In today’s legal landscape, outside counsel guidelines (OCGs) have evolved from simple billing instructions into complex compliance documents that significantly impact law firm operations. Although clients provide these guidelines to facilitate the billing process, client terms can slow down billing if your timekeepers do not have the ability to easily find out what terms govern each matter.
This article examines what happens when law firm professionals cannot self-serve answers to their questions about what terms apply to a matter.
The ripple effect of uncertainty
When your professionals do not know what terms apply to a matter because they don’t have access to the terms, the consequences extend far beyond administrative inconvenience. For example, billing professionals who don’t know the controlling client guidelines face an impossible choice: Proceed with uncertain compliance and risk rejection, or hold invoices pending clarification from those in your firm who have access to client terms.
Either path leads to potential revenue loss. A single delayed response can affect hundreds of time entries across multiple timekeepers, creating a bottleneck that impacts the entire billing cycle.
Consider a typical scenario: A law firm handles a complex litigation matter involving multiple practice areas. For any internal team conferences on such a matter, the client’s guidelines contain specific terms about task code applications. But if your firm’s timekeepers must ask another department to share with them these specific terms, they may not receive a timely answer on how to record internal team conferences. By the time the other department provides an answer arrives, some entries may fall outside the client’s 90-day billing window, resulting in automatic write-offs.
The financial stakes
Published statistics on write-offs tell a compelling story about their high costs. From the second quarter of 2022 to the end of 2023, research indicates that law firms wrote off an average of 9.5% of their billable time. Delayed responses to OCG questions contribute significantly to this figure. A mid-sized law firm handling $50 million in annual billings could face write-offs exceeding $4.75 million — losses that could have been prevented if your firm could provide quick answers to terms questions.
The impact extends beyond direct write-offs. Administrative costs soar as billing staff and other law firm professionals spend countless hours following up on their unanswered OCG inquiries, revising invoices, and managing rejected bills. This diverts resources from other critical functions and creates inefficiencies that affect the firm’s bottom line.
Pain points in OCG compliance
Several areas consistently generate OCG questions. For example, your professionals often have questions about task code applications, particularly for novel or hybrid legal work that doesn’t fit neatly into predetermined categories.
Likewise, your timekeepers are likely to have questions about expense billing requirements, which vary widely among clients, with some requiring detailed documentation that must be confirmed before submission. Staffing approvals and rate structures also vary between matters, especially when new timekeepers join matters or alternative fee arrangements come into play.
Solutions and best practices
To address these common questions, forward-thinking law firms are implementing robust OCG management systems that provide easy access to approved OCG interpretations and enable their professionals to see what terms apply to each matter. In addition, automated compliance checking in these systems helps identify potential issues before they reach the billing stage.
Successful firms have also implemented AI that can immediately answer OCG questions and reference the controlling client guidelines, thereby avoiding the delays that would result if only firm professionals could answer questions and share guidelines.
These technological solutions, while requiring initial investment, quickly pay for themselves through reduced write-offs and improved billing efficiency.
Looking ahead
The complexity of outside counsel guidelines will continue to grow as clients seek greater transparency and control over legal spending. Firms that invest in proper OCG management today position themselves for future success. This investment goes beyond technology: It requires a cultural shift toward viewing guideline compliance as a strategic priority rather than an administrative burden.
For law firms, the message is clear: Delayed internal responses to OCG questions create a financial drag that affects every aspect of operations. By implementing robust management systems and leveraging technology, firms can minimize write-offs and maximize revenue capture.
Learn about how Intapp Terms, now equipped with Intapp Assist AI, streamlines client terms adherence by providing immediate answers to OCG questions.