Time is an easy thing to communicate, and maybe that’s why law firms and clients have for decades relied on the billable hour as the basis of their transactions.
Now, an ambitious group of prominent law departments, law firms and legal tech companies wants to help the legal industry adopt a new language that will encourage law firms and clients to evaluate the value of legal services beyond the billable hour—and to better understand what all that time is actually spent doing and what it accomplishes.
The Standards Advancement for the Legal Industry (SALI) Alliance last week published an initial set of codes that it hopes will ultimately serve as a new language to describe legal matters. That standard language, the group says, will allow clients to compare how law firms performed on similar types of matters and, in turn, help foster more value-based competition and innovation in the legal market. It will also help law firms better understand the costs they’ve historically incurred for certain types of work.
“The idea is to have a standard way to label, categorize and describe legal matters so we can better share information of what we’re buying and selling,” said James Hannigan, senior manager of product development and project management at a California-based law firm, Allen Matkins Leck Gamble Mallory & Natsis, and a leading member of the SALI Alliance. “And that will allow us to do things like analytics better because we all will agree on what that work was.”
The benefits of a widespread, standard language to describe legal work, advocates say, include a better way for clients to compare law firms’ experience on specific types of matters; to serve as a baseline for law firms to increase their efficiency on those matters; and to help law firms find and track documents or other work product from similar types of matters.
But developing that language is not an easy task, nor is it guaranteed to proliferate throughout the market. Critics of the idea may argue that some legal work is too nuanced to be classified in a routine, standardized way.
Responding to that criticism, Toby Brown, chief practice management officer at Perkins Coie who has been heavily involved in the SALI Alliance, said lawyers and law firms will be able to “extend” the standards to fit their own nuances. But Brown also said firms that classify their work in a nuanced manner will lose the ability to compare their work against the broader market, which he thinks will benefit firms in the long-run.
“In some respects, it’s a cost-benefit decision they can make,” Brown said.
The group’s members include corporations such as GlaxoSmithKline Plc, Microsoft Corp. and Royal Dutch Shell Plc; law firms such as Greenberg Traurig, Holland & Knight, Perkins Coie and Allen Matkins; and technology providers Bloomberg Law, LexisNexis, Prosperoware and Intapp, among others.
One difficulty in a creating a common description of legal work is that matters change over time. A regulatory inquiry may become a lawsuit; a transaction might include regulatory advice. The new standard is designed to track those types of changes, but it will still require administrative work on the part of law firms and clients to track, which many say has thwarted the effectiveness of the industry’s existing task code systems.
The SALI standard is not intended to replace today’s task code systems, which track things like taking depositions or drafting memos. Instead, those task codes would be linked to the matter descriptions that SALI is creating as a way to track the tasks and number of hours that are spent on a given matter.
“If there is any good thing about the billable hour it is that everybody agrees what an hour is: It’s 60 minutes,” said Mark Medice, a principal at consulting firm LawVision Group who is working on the SALI standard. “What people can’t agree on right now is, if time is not the focus of how we attribute value to something, what is the language that everybody in the industry can utilize to understand what value is?”
The codes SALI released last week describe 27 areas of law, including practices like banking, transportation, intellectual property and personal injury. They also include subcategories for the practice areas. The environmental area of law, for instance, includes subcategories of mining, air, water, cleanup, waste/remediation and marine and ocean.
The release also includes five categories of what SALI calls “processes or services.” They include advisory, disputes, regulatory, bankruptcy and transactions. Those processes are also broken down into smaller categories, with disputes including nine discrete events like litigation in small claims court or civil court proceeding. The transactions process line is broken down into 17 categories, including things like financing, leases, mortgages and joint ventures.
One example SALI provided of a more complete description of a specific matter was for a labor and employment class action dispute based in New York. It might ultimately be coded as: “LEM-EMP/D-CCD(CLA)/USA-NY-NY.”
Toby Brown, a chief practice management officer at Perkins Coie who has been a leading figure in the standards body, said the draft standards released last week will now be used internally by at least two corporate legal departments as a test use case. The names of those companies have not yet been disclosed. The SALI Alliance hopes to release more aspects of the standard at a Legal Marketing Association conference in Chicago in June.
“We see that innovation is a bit stymied in the legal industry when we don’t even have a common language around what law firms sell to clients,” Brown said. “This will allow firms to look at specific matter types and see what is happening in the market versus internally. We just can’t do that now because there’s no common language.”