streamlining Legal Service Data with Phase Codes

Any serious attempt to ensure efficiency in legal services requires analysis of reliable data. One approach is to analyze time entries. But anyone who has attempted to review an invoice for legal services with each lawyer’s time narratives will understand that it can be an exercise in mind-reading. The client and matter are clear, and perhaps it is evident that the timekeeper was doing something to reach a goal. Beyond that, however, the narrative will either be too specific or too vague to be illuminating (e.g, “worked on Smith documents; analyzed options for resolution; met with opposing counsel — 6.4 hours”).

This process is frustrating. Uniformity in descriptions and standards in classification is critical, so that we can benchmark the costs of different matters. This effort is already well underway through SALI, a not-for-profit organization that aims to standardize legal services. While their work proceeds, it is nevertheless critical to examine how to capture meaningful data immediately for your company.

Fewer codes provide more useful information

Many code sets have been created, and they all describe the work involved in handling a matter from a process perspective with the progression of work divided into phases (e.g., early case assessment, trial, conduct due diligence; negotiate document), tasks (e.g., issue litigation hold: review real estate leases), and activities (e.g., conference call with opposing counsel). Many are difficult to use.

Fewer codes are better, and it is preferable to start by gathering data only at the phase level. This approach is reflected in the UTBMS Codes for Merger and Acquisition Transactions that were developed by the Task Force on Legal Project Management in the Business Law Section of the American Bar Association. The working group that I chaired sought simplicity and completeness in data collection that is aligned with the way practitioners actually handle matters. It is broad enough to cover most deals, regardless of size, complexity, or jurisdiction. Over time, we expect that well-defined needs for more detail at the task level will emerge. For example, it may be useful to understand how allocating work among different service providers (law firm, law department, accountants) might reduce the cost of due diligence.

[Related: Sign of the Times: The Rise of Managed Legal Services]

Using only phases is a radical departure from the structure of many other code sets that require granularity without regard to the utility of such information. Although interesting information may emerge, it has been at the sacrifice of data quality. Many large e-billing vendors report that in using various litigation code sets 80 percent of the time is entered in one of three categories and frequently incorrectly. Quality data through accurate and simple time-recording with fewer codes should offset the interest in collecting data for its own sake.

Instead of using task codes at the outset, we recommend phase codes. They provide the context for individual time entry narratives within the larger story of the legal matter. When codes are used both to construct a matter budget and analyze the team’s progress, it becomes much easier to determine if the matter is on track, if its scope is changing, or if assumptions that were made at the outset continue to be valid.

[Related: The General Counsel’s Manual on Leading a Legal Team]

The sooner the lawyer in charge of the matter receives this information, the greater the opportunity to manage it efficiently in real time, and report status or provide feedback with confidence to those who need it (e.g., external counsel, the in-house lawyer, legal operations, and the business client). With accurate data on the work completed and outstanding items, the matter team can make adjustments to meet deadlines, manage work to budget constraints, and minimize surprises.

Consistency, compliance, and communication

Codes enable the client and legal service provider to embrace a common vocabulary for describing the work. This is the first step in ensuring that the client’s goals are reached, that the fee reflects the client’s perception of value, and that the matter is profitable for the legal service provider.

Like any taxonomy or standard, codes only provide value if everyone uses them the same way. This requires the legal team (comprised of both the in-house counsel, legal operations manager, or other point person and the legal service provider) to confirm explicitly their understanding of how the codes should be applied:
1. What are the phases of work that are reflected in the code set?
2. What work (tasks) is contemplated by each phase to achieve a successful outcome?
3. What is the appropriate level of detail for capturing information about the work? Is there language that is particularly useful — or too opaque to provide adequate guidance.
4. Will using the the framework to clarify assigning roles and responsibilities among legal team members and other participants in the matter?
5. If we have experience using a code set, what adjustments should be made? Should more granular information be captured for some or all of the phases?

Practical considerations for inside counsel and legal operations

Whether codes are required in e-billing or not, they provide a basis for analyzing data. Some have suggested that artificial intelligence (AI) applications eliminate the need for codes. But if there are no codes, how should the data be organized when it is analyzed? Time records may be analyzed through word search techniques without UTBMS codes, but a consistent taxonomy is needed to evaluate timekeeping records to determine what happened, when it happened, and what it cost. At the outset of a matter, it is essential to have a kick-off meeting so that there is a common understanding of how the matter may evolve according to typical patterns and where there should be planned checkpoints to assess whether the assumptions continue to hold and adjustments are required.

[Related: How Aon’s Operations Team Elevated Their Legal Department]


In-house counsel should also consider the phase structure, even when timekeeping and outside counsel are not involved. The language of phases provides a communication framework on status. It also helps address the issue of how to assure the best use of corporate resources so that lawyers are not involved when others in the law department are more cost or time-efficient or when the work should not be done in the law department at all.

Conclusion

Codes are fundamentally about communication. And only with effective communication can we get everyone on the same page: participants and stakeholders have a vocabulary that provides better visibility into the work that is performed, lawyers have insight into what they are doing in the context of the matter, and both law firms and their clients are better able to manage the business of law.

Portions of this article appear in Leventon & Horst-Martz, Best Practices for Using UTBMS for Merger & Acquisition Transactions (Createspace 2017). To purchase the paperback, visit www.amazon.com or for the ebook, click here. Reviews of the book appear at www.aileenleventon.com

About the Authors

Aileen LeventonAileen Leventon is a former in-house counsel and law firm associate who consults both law firms and law departments. She is a principal at Edge International.

Jenny Anne Horst-MartzJenny Anne Horst-Martz is the process improvement manager, legal services delivery at Hogan Lovells LLP, and holds a JD and a PMP.



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