Legal is a Manageable Expense
There are fundamentals to managing any professional service: communicated expectations (policy) on what is and is not billable, agreement on acceptable rates and expense reimbursements, a means to monitor timekeeper activities and extent of compliance with your policy and a means to identify areas for improvement - to be reflected in future policy.

To establish policy you need norms and standards to base expectations upon. For legal services these norms and standards can be found within the American Bar Association’s Model Rules of Professional Conduct (MRPC) and its significant case history, negotiated terms and conditions, and your organization’s established business norms. The MRPC speaks to the business relationship of attorneys and clients, its case history has established that business norms apply to the profession of law. This means expectations in the business relationship between the law firm and their clients are the same as with other non-legal professional services.

Beyond policy, to effectively manage a service you need a means to account for time and dollars spent and a means to categorize activities for analysis and comparison. For legal this means is found again with the American Bar Association. The American Bar Association, in collaboration with Price Waterhouse and corporate counsel, established a system of accounting codes to categorize and label legal activity. By “tagging” activities and tasks of the timekeeper, you are able to group costs and time spent on identifiable actions. This allows you to analyze time and cost spent on a particular activity and establishes the basis for greater comparative analysis of two or more firms, allowing you to benchmark services and identify best practice.

The keys to managing the business relationship with the service provider is to establish and communicate policy on billable activities, monitor their compliance with established policy, analyze their fiscal and practice activities for effectiveness and adjustments to policy. This can easily be accomplished within the business of law, without disrupting the special relationship with outside counsel or negatively affecting outcome.