Outside counsel guidelines: 7 things you might have missed

Outside counsel guidelines (OCG) vary widely by company and sometimes span hundreds of pages, theoretically covering every possible situation that can arise between in-house and outside counsel. But in reality, longer, more detailed guidelines aren’t necessarily better for the company. In fact, most firms (66%) find that OCG are too complex, making compliance difficult. Having documented guidelines is only useful if outside counsel actually reads them and complies.

However, if executed properly, outside counsel guidelines are a valuable tool, particularly for spend management and controlling billing processes. There are a few often-overlooked features you should include in your OCG to make them clearer and more effective, such as automatic invoice rejections and a designated supervising attorney.

We’ve included seven aspects that, if included in your OCG, will help improve both your billing process and the relationship between your in-house team and outside counsel.

1. Actual Guidance

Outside counsel guidelines are intended to be guidelines, not a one-sided list of demands from in-house teams to their outside counsel.

In-house teams often cause issues themselves by continuously adding to OCG for several years. Over time, they become a series of requirements that just attempt to prevent abuses the company has suffered in the past. But as guidelines get longer, they become less effective—40% of firms think OCG actually make it harder to communicate with the client.

For outside counsel guidelines to be effective, they need to be instructional and useful for all parties. OCG should help both sides understand and agree to processes and keep everyone on the same page.

Remember, OCG are not contracts, but rather outlines for a communicative and productive relationship between in-house teams and outside counsel. Take this excerpt from a CLOC sample template, for instance:

“[insert company name] believes in innovation. It is one of our core values and is a trait we not only expect from ourselves, but from our vendors and partners. We believe that pushing past traditional methods of billing based on an hourly rate and instead working towards alternative fee arrangements (AFAs) will lead to a longer, more engaged and predictable relationship with outside counsel.”

This clause outlines the philosophies of the company and billing preferences as related to those values, rather than laying out a strict rule.

When writing your OCG, focus on guidance. Use your OCG to describe the role of outside counsel and explain how adhering to the requested processes will help maintain a better working relationship between your team and theirs.

2. Automatic Invoice Rejections and Reductions

If your in-house team automates aspects of invoice processing, your outside counsel guidelines should explain the circumstances where invoices would be automatically flagged, rejected, or reduced.

With SimpleLegal, you can set up rules using UTBMS codes to manage invoices. For example, you can set a limit stating that a particular UTBMS task code can only be billed for X hours or X dollar amount. If someone submits an invoice over-billing, then the invoice can be automatically reduced or rejected.

You can also use SimpleLegal to automatically flag an invoice for manual review. By setting rules for when an invoice should be flagged, you can help the manual approver by directing them to a specific issue, such as an unapproved UTBMS code or unauthorized timekeeper.

Detailing your automated invoice flagging, rejection, and reduction process can ultimately help you manage your budget and time more efficiently. More than 43% of firms have around 5-10% of their invoices reduced or rejected, and more than a third of firms have 21% or more of their invoices reduced or rejected.

Outside firms are accustomed to invoice adjustments, but they’ll be happier with the relationship if they have clear guidelines to follow that help them keep those issues to a minimum. With the help of clear guidelines and automations, your in-house team can spend less time watching out for over-billing while still sticking to the agreed-upon budget.

3. Designated Supervising Attorney

Designating a supervising attorney gives your outside counsel a specified point of contact (POC) and ensures that someone is overseeing the relationship.

Naming a POC ensures all documentation, invoices, requests, and casework will go through the same person in your company. Funneling all your communication to one source helps reduce the likelihood of anything getting lost in the wrong person’s inbox.

Use your outside counsel guidelines to designate both the supervising attorney and what information/processes should be directed to that person. There’s no need to be overly detailed—this clause can broadly state that all communication goes through this specified POC.

CLOC’s OCG template communicates this in just two sentences: “[insert company name] will assign a supervising attorney to each matter (“Legal Contact”). Unless otherwise agreed to by the Legal Contact, all communication between outside counsel and [insert company name] personnel should be made through the designated Legal Contact.”

The easier you make it for outside counsel to understand the process, the more likely they will follow it.

4. Appeals Process

Detailing a standardized appeals process makes it simpler for your company to sort through and address appeals, particularly if you work with multiple outside firms.

Let outside counsel know how they should submit an appeal by getting ahead of questions such as:

• Where should appeals be sent?
• Is there an automated appeals process they need to follow?
• Is there a specific set of information they should include?
• What is the in-house team’s timeline for reviewing appeals?

Clearly outlining how to submit appeals prevents your team from having to sort through different types of these requests for each outside firm. Many firms still rely on outdated processes like redlining with pen and paper or making notes in Excel spreadsheets. Providing outside counsel with the guidance they need to submit an appeal in your preferred format helps speed up the entire appeals process.

5. Budget Forecast Timeline

A budget forecast timeline requires outside counsel to submit detailed budget forecasts, which helps your company stay on top of accruals management.

Your outside counsel guidelines should define a deadline for firms to submit a budget forecast (e.g., within 10 days of opening a new matter) so they can plan accordingly and document the necessary information.

Remember, these guidelines need to serve both sides, so be sure to specify a timeline for your in-house team to review and approve the budget as well. Establishing expectations reduces the chances of conflict if the budget requirement comes up after invoices have been sent.

Requiring budget forecasts also makes it easier for you to stay on top of accruals and design your budget based on anticipated invoices. Plus, you can use this section of your OCG to detail the process and format for submitting budgets so they are easier to track and organize. With SimpleLegal, you can improve your legal billing process even further by automating the accruals process and tracking unbilled estimates.

6. Easy-to-Read Summaries

No matter how well-crafted your outside counsel guidelines are, they are only useful if the outside firm’s attorneys read them. Including a solid summary increases the chances that your guidelines will be read and followed.

A staggering 43% of firms don’t read OCG because they are too long and contain too much information. Prevent information overload by including a brief, easy-to-read summary for each section. Summaries make the document easier to skim and ensure that at least the main points are clearly laid out.

At the beginning of the OCG document, include an overview summary that outlines the most important takeaways, like this OCG from the University of California:

Another example from the State of New Jersey specifically details that the guidelines will be different than typical private sector guidelines, which encourages attorneys to read more carefully.

The ultimate goal is to make the most critical points as clear and obvious as possible to maximize the likelihood that the guidelines will be followed.

7. Confirmation of Receipt and Understanding

Include a signature page in your outside counsel guidelines to confirm that the lawyers at the outside firm have received and understand the document.

On average, only 56% of lawyers know what is in the guidelines for the matters they handle. If more than half of the firms you work with are unfamiliar with your OCG, you can’t expect much in terms of compliance. Requiring a signature page to confirm receipt and understanding may not force outside counsel to read OCG thoroughly, but it will certainly make them think twice about ignoring them altogether.

When delivering your OCG, include instructions for reading the guidelines as well as a time frame for returning the signature page.

While the hope is that outside counsel will be more inclined to read the document in full, signature pages ultimately make it easier for your in-house team to enforce guidelines and handle disputes because outside counsel cannot claim ignorance.

Review Your Outside Counsel Guidelines Regularly

With many companies, outside counsel guidelines are developed early on and then merely added to over the years. The result is an unnecessarily long document with outdated—or even completely obsolete—guidelines. Processes regarding invoice and appeal submissions, for example, will certainly have been updated since a decades-old set of guidelines was produced.

Review your outside counsel guidelines at least once a year to ensure they stay up-to-date and change or eliminate any incorrect information. Having an updated set of guidelines with no unnecessary information will help build a solid relationship with your outside counsel and increase the likelihood that all your guidelines will be read and followed.

If you’re ready to revamp your process, take a look at our Legal Billing Guidelines Best Practices to learn how to write and enforce outside counsel guidelines effectively.