Ad Litem Consulting, Inc.

Department and Firm Level Initiatives

Budget Estimation

The Litigation Support Department can be an entrepreneurial dream.

Litigation Support doesn't worry about collecting payments. It doesn't need to make sales calls to drum up more work (although it should). It is similar to a preferred vendor—one that will exist as long as the firm exists, except that the people may change at any moment. This is the mindset the team should adopt.

Litigation Support's single greatest attribute is that the workers and storage capacity can generate revenue for the firm; not only can it generate billable hours, it can (if warranted) take revenue from other vendors by bringing the work in-house. This is not to say that a firm should do so. This environment can be exciting for the entrepreneurially-minded Litigation Support staff—and for a firm’s Accounting Department.

Of course, not all attorneys want to pass Litigation Support billables through to their clients, but instead will tend to "write off the time." Luckily, Litigation Support doesn't actually need that revenue to stay in business. It just needs the financials tracked by the Accounting Department.

Later in this text, we will discuss approaches to take toward billing, cover strategy, and describe how Accounting fits into the Litigation Support game plan. Initially, the following three steps are important to get Litigation Support services on the books:

Step 1: Create vendor cost codes.

If the Litigation Support Department does not yet bill for various services, it can use a selection of actual vendor bills to help the Accounting Department understand which services to track.

Litigation Support needs Accounting to understand how these new codes will help the law firm as a business. If a service such as the processing of electronic discovery uses the same cost code as legal research, the firm is getting a skewed financial picture.

Step 2: Provide codes to all vendors.

Make certain all of your vendors include the required code information on their invoices. If the vendor knows to include the cost code along with other key information, the Accounting Department persons will have an easier time performing their tasks.

Include the cost codes in your firm's Litigation Support Technical Standards document. In this fashion every vendor will always have access to the code and know to include it in all invoices.

Step 3: Use codes on all invoices.

The best vendors will match the law firm's standard. As this includes what information to include on an every invoice, this can naturally lead into steps four and five, accordingly.

Step 4: Start tracking potential revenues.

The 6-month and 12-month accounting reports on these cost codes will help the firm intelligently decide how much funding to allocate for the growth of the Litigation Support Department and the need for services. At the same time, the department will provide storage trend reports. As electronic discovery is data intensive, one must plan for the cost to store this information, whether internally or with a hosting company.

Whether your firm bills for Litigation Support time or not, tracking potential revenue is important. At a certain point, the department may need additional staff. If each person bills 1,000 hours a year, the question centers more upon the ability to meet said hours than increasing firm budgets.

Step 5: Identify lost versus captured revenue.

Now that your firm or practice can identify potential and lost Litigation Support Department revenue, the appropriate firm committee can address the question of whether to bill. They can understand how much the firm spends for any given type of service. It is not uncommon to have a discovery project cost $20,000. This cost may not be sufficient to warrant firmwide change. However, when the firm considers the aggregate cost for ten projects each year, the totals may warrant firmwide change.

Now that your department is able to justify income, it is time to justify expenses. There are certain hardware and software tools every law firm should have. These tools extend from the Litigation Support Department to the legal team. For the team, a second monitor will improve everyone's document review speed. This small cost will greatly improve moral and reduce eye strain. The firm can use the second monitor for all cases. The author's research determined that a second monitor, not simply a bigger monitor, provides a better result.

At the same time, the firm should consider risks and responsibilities before attempting to bring any new services in-house. One cannot deny that the single service of project management on the part of Litigation Support is a vital service and will ultimately impact the case as a boon or a burden.

Department and Firm Level Initiatives

Budget Estimation