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Should lawyers be scared of abandoning the hourly Billing Rate?

May 05, 2010: Gururaj Potnis

Law firms today are facing increased pressures from corporate counsels to reduce their external legal spend. They have been caught in a pincer grip of a slackened economy on one hand and reduction in work from clients on the other, resulting in a demand to lower both the quantum of billing and the billing rates. They need to adapt to this changing market scenario and the unimaginative ones will see their earnings do down. But, this market also offers growth opportunities for those firms who are ready to change, and are ready to look at the value they offer to the clients in a different way.

Reduced billing rates need not mean reduced profits per partner. You can increase the leverage smartly; reduce cost of delivery, increase efficiency of resources deployed, increase the billing amount the lawyer retains and at the same time reduce the amount you would bill your customers.

Traditionally, the alternative billing methods pioneered by DuPont include:

• Flat fees for repetitive, predictable services
• Discounted fees in exchange for performance bonuses (based on cost savings)
• Blended rates for any resources used - from Senior Partner to paralegal - that should push the firm to use lower level employees when possible
• Volume discounts that discount hourly rates as the volume increases
• Capped fees, which may be a gamble, but can provide predictability

Striking upon the right billing model is a challenge for most law firms, and it has been seen that alternative billing models will be more in vogue going forward. Manthan seeks to add a new dimension to enable alternative billing models to work for firms, by  dramatically reduce the cost of delivery if they leverage a team of lawyers in India to deliver a substantive portion of select processes. Law firms will find it easy to retain their profits per partners in a comfortable zone only if they can seek an increased leverage, offered by offshore outsourcing. Offshore outsourcing works best if you offer flat fees, capped fees or blended rates.

Let’s take a case in point:

1. Cost of drafting a typical contract in US: $3000
2. Cost of drafting the same contract in India + Cost of review by attorney in US: $750

The labor arbitrage between US and India is 8:1 (Billing rates of $300 an hour for an associate in the US versus $40 an hour in India) and hence deploying offshore support to do most of the repetitive, predictable and well defined legal tasks shall deliver dramatic increases in profits per partner for a law firm.

Write in feedback to gururaj.potnis@manthanlegal.com

ATL interviews Gururaj Potnis

June 11, 2009: Jasbir S. Juneja

The editorial staff at abovethelaw.com interviewed Manthan Legal’s director Gururaj Potnis in New York this week. Gururaj explains the value addition than an LPO, like Manthan Legal, brings to legal world and specifically to law firms.

” If you look at law as a value-producing system, there is no reason why 16 hours a day it needs to be turned off. It's a sin not to keep the value producing cycle keep going. Things can be done at any time of the day.”

Gururaj also clears up some misconceptions related to legal outsourcing and talks about the current economic scenario and how the future may look like.

“[I'm not sure I agree] when you say that the legal industry itself is shrinking. No. There's a shift ... and it's not an incremental adjustment. We're talking about having to let go of the old way of thinking and come up with a new way……………………………………… The economic downturn is the right time to innovate. It's the right time to fundamentally change the firm. It's the right time to start laying the foundations, so when the market starts picking up, you are ready with a new model…………………………………… This industry is going to change from the top down. It will change from customers choosing a better billing model.”

The entire interview is available at
http://abovethelaw.com/2009/06/outsourcing_what_indian_firms.php

Write in feedback to jasbir.s@manthanlegal.com

Manthan continues expansion

November 23, 2007: Gururaj Potnis

Manthan has proved the method of delivery and support that we provide to our customers in North America. The value that we can offer has been clearly established and validated and we now want to have more of our customers get access to this support that will enable them to leverage their expertise and experience and develop high growth.


Write in feedback to gururaj.potnis@manthanlegal.com

May 10, 2007: Gururaj Potnis

Manthan has built a formidable volume of knowledge, experience and resources in the areas of Litigation and Legal Support. We have a team that is trained in the relevant law areas and many of who have actually worked with the legal systems for which they today provide support. This helps us understand and communicate effectively with our customers.


Write in feedback to gururaj.potnis@manthanlegal.com