USA/Canada News
Traditional Recovery Remains High, More Firms Outsourcing
Legal support services consulting firm Mattern & Associates, LLC announces today the highly regarded, bi-annual Mattern & Associates Cost Recovery Survey results are in. The 2016 Cost Recovery Survey delivers comprehensive benchmarking of traditional and emerging areas of recovery as well as trends in the law firm middle office, including legal workflow and processes.
Key findings from this year’s survey include an uptick in firms implementing non-traditional cost recovery programs, a sharp decline in the net realization of legal research, and wide interest in outsourcing key middle office functions.
The Mattern & Associates Cost Recovery Survey is, year-over-year, lauded by industry leaders as the most comprehensive snapshot of cost recovery practices in the industry. The Survey has tracked recovery data since 2004 in traditional areas, including copy, print, scan, litigation support, and eDiscovery; 2016 marks the first year the Survey will track back and middle office function trends.
In cost recovery areas, this year evidences that more firms are implementing non-traditional cost recovery programs at their firms, quadrupling from the 2% of firms doing so in 2008/2010 and doubling from the 4% of firms in 2014: 2016 data shows 8% of firms investigating and moving forward with new cost recovery programs including Mattern Plan B Cost Recovery®. This uptick in interest in cost recovery is supported by stable net realization which has hovered in the mid to high - 80% range consistently since 2010.
Overall, most firms which are actively recovering costs follow a traditional model of cost recovery. Internal write-offs prove to be the enemy of soft cost recoveries with a 14 % decline in soft costs designated as billable and an 18% decline in those costs actually being billed. However, hard cost recovery remains the strongest area with over 90% of billable hard costs being invoiced to clients with an 86% realization on these costs.
Legal research leads client pushback and refusal to pay. In 2014, Mattern reported that legal research had its lowest net realization since the inception of Mattern’s recovery survey at 36%. In 2016, net realization has declined even further – sinking to 25%. This decline is attributable to a lower billable percentage combined with a 13.6% increase in internal write-offs. Mattern predicts extinction of legal research recovery by 2022.
New this year, the Mattern & Associates Survey tracked middle office trends. This year’s survey results show 11% of firms surveyed now report outsourcing library services. Litigation Support is an emerging area of interest in outsourcing with 24% of firms indicating outsourcing of some on-site functions related to litigation support (technology or staffing). Records management proved to also be a hot area with 14% of respondents reporting they outsource records staffing, while an additional 7% of firms are considering doing so in the future.
77% of firms have an approved records retention policy; however, only 68% of firms’ retention policies encompass both paper and electronic records. As the need for comprehensive information governance strategies continues to increase, Mattern predicts these numbers to increase and become closer in parity.
Founder and President Rob Mattern comments “We are pleased to provide the Cost Recovery Survey as an industry-wide service. It is a key component of our commitment to our clients to provide comprehensive benchmarking data. Participants in the 2016 Cost Recovery Survey receive highly customized web-based reports benchmarking their firms’ performance in all areas of recovery and middle office trends to those of their peer firms, an invaluable tool as firms set recovery strategies which affect their firms’ bottom lines for years to come.”
Non-participating firms are invited to request the 2016 Overview of the 2016 Cost Recovery Survey which shows highlights across areas.
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