Sorry for the delay (and cross posting). Below is my initial query, and
my subsequent clarification of the question. Below that, the responses
I received, redacted to preserve anonymity of respondents. And finally,
my unsolicited (and FREE - remember, you get what you pay for)
editorial comments:
Sorry also about the LONG post, but perhaps someone out there will read
this and have a flash of brilliance about the perfect solution (call or
email right away if you do!). Thanks to all who responded to my survey.
________________________________
From: Webster, Trish
Sent: Tuesday, October 16, 2007 10:08 AM
To: 'law-lib@ucdavis.edu'
Subject: Firm Librarians: Daily cap on Lexis and/or Westlaw bills?
When I sent this in August, I received only one response from a firm
that has a cap on Lexis or Westlaw charges. Now that I've learned there
are nearly 4,000 subscribers to the list (and I still have to work out a
cap for my firm), I'm resubmitting, hoping that I will get more than
one response. Still intend to summarize responses.
Anyone? Anyone?....
________________________________
From: Webster, Trish
Sent: Friday, August 24, 2007 12:04 PM
To: 'law-lib@ucdavis.edu'
Subject: Firm Librarians: Daily cap on Lexis and/or Westlaw bills?
We have flat-rate Lexis and Westlaw contracts and currently share our
monthly realized "discount" proportionally between clients and the firm.
We are considering implementing a daily cap on the dollar amount that
can be charged to individual client matters for Lexis and Westlaw use.
We ask attorneys to be cost-conscious about use of these resources all
the time, but without giving them any solid pricing information to
inform their approach (we can estimate our average monthly discount
rate, but with such a variety of different hourly and transactional
d-base retail charges, I think this is somewhat meaningless). My theory
is that a daily cap would give attorneys some sense of security to use
these resources with the confidence that they would not incur the much
dreaded multiple-thousands-of-dollars research session charge, either
for a client or as general office.
I have anecdotal evidence that this is being done at other firms, but
was hoping to gather more information to support my case that this is an
acceptable way to handle online resource cost recovery.
If your firm has a daily cap, I would appreciate anyone willing to
answer the short questions below. (Anyone who does not have a cap, but
wants to comment on the issue can certainly send their thoughts to me as
well). I can compile answers next week for the list, and of course,
will preserve anonymity of responses.
Thanks in advance for any responses.
QUESTIONS:
1. Considering only Lexis and Westlaw, does your firm have a flat-rate
contract with one or both?
2. Is the cap for one service or both?
3. If both, is the cap set at the same amount for each vendor?
4. What is you daily cap billable to a client matter for research (in
$100 increments, i.e $1 - $100, $101 - $200, etc.) ?
5. In combination with your cap, do you set prices for transactions
such as pulling statutes, cases, KeyCite/Shepards, etc?
6. Does your firm have any practices in place to prevent actual client
recovery from exceeding the monthly invoice payable to your vendor(s)
per the flat-rate?
7. How many attorneys at your firm? (A range is fine.)
ADDITIONAL COMMENTS?
HONIGMAN
Trish Webster
Library Manager
Honigman Miller Schwartz and Cohn LLP
660 Woodward Avenue
2290 First National Building
Detroit, MI 48226-3506
'
(313) 465-7046
+
"
www.Honigman.com <http://www.honigman.com/>
________________________________
From: owner-law-lib@ucdavis.edu [mailto:owner-law-lib@ucdavis.edu] On
Behalf Of Webster, Trish
Sent: Tuesday, October 16, 2007 8:28 AM
To: law-lib@ucdavis.edu
Subject: CLARIFICATION Firm Librarians: Daily cap on Lexis and/or
Westlaw bills?
An email response I just received made me realize I should clarify what
I mean by cap. I am suggesting a cap on the amount that can be billed
to clients, not the amount of Lexis or Westlaw research that can be
done.
For example, if the daily cap were $500.00, someone might do $50.00
(retail rate) of research for a matter one day, which would be billed to
the client. Then, the following day, they might "use" $1200 on Lexis or
Westlaw, but the client would only be billed for $500.00 for that day
because of the daily cap. In other words, I'm trying to set a
reasonable cap that would encourage attorneys to be cost conscious, but
would not prohibit them from using what they need to get the job done.
I suppose some firms might also set the cap weekly, or even monthly,
though I have never heard of anyone doing it this way.
************************************************************************
***********************
RESPONSES...
************************************************************************
***********************
Response 1:
1. Considering only Lexis and Westlaw, does your firm have a flat-rate
contract with one or both? Flat rate with Westlaw only
2. Is the cap for one service or both? No caps
3. If both, is the cap set at the same amount for each vendor?
4. What is you daily cap billable to a client matter for research (in
$100 increments, i.e $1 - $100, $101 - $200, etc.) ?
5. In combination with your cap, do you set prices for transactions
such as pulling statutes, cases, KeyCite/Shepards, etc?
6. Does your firm have any practices in place to prevent actual client
recovery from exceeding the monthly invoice payable to your vendor(s)
per the flat-rate? With our method, client recovery never never exceeds
the monthly payables.
7. How many attorneys at your firm? (A range is fine.) about 300
ADDITIONAL COMMENTS? We set a new discount rate each year. For
instance, the clients may get an 80% discount on all Westlaw searches
under the flat rate. Quickview takes care of applying the discount.
Files that are not under the flat rate are charged at actual cost. All
our Lexis searches are charged out at the actual cost plus a surcharge.
Every year the discount rate is adjusted to make sure we are passing on
the discount in a fair proportion to the non-billable searches. With
this method, the client invoices are very small and we never collect
more than we pay to the vendors.
************************************************************************
***************
Response 2:
I have been considering another scenario to encourage cost-effectiveness
and recoupment but it is in ways opposite of yours. I am considering
offering some access that would not be billed (Keycite would be set at
$0 but finds under a client and file number would be charged at monthly
discount after the first 10 for the day. Assumption is that finds are
the link outs from Keycite but could be others too) Not the best
example, but you get the idea. Think the billing aspects would be more
complex.
************************************************************************
***************
Response 3:
1. Considering only Lexis and Westlaw, does your firm have a flat-rate
contract with one or both? Flat rates with both
2. Is the cap for one service or both? Our cap policy applies to both
(though I take far more care with Westlaw, as we have a monthly
firm-wide dollar cap)
3. If both, is the cap set at the same amount for each vendor? Yes.
4. What is you daily cap billable to a client matter for research (in
$100 increments, i.e $1 - $100, $101 - $200, etc.) ? No matter will be
billed for more than 6 searches on any given day. This applies to L & W
(a max of 12 searches per day.) We have a straight dollar amount for
each search ($75) . This is easy to explain to attys and the "discount"
is very good.
5. In combination with your cap, do you set prices for transactions
such as pulling statutes, cases, KeyCite/Shepards, etc? No. These are
included in the daily maximum.
6. Does your firm have any practices in place to prevent actual client
recovery from exceeding the monthly invoice payable to your vendor(s)
per the flat-rate? So far, this hasn't happened.
7. How many attorneys at your firm? (A range is fine.) [Under 200 ]
************************************************************************
***************************************
Response 4:
1. Considering only Lexis and Westlaw, does your firm have a flat-rate
contract with one or both?
We have flat-rate Westlaw contract only.
2. Is the cap for one service or both? N/A
3. If both, is the cap set at the same amount for each vendor? N/A
4. What is you daily cap billable to a client matter for research (in
$100 increments, i.e $1 - $100, $101 - $200,
etc.)
$20.00 per hour for each and every hour or portion over an hour spent
connected.
5. In combination with your cap, do you set prices for transactions such
as pulling statutes, cases, KeyCite/Shepards, etc? No all is billed at
$20.00 per hour
6. Does your firm have any practices in place to prevent actual client
recovery from exceeding the monthly invoice payable to your vendor(s)
per the flat-rate? No
7. How many attorneys at your firm? (A range is fine.) [Less than 40]
************************************************************************
**********************
Response 5:
We had a cap for 5 years but dropped it on our last contract in favor of
a percentage across the board discount on all out of contract databases.
There were many many months where we did not go over cap. Since we bill
Lexis charges especially out of contract charges it made more sense to
remove the cap in favor of a discount.
************************************************************************
******************
Response 6:
We do not have a cap. Caps may not actually foster cost conscious
research (I can search all day now on this number - client- as I have
already reached the cap). We charge a set $ per minute for online
database time. This, no matter what the cost of that database per
minute. What this does for us is to give the researcher some idea of
what the client is going to be charged. It almost always gives the
client a break on price from the retail rate and therefore allows us to
pass savings from our contract pricing along to the client.
In conjunction with this we do purchase e-libraries that are not charged
to clients. The the user has unlimited access to these databases. These
are mainly state specific, Shepards, federal cases, things we no longer
buy the books for in our library but provide electronic access.
This is not exactly the question you asked but may give you some ideas.
[Less than 85 attorneys.]
************************************************************************
*****************
Response 7:
A firm where I used to work had a $500 monthly cap. Charges over the
cap generated a query email to the researcher to briefly explain what
the research was for: trial prep, expert witness workup, speech or
publication, etc. The idea was that by the time clients reviewed the
bill, the explanation was ready to give them.
The second monthly cap was $20 for firm-general charges. The query
email asked for any billable numbers or if non-billable, what it was
for. Users were encouraged to use specific nonbillable numbers for
marketing, speech, pro bono, etc. to identify charges in the future.
************************************************************************
*****************************************
Response 8:
One firm I was at had a client who, as part of the contract/retainer,
would not be paying any online fees UNDER $75.
You might want to consider both the minimum and maximum amounts in your
survey.
************************************************************************
***************************************
Response 9:
I have never heard of a cap. At all my firms, the responsible partner
just writes down (or writes off) the amount to be billed to the client
as he or she sees fit.
************************************************************************
***********************************************
Response 10:
We do not use the cap system since we do not bill our clients for
Westlaw (we have a contract) but consider it as overhead unless a
database outside the contract is used. We recently moved to this
business decision and so far it is working very well. The clients are
happy and the attorneys are more relaxed when conducting research. [Less
than 125 attorneys]
************************************************************************
**********************************************
Response 11:
1. Considering only Lexis and Westlaw, does your firm have a flat-rate
contract with one or both? YES
2. Is the cap for one service or both? BOTH
3. If both, is the cap set at the same amount for each vendor? YES
4. What is you daily cap billable to a client matter for research (in
$100 increments, i.e $1 - $100, $101 - $200, etc.) ? $1-$100 (but it's
not enough to recover on the contracts)
5. In combination with your cap, do you set prices for transactions
such as pulling statutes, cases, KeyCite/Shepards, etc? USED TO, BUT
NOT ANYMORE
6. Does your firm have any practices in place to prevent actual client
recovery from exceeding the monthly invoice payable to your vendor(s)
per the flat-rate? NEVER HAPPENS
7. How many attorneys at your firm? (A range is fine.) 350
ADDITIONAL COMMENTS? We've been experimenting with a daily cap for about
7 years. We've increased the cap 3 times in that time. We've never
been able to recover enough on on either contract to make this solution
viable. We're now considering a per search (we do everything
transactionally) charge rather than a daily cap.
************************************************************************
**************************************************
Response 12:
A cap is an interesting way to bill clients. If this is done, will the
firm absorb the invoice balance for both Westlaw and Lexis? Won't this
encourage attorneys to have a false sense of security with the firm
footing the bill for thousands-of-dollars not billed to clients? It's a
win-win for the clients but It seems that it would only be a win-win for
the firm if there was some way of a warning or alert popping up before
the cap is reached. Of course Westlaw and Lexis would not include this
feature in their services. But in a dream world, wouldn't it be nice if
an attorney could input the dollar figure to be alerted at?.
************************************************************************
*************************************************
EDITORIAL COMMENTS
************************************************************************
************************************************
There's a noticeable trend toward setting a straight dollar amount for
Wexis, whether per search or per hour, which is something a bit
different than (or in addition to) the cap idea. For example
Respondent 3 charges $75 per search and Respondent 4 charges $20 per
minute, no matter the database the user is in (presumably,
out-of-contract use is billed at its retail rates).
I like this idea, though I struggle with the either/or nature of this
(i.e. everything is billed by transaction or by the minute). We've
spent years teaching our attorneys to identify when it's best to use
transactional or hourly billing, and in some ways it's to the firm's
benefit to have people who know the difference. For instance, when the
retail rate per search is quite high, and you know you only need 3 or 4
minutes to get what you need. If you always bill by search, that one
search artificially inflates the usage $ amount that the vendor uses to
track your usage (and to try to demonstrate "received value" at contract
negotiation time). Conversely, there are times when people really do
need to read 20 or 30 cases online, and downloading all the cases is not
the answer in my view. I suppose you could set a straight fee for
hourly and transactional searching, which is where I'm heading at this
point.
One response raises the issue that a cap might foster sloppy (not cost
conscious) search habits. Once an attorney knows they've hit the cap
that the client will be billed for that day, they're free to "go crazy"
for the rest of the day. I can see this point. For me it's a matter of
deciding which is the greater evil - the possibility of developing "cost
unconscious" behaviors, or the risk that users are not finding what
they need or doing thorough enough searches since they live in fear of
the egregiously high bills for clients (or firm overhead). As one young
associate once put it to me, "Lexis and Westlaw are making us bad
lawyers because I'm afraid to even log on." (I hastened to point out
that firm administration - i.e., me - contributes to this by asking them
to spend a lot of time and energy trying to "guesstimate" what their
charges will look like before they even start searching.)
This raises the specter of the "all overhead" contracts which some firms
use. This is my fondest wish, but my firm is simply unwilling to do
this given 1.) the magnitude of the yearly contract charges, and 2) the
fact that some clients and/or departments use very little Wexis, and
building it into rates seems to unfairly ask those clients to pay a
share of these contracts. I can come up with other examples of where
this occurs (library books, phone charges, conference rooms for
closings, other computer applications and support personnel for same),
but I also can see the point. Wexis contracts are pretty easy to track
back to exact matter usage, so why not charge use to those matters?
Respondent 8 proposes clients who won't pay for online charges UNDER a
certain amount ($75). Now, that's just scary. I'm having a hard
enough time with the maximum idea. Ditto Respondent 9, whose billing
partners essentially decide what to charge on a case by case basis.
Though my life would be easier - pity the poor head of billing and
collections when she is asked to explain this system to a client.
[Respondent 9 - please don't be insulted. According to market research
theories about how many people a survey respondent might actually
represent, there are surely many more firms that do the same.]
Respondent 11's long-term experimentation with the Cap Method makes me
more prone to go back to the drawing board on the set fee idea (either
by minute or by search).
Respondent 12 asks if the firm won't end up making up thousands of
dollars of difference on the invoice between what gets billed to clients
and what the firm owes. Though I'm sure this can happen (and is
probably the reason R 11 has had to raise the cap 3 times), I've done a
lot of modeling of this on historical invoice data so that I think we
could set the daily cap to assure we recover about 75-80% of the
monthly invoice amount (which is about what our client billable ratio is
- 20-25% firm use per month).
Others asked me about the mechanics of using PowerInvoice and Quickview
to implement these ideas. I'm not sure what others are doing with these
tools, but already with one of them I just download the raw data and use
formulas in Excel to generate our monthly bills, which is how I suspect
I would institute either a cap or straight search or hourly charges
(I've plated around with it and have been able to make all these work).
Thanks again to all respondents!
HONIGMAN
Trish Webster
Library Manager
Honigman Miller Schwartz and Cohn LLP
660 Woodward Avenue
2290 First National Building
Detroit, MI 48226-3506
'
(313) 465-7046
+
"
www.Honigman.com
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