Show Me The Math: The importance of cost estimates when engaging a law firm

RICHARD BRZAKALARichard Brzakala is a recognized legal marketplace thought leader and expert in legal operations, sourcing, and cost efficiency strategies. He has been a trusted advisor to many senior executives and general counsels, having worked and consulted for numerous FIs, law firms, and government agencies. Richard is a frequent speaker, panelist, and writer, having published numerous articles on a variety of legal ops topics such as legal sourcing, winning RFPs, convergence practices, and creating corporate cost-saving strategies. Richard’s most recent essay, “The Impact of COVID-19 On Future Legal Operations and the Legal Marketplace”, appeared in Horizon Scanning: Modernizing Legal service Delivery (ARK Group). He is a contributing author for Thomson Reuters Legal Executive Institute, chairs a number of legal sourcing discussion groups, and also participates in an executive advisory capacity for a global IT legal service company. In 2017, a leading US publication recognized and awarded Richard with its annual Trailblazers award for his work in developing a comprehensive global methodology for evaluating law firm compliance with cyber security standards. Richard is currently working as the global director of external legal services at a large FI in Canada where his mandate includes the oversight of legal ops, compliance, finance, and risk management practices as they relate to the management of external counsel globally.

• Chapter one: The benefits of cost estimates- Background- The increased popularity of cost estimates- What do clients look for in a cost estimate?- What don’t clients want to see in a cost estimate?- How clients are empowered by cost estimates- The benefits of cost estimates to a law firmChapter two: The mechanics of cost estimates- The continued utilization of the hourly rate billing model- Cost estimates based on task-based billing models- Utilizing dollar ranges in cost estimate proposals- Buyer beware – stay away from commercial (street) rates in cost estimates- Leveraging historical data and work- Highlighting cost savings and efficiency in a cost estimate- The importance of understanding variances and assumptions- Calculating the variance cushion- Leveraging law firm resources to develop cost estimates- Calculating the staffing utilization ratio- Challenging the traditional legal model- Monitoring staff utilization ratio in cost estimates- Measuring and monitoring work in progress (WIP) ratio- The impact of changing resources on a cost estimate- The benefits of using Alternative Fee Arrangements in a cost estimate- Third party vendor costs- How to treat disbursements in a cost estimate- The importance of a communication strategy- The criticality of properly defining and understanding scope- The importance of communication during the cost estimate process- Defining scope- The law firm’s responsibility in defining scope- The unpredictability of “scope creep” and accounting for variances- Dealing with cost estimate overages- The blame game – dealing with law firm fault bias- Avoiding cost overages that impact a cost estimate- How law firms should communicate overages to clients- Dealing with multiple clients and instruction points on a cost estimateChapter three: Operational challenges- Operationalizing a successful cost estimate strategy- Case study – US insurance company- Working through differences on a cost estimate- Educating lawyers on the business of law- Leveraging Legal Operation (Legal Ops) specialists- Why do in-house counsel fail at cost estimates?- Top ten list – what law firms dislike most about cost estimates- The resistance to utilize cost estimates- Beware of law firm caveats and disclaimers- Chapter four: Value and cost estimates- How does value factor into a cost estimate?- Measuring value using Value Indicators- Value Indicators- Law firm Value Indicator calculator- What happens in the absence of value?- Law firms need to stand their ground – clients are not always right- Unlocking the value of cost estimates- What type of insight or strategic advantage can cost estimate data give clients?- How clients track the success of a cost estimate- Tracking the success of cost estimates- How firms should leverage cost estimate data for the benefit of their clients- How can a firm win work on the basis of a cost estimate?- When are cost estimates a waste of time and not necessary?- Who cares about the math, show me the value!- Is there any room for an “instinctive approach” on a cost estimate?Chapter five: Other considerations- How third party pass through hourly rates impact a cost estimate- Treating cost estimates like a request for proposal (RFP) bid- The importance of trust in cost estimates- Challenging a law firm’s cost estimate- How to get a firm to reduce its cost estimate- What to do when a cost estimate fails- Billing for a cost estimate- What is the future for cost estimates?