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Market Update - Legal

Posted by Manoj Kamath on 2 May 2018

Study Shows Opportunities from Cost Recovery

 

          While there have been a number of industry surveys over the years on expense data capture, when we study actual law firm capture and billing rates, the results were quite astounding. By analyzing what firms actually do rather than what they say they do, we have found that the reality does not stand up to  the perception of business owners at law firms. 

There is more revenue to be gained!

          A study pulled data from 152 different law firms worldwide (75% North America, 15% Europe, 10% Asia-Pacific). All of the firms included in the study captured basic photocopy information. While the study could not explicitly reveal what happens after capture data reaches the firms' time and billing systems (for example, we are unable to reveal either the firms names or the number of instances where partners choose to write off photocopy charges due to NDA restrictions), they were able to analyze and publish the rates that firms were charging their clients. In the case of basic photocopies (black-and-white copies at firms that differentiate) the median rate charged is $0.20 per copy. Almost all firms (90%) charge between 10 and 35 cents per copy.

         Most firms are missing opportunities, from color copies. For the record, even a single line or symbol in color, constitutes a color copy (because in many cases, the image is a composite of all 4 colors). While more than 50% of firms differentiate between color and black-and-white copying, the remaining firms are leaving money on the table and almost everyone is missing the charges for color as strictly defined by printer manufacturers and indeed as understood by the printer. The median rate charged for color copies is $0.60 per copy, a 330% increase over the charge for black-and-white. That is 20 cents lost on every print that has even a few pixels of color, adding up to about $500 in revenue every month for a firm that prints 10,000 pages with 30% of them having color on them!

Solution: We, at Xerox, can tailor a solution to effectively capture Color and Black-and-White prints, performed for a matter, by client, with 99.99% accuracy. An itemized bill with a lower base charge will make your firm more competitive by charging clients where due.

 

A New Revenue Stream?

          The study found that as technology has evolved, so has the way that firms create documents. A few years ago, it was most common for an attorney or other user to print a single document and duplicate it by making photocopies. Today, however, firms use multi-function devices (MFDs) to print and copy. There is no more any advantage to "print-one copy-many" and people simply print the quantity they think (!) they need, which might lead to leaking profits (read: excess paper and excess toner usage, more wear and tear increasing service costs, for starters). Ten years ago, firms were on average making 7 copies for each print; today they are printing 50% more than copying. As such, it is crucial to capture and recover for prints, and most firms are doing so. More than 76% of firms are capturing print information and charging at an average of $0.18, similar to the rates charged for copies.


         About 73% of the firms surveyed admitted that they did not charge for scanning and storing documents related to their client's matters. While the multi-function device uses energy, labor, parts to scan, most legal firms tend to distribute the overall device charges across clients. This in turn, increased negative perceptions amongst base clientele who need a simple signature or attestation, that lawyer fees are unusually high. Charging to securely digitize and save for perpetuity, is perhaps the biggest opportunity out there. Firms have real costs associated with scanning, including storage, software and device costs, so it is defensible to charge for scanning. However, only about  28% of firms do this currently. The most common defense, the study found, was cost of damages.


Solution: We, at Xerox, can tailor a solution to effectively capture scanning services, performed for a matter, by client, with definitive accuracy. An itemized bill with charges for "secure digitization" will make your firm more competitive by charging clients, where due. Secure Digitization can also effectively counter the argument against damages.

 

Capture. Analyze. Ask. Earn.

         Not recovering chargeable costs is called "financial leakage" and it has an adverse impact on profitability. Not even capturing the information completely prevents the opportunity to recover and inaccuracies in collection can limit the opportunity to make good decisions. We are confident that small business owners more than anyone else, understand the value of data to inform better decisions.

        The first rule of doing good business is to capture all possible expense related information. In addition to prints, copies and scans, capturing expenses related to fax, phone, postage, shipping, and research.  In most cases, these expenses can be directly billed to clients in an itemized format and in other cases the data can be used to build goodwill with clients because you are not charging!

        Once all data is captured, it should also be processed into information that can be acted upon. For example, certain clients may be generating a lot revenue, but in order to understand how profitable they are leakage from the above pointers (and others) must be taken into account. Your biggest revenue generators also generate the maximum paperwork. Many clients are asking for alternative fee arrangements, and they can be a big marketing advantage for the firm. But they cannot be properly priced without full cost-related information.

        From an operational standpoint, is your firm using the right type, make and number of devices? Are they configured and located optimally? Are the right projects being sent to the right client's historical archives? These are the types of questions that can be answered with complete capture of expense information, even if there are costs that cannot be recovered.
Contemporary law firms require a more client-centric approach than firms have taken in the past. Some say this is incongruous with cost recovery: some say that "cost recovery is dying."

       But the data garnered from our study tells a different story. Cost recovery is still an important element in a firms' profitability. And there is opportunity for more, both in terms of additional recoveries as well as the value that can be created from leveraging the information that can be captured in the process.

Solution: Start putting those currently unclaimed funds in the bank and let those you cannot claim, add to your goodwill. Ask me how! Call Manoj  @519-974-3028 x6093 for a no cost, no obligation Office Technology Assessment today.

Author: Manoj Kamath
About: Manoj works with the legal community in Windsor, Essex, Chatham-Kent and Sarnia to provide the best of technology innovation to boost legal productivity and lower lifetime costs, making legal eagles more profitable making the world go around even more smoothly, in Windsor-Essex.
Connect via: LinkedIn
Tags: Lawyers Legal Community Technology Updates GDPR General Data Protection Regulation

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