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6 ways Robotic Process Automation can Help Law Firms Meet the Challenges of Fixed Recoverable Costs

By Pola Zafra-Davis - 5 Aug 2019

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The latest of Lord Justice Jackson’s proposals places intermediate track’s fixed recoverable costs (FRC) up to £100,000 and is planned to roll out on December 2019. After a five-year review, the FRC can rise to £250,000. Law firms specialising in civil and corporate litigation will undoubtedly consider more risk when taking on a client’s case. Already one law firm has closed due to the financial ramifications of these proposals stating it, ‘made it clear there needed to be a complete revisit of the company structure and consideration for survival’.

Where does robotic process automation fit into this legal industry challenge? Strategies using robotic process automation can more effectively assess the risk of taking on a new client and lower the cost of managing civil cases within FRC guidelines.

To see specific robotic process automation benefits and applications in the legal industry we’ll be taking a look at:

  1. RPA’s use in assessing the financial risk of a law firm
  2. RPA and client risk
  3. RPA ensuring legal compliance
  4. RPA coordinating information between fee earner and client
  5. RPA’s role in reducing fee overruns
  6. RPA for accurately tracking and auditing a civil case’s running costs

 

Robotic Process Automation analysing and alleviating the risk on taking on a new client

Planning around a case with the addition of fixed recoverable costs spotlights and a new emphasis on financial planning. Law firms must err on the side of caution when taking on cases and not gamble on the big-win. To further complicate matters, the balancing of cost, profitability and risk needs to be done under the watchful eye of compliance and regulation in the legal industry.

RPA is useful in supporting data driven processes necessary to assess FRC impact to a law firm through the following….

RPA is useful in supporting data driven processes necessary to assess FRC impact to a law firm through the following….

1.RPA’s use in assessing the financial risk of a law firm

McKinsey’s Global Institute reports that 56% of financial planning & analysis and 20% of risk management activities can be either highly or fully automated.

Risk reconciliation done by robots is an example of risk monitoring that is unassisted (no humans!). Robotic process automation is extremely flexible in what it can retrieve and sort. Examples include: historical case-cost data inside a firm’s system, client’s credit ratings imported from trade databases, and accounts payable from the firm’s own accounting department.

Instead of bookkeepers and legal aides digging around for sources, the data can be automatically found, gathered and placed into the appropriate risk registers by robots. Partners or their financial controllers will have more time to assess the risk at the client and transactional level. It also makes the law firm more self-reliant, saving costs and effort in contacting consultants.

Perhaps theoretically you can accept the case, but you really shouldn’t if you like sleeping! How would you know? RPA can help determine the opportunity-cost of committing. Software robots absorb the (numerical) parameters of the case and match code-ids to estimate the total number of hours to complete the case.

A firm’s scheduling software can be leveraged effectively by having this robot assign the hours into case calendars. This is especially useful for fixed recoverable costs, as it determines the feasibility that a case can be placed on the fast-track, intermediate-track, etc. for the potential value of the FRC.

As long as there are guidelines on the appropriate codes and values given to the robot, the robot can quickly organise the data so that it is ready for human (or AI) calculations. It drops the chance of a firm finding themselves out-of-pocket. It also helps the fee earner confidently report the time estimates to the judge.

2.RPA and client risk in law

A client’s risk profile can be built more quickly using robots. Software robots operate across already existing document management, e-discovery, imported public databases or law practice management applications.

Take one example: robots filling in fields of the anti-money laundering (AML) and Counter-Terrorist Financing (CTF) risk assessment forms. Recoverable information can include the length of relationship between the firm and the client, countries and geographic regions where the client operates, the client’s products & services, and delivery channels. Robots then create “mini-databases” after documents are placed on legal hold and gather all aggregated facts into a single structured file. The robot can continue to run reports, check for completeness and sort it. This quickly builds a more cohesive profile of the client.

This task would have taken a team of paralegals days to complete. In rpa, the task can be done in a matter of hours. Relying on manual processes could prove a liability if staff are already under a heavy caseload. But software robot yields a typical 10-15% reduction in administrative costs.

3.RPA ensuring legal compliance

Yet even a cleared new client (or a regular) can go rogue. Keeping up with compliance checks before or after a trial protects a firm against sanctions and fines further down the line. One oversight and a firm might find itself unwittingly enabling a money laundering scheme. Software robots can automatically perform periodic due-diligence checks and flag suspicious activity with 24-hour vigilance and 100% accuracy.

RPA’s software robots are able to fill out the Suspicious Activity Report (SAR) and ping it when done. Through crawling the law firm’s records, robotic process automation can automatically place information required in the subject details and transaction details.

Did you know that the NAC receives +380K SARs annually? It is thus very important that the filled-in form fields are accurate. This prevents the NAC from having to contact the law firm for further information, taking time away from the firm’s core activities.

Robotic Process Automation and streamlining matter management and case management in law firms

Ah, Plebgate. The ruling behind Andrew Mitchell MP v. Newsgroup Newspapers Limited showed us the consequences of a party missing the 21-day cost budget and 7-days Cost Management Conference (CMC) deadlines for court submissions. Worst case scenario, the party would be unable to claim costs from an opponent. To make sure this doesn’t happen, robotic process automation can coordinate information from individuals needed for timely submission.

4.Robotic Process Automation coordinating information between fee earner and client

Robotic process automation essentially automates business and people requests to ensure consistency across multiple systems and formats. Software robots can be directed to move the correct documents from a law firm’s document management systems to an extranet that is readily accessible to the client.

During case preparation, robotic process automation can sort and locate various documents delivered by the client ready for preservation and disclosure. It can also grab unstructured data in notes and documents and place only relevant information into structured forms.

Data gathered this way can be placed into law firm management systems and later populate and export pre-trial CPR forms such as probate claim forms and notes for defendants. It also has the ability to send forms to the client and track client’s amendments when preparing documents.

Above all, robotic process automation is user friendly. The fee earner does not need technical knowledge to create a robot. By using the main Graphical User Interface (GUI), the robot can be directed to act across applications, legaltech or otherwise. The software robot can either be given instructions through a user-created visual flowchart, or it can follow screen captures within the target application to “learn” what needs to be done. Most attractively, the same robot retains this knowledge and can repeat this process for future cases.

5.RPA’s role in reducing fee overruns

The time it takes to close a case and the amount of resources used within the court are factors that a fee earner can’t foresee. Fee overruns not only causes friction with the client, but can open up lengthy cost disputes and satellite cases. RPA can be a key tool for quicker task completion when a client’s own records system is also brought into the mix. This helps close any communication gaps.

Delays in providing key documents and instructions from the client’s side places extra pressure on the fee earner who now has even less time. Luckily robotic process automation can be deployed at-scale to help ease the burden during peak activity. This makes it particularly valuable in times of case acceleration whether it be by changes requiring extra work, commercial developments forcing tasks to be moved forward, or previous matters overrunning.

6.RPA for accurately tracking and auditing running costs

It is worth keeping in mind that it’s possible that a claimant receives less money under a fixed recoverable cost. This can happen if a judge feels that the claimed fee is disproportionate to the matter of the case – as was seen in Willis v MJR Rundell & Associates Ltd.When the margin between what is recoverable and the eventual client’s bill widens, complaints will be coming.

It has become a habit for corporate clients to use task-based billing after years of frustration of block-billing. If you find yourself dealing with a task-based billing client, RPA can conduct regular monthly file audits on a thematic basis.

Software robots can log audit trails to track a fee earner’s noted activities in time management systems and reference them during billing disputes or compliance issues. It can place task-based codes accurately or grab data that would be useful in forecasting burn rates and granular analysis. Robotic process automation can implement J-codes to create the new Bill of Costs (BoC). Overall, the process would need less manual human inputs and less time for review.

Despite squeezed deadlines and conflicting client-litigator meeting schedules, a judge won’t allow a party to revise an approved budget even if there was a simple error. The only exception is if there has been a significant change during litigation i.e. Group Seven Ltd v. Nasir. Adopting a technology that is 100% accurate and never takes a holiday can quicken the process and give more time for review.

Careful case management can soften the unpredictable effects of the Jackson reforms. Streamlining out-of-court procedures with robots prevents further delays.

Concluding remarks

As 2019 approaches, law firms are faced with the unstoppable march of fixed recoverable costs. Applying robotic process automation in the contemporary challenges of the legal industry requires looking deeper into the risks of taking on a case and making sure your case management is optimised. The flexibility of robotic process automation shows that it shines in matters dealing with data, accuracy and efficiency.

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