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By Mark Lieb | Ad Litem Consulting
October 2005
This article discusses the philosophy behind taking a business approach to Litigation Support Department operations. If one is to evaluate any business, the first step is to consider which goods and services to track, and how to use the resulting reports.
Any financial analysis of the Litigation Support Department should evaluate the department as if it is an independent company -- as if it is a vendor to the law firm rather than an internal support group. This is because the department should operate exactly as a business. Only through this method can the department provide the highest level of goods and services to each legal team and the lowest operational costs to the law firm and clients.
The Litigation Support Department should charge for time (technical and project management), hosting (storage) and the products they manufacture, such as CDs. It is in the best interest of Litigation Support to track the accounting numbers associated with each good or service. This is because the head of the department will use accounting reports to argue for investment by the firm in additional hardware, software and people. The law firm is a business, after all; the people running the business use financial numbers to help make budget decisions. Other types of reports, such as billable time show whether there is enough work to allow the resource to pay for itself. A nominal charge for hosting information can pay for additional storage and backup hardware. The revenue reports illustrate the department's ability to actually pay for these resources.
Proper tracking of goods and services provides the Litigation Support Department with ancillary benefits. As an example, through the use of accounting cost codes, the department can identify attorneys who are contracting services without the involvement of the Litigation Support Department. The department can also negotiate better rates with preferred vendors based upon the total amount spent to date.
In firms where accounting does not use cost codes for litigation technology goods and services, partners may be surprised by how much money these expenses, added together, actually represent. It is possible that a firm annually buys $500,000 of a litigation good or service which Litigation Support Department technicians could produce internally for a one-time investment of $300,000 and annual reinvestment of $100,000 by the firm. Through financial reports and some research, the department can make the argument for either investment by the firm to provide a good or service internally or better rates with preferred vendors.
Financial reports show trends which are critical for the proper management of the department. Rapid change is expense. Planned change is less expensive. If the department knows it has 6 more months of storage capacity left, the IT Department can plan and schedule an upgrade project. It does not matter whether Litigation Support line items, such as hosting, are removed from every client bill. The department will not go bankrupt. What does matter is the proper tracking of financial information. Depending upon growth patterns, the department can estimate budgetary and resource needs for the next year.
When each resource pays for itself, the question of whether to add resources centers upon use, not budget. In a law firm where there are many practice groups in addition to Litigation, one must also consider whose money should pay for those additional resources which only the Litigation group will use. It is possible to have the Litigation Support Department pay for itself and these resources through billing for goods and services.
To learn more about these best practices and how to implement them within your practice, please visit the http://www.Litigation-Support.info web site. Mr. Lieb's book, Litigation Support Department, provides a template for the department and how to consistently provide top quality support to each case, from pleading to trial.
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