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Solo and Small Law Firm - COST RECOVERY

Solo and Small Law Firm - COST RECOVERY. ABA GP/SOLO MEMBERSHIP SURVEY RESULTS. Objectives. This research was intended to gather information to better understand current cost recovery practices and challenges in small law firms. The objectives of the research were to:

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Solo and Small Law Firm - COST RECOVERY

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  1. Solo and Small Law Firm - COST RECOVERY ABA GP/SOLO MEMBERSHIPSURVEY RESULTS

  2. Objectives This research was intended to gather information to better understand current cost recovery practices and challenges in small law firms. The objectives of the research were to: Identify which components of cost recovery costs are recovered Understand which costs are not recovered Determine who at the firm is involved in the recovery process Identify tools and products used to recover online research costs Discover what aspects of the cost recovery process are difficult 2

  3. Survey Background Survey was open from April 23 – April 28th, 2008 A total of 585 respondents completed the survey Response rate - 6%. 3

  4. Findings

  5. ONLINE LEGAL RESEARCH SUBSCRIPTION SERVICES 2/3 of respondents subscribe to Westlaw or Lexis 66% 1/4 do not subscribe to OLR services n=582 5 To which paid legal research services does your firm subscribe?

  6. COST RECOVERY PRACTICED 1/2 of respondents attempt to recover all or part of their online legal research costs n=417 6 Does your firm attempt to recover online research related costs by billing all or part of it back to clients?

  7. Cost Recovery - Practiced

  8. COST RECOVERY PRACTICEDCOST RECOVERY POLICY Nearly 1/2 review costs on client by client basis, while 1/4 attempt to bill back all costs to clients n=209 Base = those who attempt to recover online research costs 8 Which statement best describes your firm’s cost recovery policy for online research expenses?

  9. COST RECOVERY PRACTICEDCOMPONENTS INCLUDED IN COST RECOVERY Most respondents include out of plan charges and document retrieval as part of their legal research costs. n=194 Base = those who attempt to recover online research costs 9 What components of the legal research costs are included in your firm’s cost recovery efforts?

  10. COST RECOVERY PRACTICEDPERCENT OF CHARGES RECOVERED On average respondents recover about 2/3 of the online subscription charges or out of plan charges they bill to clients Overall, about what percentage of actual (Westlaw/LexisNexis) online subscription charges does your firm recover from clients? Mean: 62% n=76 Base = those who attempt to recover online research costs and include online subscription charges in their cost recovery efforts Overall, about what percentage of actual (Westlaw/LexisNexis) out of plan charges does your firm recover from clients? Mean: 67% n=156 Base = those who attempt to recover online research costs and include out of plan charges in their cost recovery efforts 10

  11. COST RECOVERY PRACTICEDPRIMARY LEADERSHIP FOR SETTING AND MANAGING COST RECOVERY POLICY Partners are most commonly involved in setting and managing the policies around cost recovery. n=210 Base = those who attempt to recover online research costs 11 Who at the firm is involved in setting and managing the policy for online cost recovery?

  12. COST RECOVERY PRACTICEDFACTORS CONSIDERED FOR COST RECOVERY Over 1/2 indicated that an attorney’s experience at other law firms was considered when setting their cost recovery policy n=190 Base = those who attempt to recover online research costs 12 For each of the following statements, please indicate whether or not the factor was considered when setting your firm’s cost recovery policy.

  13. COST RECOVERY PRACTICEDCOST RECOVERY TOOLS Tools developed in-house are the most commonly used cost recovery tools, 1/4 of respondents also use QuickView+ n=190 Base = those who attempt to recover online research costs 13 Which of the following cost recovery tools or software are currently used at your firm for online legal research?

  14. COST RECOVERY PRACTICEDCOST RECOVERY TREND OVER PAST 2 YEARS About 1/4 indicate an increase in costs recovered. Most firm’s recovery rate has remained the same over the last two years. n=189 Base = those who attempt to recover online research costs 14 Compared to two years ago, would you say the percentage of online research costs recovered by your firm has increased, decreased or remained the same?

  15. COST RECOVERY PRACTICEDREQUESTED COST RECOVERY TOOLS Firms that do practice cost recovery would find ABA guiding principles, articles or white papers, and market research beneficial tools to help with their cost recovery strategy and processes. Base = 200 15 Which of the following would help you with your cost recovery strategy and processes? (Firms that practice cost recovery n=171)

  16. Cost Recovery – NOT Practiced

  17. COST RECOVERY NOT PRACTICEDREASONS FOR NOT PRACTICING More than 1/2 respondents cite their firms do not recover online legal costs because it is tradition not to charge, or to maintain relationships with clients, or the time and cost for billing and tracking is not worth it. n=197 Base = those who do not attempt to recover online research costs Thinking about the reasons your firm does not recover online legal research costs; indicate your level of agreement with the following statements. 1 – 5 scale where “1” means strongly disagree and “5” means strongly agree. 17

  18. COST RECOVERY NOT PRACTICEDREASONS FOR NOT PRACTICING n=197 Base = those who do not attempt to recover online research costs Thinking about the reasons your firm does not recover online legal research costs; indicate your level of agreement with the following statements. Please use a 1 – 5 scale where “1” means strongly disagree and “5” means strongly agree. 18

  19. COST RECOVERY NOT PRACTICEDLIKELIHOOD TO START COST RECOVERY 15% are likely to start recovering costs. Most Overhead SLF firms are not likely to shift to Recovery Model in next 2 years n=199 Base = those who do not attempt to recover online research costs 19 How likely is your firm to start recovering online legal research costs in the next two years?

  20. COST RECOVERY NOT PRACTICEDHELPFUL COST RECOVERY TOOLS Firms that do not practice cost recovery would find ABA guiding principles, articles or white papers, and market research beneficial tools to help with their cost recovery strategy and processes. Base = 200 20 Which of the following would help you with your cost recovery strategy and processes? (Firms that do not practice cost recovery n=29)

  21. SUMMARY OF KEY FINDINGS Two-thirds subscribe to legal research services through Westlaw/Lexis Half of respondents attempt to recover all or part of their online research costs. About half review costs on a client by client basis Majority of clients include out of plan charges and document retrieval as part of their recovery efforts Two-thirds of online subscription charges or out of plan charges are recovered Typically partners are involved in setting / managing policies around cost recovery One-fourth indicate an increase in costs recovered over the last two years One-half said their costs recovered have remained the same over last two years 21

  22. SUMMARY OF KEY FINDINGS (cont.) For those who do not recover, common reasons include: Have never charged for research costs Maintain relationships with their clients Administrative time and costs involved Noteworthy: Firms that practice cost recovery and firms who currently don’t practice both state they would benefit most from: ABA guiding principles Market research Articles or white papers about cost recovery 22

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