Outside Counsel Guidelines: Best Practices

Key categories, detailed explanations, and complete examples you can use to set billing guidelines and improve outside counsel relationships.

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Outside counsel guidelines, also called legal billing guidelines, are a tool for aligning expectations between in-house teams and their vendors. They set the foundation for a successful relationship with outside counsel, allowing both parties to focus on providing value to the business by solving important legal issues.

We developed best practice sample outside counsel guidelines based on our experience working with hundreds of in-house legal teams.

What Outside Counsel Guidelines Cover

Outside counsel guidelines typically cover four areas:

  • Resourcing: Who should be doing the work (seniority and diversity of fee earners)
  • Activities: For what work fee earners should and shouldn’t charge
  • Commercial terms: Following agreed rates and budgets, limits on when and how much rates can increase, etc.
  • Billing hygiene: When and how to bill and requirements for submitting budgets and accruals (unbilled estimates)

Understanding Guidelines & Rules

In-house teams support every part of the business and cover a wide variety of activities. For this reason, creating billing rules that apply to every legal matter isn’t always practical. That’s why there are guidelines, for which enforcement is up to the attorney, and rules, which are always enforced.

Not billing for research is an example of a guideline. For example: “Outside counsel should not charge for research unless the lead attorney approves it.” In-house teams do not expect to pay for basic research; however, original research is sometimes necessary for matters related to niche or new areas of law. You can reject billing for basic research but approve specific research charges where the attorney feels it necessary.

A rule, on the other hand, is always enforced. For example: “Outside counsel should not charge the in-house team more than the agreed timekeeper rates.” With a rule like this in place, charging in excess of agreed timekeeper rates is rejected in all circumstances.

Developing, Monitoring & Improving

Outside counsel guidelines are living documents and should be updated regularly as the needs and resourcing mix of the legal department change. Best practice is to maintain outside counsel guidelines independently of engagement letters for this reason. This makes it easier to include updates over time.

It’s difficult for busy in-house attorneys and a large number of outside counsel fee earners to remember what each guideline means and how to apply them. To help with this, providing lead-in time allows invoice reviewers and fee earners to get up to speed with guidelines can help increase compliance.

This is the best practice for rolling out new or updated outside counsel guidelines:

Month 0 Months 1–2 Month 3 Months 4+
Share OCGs and ask outside counsel to become familiar with them Monitor compliance with the new OCGs and see which guidelines are being followed Adjust invoices according to the OCGs Iterate on the OCGs, fine-tuning them to meet your changing needs

Enforcing Legal Billing Guidelines

Outside counsel guidelines set the tone for all engagements and legal service providers are expected to adhere to them when performing work and billing on matters.

In-house legal teams enforce outside counsel guidelines during invoice review. Legal e-billing software can assist by identifying violations of rules and potential violations of guidelines so reviewers don’t need to find them on their own.

Most e-billing systems can automatically reject invoices that violate certain rules, saving reviewers even more time. At the same time, they can auto-approve invoices that don’t have violations and meet certain other criteria, such as being under budget.

Most legacy e-billing systems require law firms to add UTBMS codes to each of their invoices to enforce outside counsel guidelines. This significantly reduces the effectiveness of outside counsel guidelines. Brightflag uses industry-leading AI to enforce outside counsel guidelines 100% of the time without law firms doing anything differently.

Sample Outside Counsel Guidelines

We share 20 best practices in our downloadable sample outside counsel guidelines that help you to maximize the value received from outside counsel. The guide provides an explanation of each and highlights whether they are a hard-and-fast rule or a guideline. We also provide sample outside counsel guideline text to help you create your very first version or to improve your existing one.

The 20 best practices are:

  • Staffing, diversity, and billable hours per day
  • Read-in time, research, internal communications, billing by multiple people in meetings/calls, administrative support services, prohibited expenses, and training time
  • Timekeeper rates, budgets, and business reviews
  • Billing detail, block billing, invoice format, invoicing process, billing period, accruals, and currencies and entities

Our “Favorite” Guideline Violations

Brightflag has been helping in-house legal teams to set clear expectations with outside counsel and control costs for years. As you can imagine, we have some “favorite” outside counsel guideline violation stories to tell. Here are a few of them:

  • Internal communication is difficult to identify using legacy e-billing software because there’s no UTBMS code for it. Brightflag’s AI once identified an invoice where outside counsel talking amongst themselves accounted for 80% of the charges. (Brightflag automatically rejected the invoice.)
  • A law firm partner once tried to bill one of our customers for 26 hours of work in a single day. A single day! Brightflag automatically rejected the invoice for correction.
  • One customer’s vendor caused problems with financial reconciliation by consistently billing 90 days late. In partnership with Brightflag’s customer success team, the customer strengthened enforcement of their billing hygiene guideline until all invoices were being submitted within 30 days.

These examples are humorous only if your e-billing software catches them for you; if not, they’re an embarrassing and expensive headache.

Consider booking a demo with Brightflag today to see how we can help ensure you never encounter these issues yourself.

Sarah Scales

Head of Product Marketing at Brightflag

Sarah Scales is the Head of Product Marketing at Brightflag, previously serving as a Product Manager and Change Manager. Sarah holds a Bachelor’s Degree in Law and Political Science from Trinity College Dublin, as well as a post-graduate diploma in Software Product Management from Technological University Dublin.