Legal Briefing

Managing global legal 
and expert spend

The In-House Lawyer Logo

Technology, Media and Telecoms | 01 September 2013

Case study, ACE Group: LSG outline the lessons that in-house lawyers can learn from their collaboration with ACE Group to control legal budgets.

The ACE Group is one of the world’s largest multiline property and casualty insurers. With operations in 53 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance 
to a diverse group of clients. 


ACE Ltd, the parent company of the ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a member of the S&P 500 index.

In 2005, LSG and ACE met to see if LSG could help them manage their global litigation and expert spend program. By 2008, ACE wanted to expand the program throughout North America, prompting LSG to provide a new system to better accommodate North America’s workflow and meet the following critical business issues.

ACE’S CRITICAL BUSINESS ISSUES AND LSG’S SOLUTION

Cost visibility across the globe

ACE wanted cost visibility and better control of their external expert spend across the globe. With operations in 53 countries, it needed a solution to manage their legal suppliers, their rates and associated expenses.

To address this issue, external counsel and other experts across the globe are invited to join Advocator System®, which enables designated ACE client executives to approve their rates and fixed expenses (eg travel rates and photocopying charges) prior to invoice submission. This provides cost visibility and control of preferred suppliers.

Increased rates and new fee earner details can be submitted by the external counsel at any time. However, only rates up to and including the approved rate for each fee earner are ‘accepted’ by Advocator System® when invoices are submitted. This automated validation ensures only the approved rates are billed.

These controls contained within Advocator System® ensure that ACE keeps control of their experts: only pre-approved experts can be assigned cases/matters, rates are controlled by the designated client executives and invoices are validated against the pre-approved rates.

Cost visibility is delivered.

BUDGET TRACKING

Paper-based budgets on fees, expenses and indemnity costs have been provided by counsel and claims professionals for many years, but tracking these costs against the reserve can be difficult without supporting technology.

The same principle applies to any in-house lawyer managing their matters/workload with their external counsel.

ACE required a solution that would enable their claims executives to track the spend against the approved budgets.

The Advocator System® enables the claims executive to:

  1. request either a ‘life of case’ or ‘phased’ budget, depending on the complexity of the case;
  2. approve or reject the budget submitted by the external counsel; and
  3. once approved, budget erosion is tracked as the invoices are submitted with e-mail notifications sent to both parties.

This improves collaboration, triggers a strategy review and if necessary a re-setting of the budget.

This proactive approach to case and 
cost management helps both parties 
to manage their case load and strategy 
at the matter level while also providing ACE’s senior executives with a high-level view of their reserves across all business units.

Budget tracking enhances the performance of ACE’s claims team and their external counsel.

BILLING GUIDELINE COMPLIANCE AND VALIDATION

ACE claims’ executives are responsible 
for managing the costs of a claim. A paper-based invoicing process was proving inadequate because there was no easy way to check that the invoices were compliant against ACE’s service level agreement (SLA) and billing guidelines. The only way involved manual review, which was costly, prone to ‘human’ error and inconsistent application.

ACE asked LSG to provide a solution that would take this ‘invoice compliance’ burden off the claim executives’ desk.

The Advocator System® e-billing desktop automatically validates key parts of the invoice including:

  • fee earner rates;
  • expense/disbursement costs such as travel and photocopying;
  • maths (rate x unit cost for each line entry and total cost);
  • removal of duplicated line entries; and
  • compliance with budgets (if any).

LSG also provides a ‘manual’ review of the invoice, supported by additional technology, which validates the remaining 40 billing guidelines.

After this review and if potential reductions are made, the external counsel may challenge them with clarification(s). If valid, these are accepted by LSG, and the invoice is ‘passed’ to the claim executive for their ‘qualitative’ review and approval.

Ultimately, the burden of invoice review is taken off the ACE executive’s desk, saving time and enabling them to focus on higher value work.

This ‘manual’ invoice compliance service can be switched ‘on’ or ‘off’ by ACE.

EASY INVOICE REVIEW 
AND APPROVAL PROCESS

Rather than review paper invoices, 
ACE wanted a system which would streamline their internal processes. 
With Advocator System®, they can 
review, reduce and/or reject an invoice 
on a single screen.

Specific line items can be reduced or a 
‘high-level overall’ reduction can be made.

The ACE executive may also provide a ‘comment’ which is incorporated into an automatic e-mail to the external counsel informing them that their invoice has 
been approved.

These e-mail notifications can also be sent to the relevant billing clerk or accounts assistant at the firm to help them to manage their receipts.

The approver can also forward the invoice 
to their manager if it is outside their approval authority.

Once approved, ACE’s accounts payable team are also notified via a secure FTP file so they can arrange payment.

FINANCIAL AND MI REPORTING ON BUDGETS AND SPEND BY MATTER/BUSINESS UNIT/CLIENT/LAW FIRM/LEAD LAWYER/CLAIM HANDLER

ACE recognised the value of managing 
their external counsel and legal spend on 
a single platform.

With this, ACE is able to obtain ‘real-time’ reports on a variety of key financial and performance metrics on their internal and external counsel across cases/matters, business units and geographies.

The Advocator System® provides key reports within the system and LSG also provide a separate Advocator System® Dashboard (ASD) which can ‘slice and dice’ and present the data in graphs, tables, pdf and Excel spreadsheets.

ASD® is a powerful reporting tool that generates both high-level and granular reports. These include, for example, matter/case specific budget v actual, fees and expenses, guideline non-compliance, business unit reports, internal executive reports, top 10, 25, 100 cases/matters by spend and similar external counsel reports.

Another feature of ASD® is the ability to produce and send selected reports to selected employees at regular pre-set intervals prompting better management and proactive action.

Law firm performance scorecards are also particularly useful to record and report on the performance of ACE’s panel and other external expert suppliers/vendors.

This reporting, and data analysis, remains a key driver for ACE to use the Advocator System® and ASD®.

Gary R Markham , chief executive, comments:

‘LSG’s partnership with ACE has helped generate significant gross cost savings since 2005 and produce a better cost/benefit ratio by improving adjuster and law firm performance alike; via the utilisation of its Advocator System®.’

By Charlie Morgan, 
client relations manager, LSG.

E-mail: ccm@lsg.com.

Contributing Firm

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