A multinational insurance company with a large portfolio of asbestos claims faced a puzzling problem: claims activities were decreasing but legal defense costs were not. The claims department implemented a number of common cost-control practices – selecting a preferred panel of law firms, implementing an e-billing system, analyzing spend by jurisdiction/phase/task, discussing cost management with their law firms, etc. – but costs remained inexplicably higher than expected.
The law department turned to us for a new approach. Our team quickly realized that identifying the true drivers of the legal costs was going to require more than simple analysis of e-billing data. First, the team conducted detailed process mapping sessions with all key stakeholders. This exercise identified the case handling and reporting activities each entity performed in sequence. Next, to understand levels of effort by task, the team examined time entries in the e-billing system after scrubbing the data to apply consistent task coding. Our team then created a composite analysis by comparing this data against the process maps, revealing a pattern of work that was either duplicative or added no value. We pinpointed concrete steps to eliminate areas of waste and inefficiency, and identified scorecard metrics and opportunities for alternative fee arrangements that could be deployed to help prevent these issues from recurring in the future.
Our team’s analysis provided our client with a list of concrete steps – eliminating duplicative low-value reporting activities, streamlining excessive document review practices, addressing inefficient staffing – that could be taken to reduce legal spend by over 30%. It also provided a foundation for working more effectively with its outside counsel going forward. Implementing these steps allowed the company to bring its costs under control without incurring the disruption of changing its panel of outside counsel.