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Cost Recovery and Profit Making in Private Law Libraries

Cost Recovery and Profit Making in Private Law Libraries. by LaJean Humphries Library Manager Schwabe, Williamson & Wyatt Canadian Association of Law Libraries May 27, 2008. Agenda. Trends Policies Communication w/ firm management Ethical issues – “pitching cost recovery”

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Cost Recovery and Profit Making in Private Law Libraries

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  1. Cost Recovery and Profit Making in Private Law Libraries by LaJean Humphries Library Manager Schwabe, Williamson & Wyatt Canadian Association of Law Libraries May 27, 2008

  2. Agenda • Trends • Policies • Communication w/ firm management • Ethical issues – “pitching cost recovery” • What you can do • Implementing successful cost recovery • ERM products

  3. Trends • Pre 93-379 library as profit center • Cost recovery struggle • No clear policies • ABA Legal Technology Survey Report – Online Research volume • ALM Survey • http://lawfirminc.law.com/

  4. What percentage of online charges paid to Westlaw and LexisNexis does the firm recover from clients?

  5. Cost recovery by size of firm Number of lawyers at all locations Solo 3-9 10-49 50-99 100+ Bill clients at cost 21.9% 44.3% 53.5% 60% 45.1% Bill clients at cost + premium 2.7% 2.8% 5.6% 5.6% Bill clients at discounted price 2.7% 2.8% 5.6% 7.0% Don’t bill clients for online research 43.8% 26.4% 15.5% 20% 5.6% Source: 2007 Legal Technology Survey Report – Online Research, ABA.

  6. Firm policies – most common • No markups • Discounts passed through to clients • Nondiscounted databases used only for billable work

  7. Firm policies – frequently • Do not recoup costs where: • Online replaces paper • Online replaces duplicate copies • Caselaw retrieval • Citation verification – Shepard’s • Dictionaries • Some treatise collections

  8. Firm policies – increasingly • Policy reflected in engagement letters • Transparent pricing

  9. Communicate with management • Make friends with Accounting • Expense reports • Actual recovery • Make friends with Excel • Make friends with group leaders • Law Firm Accounting 101 (Randall J. Thompson) http://www.aallnet.org/sis/pllsis/newslett/Spring08.asp

  10. Ethical issues • Value of online research • Shareholder decision • Attorneys must communicate clearly with clients

  11. Value of online research • In re Cendant Corp.: “Computer-assisted research is also essential to modern complex litigation.”

  12. But, it costs so much • “We have a healthy respect for the quality of their work, but the only thing worse than passing along the sometimes high cost of CALR is the thought of absorbing the cost ourselves.” (Chicago Daily Law Bulletin, August 31, 1994)

  13. What you can do • Law firm’s history of online research billing • Review ABA Formal Op. 93-379 • Present current status of billing procedure / policy • Look at the bills

  14. What you can do (cont.) • Cost recovery CLE • Present scenarios • Collect results • Present findings to management

  15. Implementing successful cost recovery • Attorney support / buy-in • Realistic expectations • Client validation

  16. Billing • Get it on the bill soon • “Computer assisted legal research, such as Lexis and Westlaw, is used for the direct benefit of our clients, saving a significant amount of time required by an attorney performing the same function manually. We pass on to you only our cost of this service, as reflected above, as a substantial reduction in the overall cost of delivering our legal services.” ”Recover 100% of Online Research Costs” July 20, 2005 (AALL program, Mark Estes)

  17. ERM Products – what they can do • Client-matter validation • Site tracking • ID/password management • Auto-population of ID/passwords • Reports

  18. ERM products – what’s available • Cost Recovery Manager (Lexis) http://www.lexisnexis.com/infopro/training/reference/PracticeMgt/CostRecoveryManager.pdf • Lookup Precision (Advanced Productivity Software) http://www.aps-soft.com/Products/LookUp/default.asp

  19. ERM products – what’s available • OneLog (Info Technology Supply - UK) http://www.itsltduk.co.uk/onelog.asp • Research Monitor (Priory Solutions – UK) http://www.priorysolutions.co.uk/researchmonitor.htm • Areus(Iconitel – US) http://iconitel.com/

  20. Lexis Cost Recovery Manager

  21. Other tools • PowerInvoice (LexisNexis) • Quickview (Westlaw) • Client code, reference number available • Accurint • CourtLink • Dialog • GSI/LiveEdgar • Pacer

  22. Thank you! Questions? Feel free to contact me. LaJean Humphries, Library Manager Schwabe, Williamson & Wyatt lhumphries@schwabe.com503-796-2071

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