E D I T O R I A L
W
VOL. 12, NO. 2
FALL 2010
Unbiased Support Services Analysts and Cost Recovery Experts
How One Firm Created a Long-Term
Strategy for their Off-site Records
Storage Issues and found the key
to unlocking the permanent
withdrawal handcuffs...
871 Baltimore Pike #12
Glen Mills, PA 19342
elcome to the Fall 2010 Edition of Mattern Matters. My name is Rob
Mattern and I am one of the principals of Mattern & Associates, LLC.
Mattern & Associates assists firms in improving their support services
and billable cost recovery revenue. Unbiased, we approach the process without
any need to sell services or products. This allows us to make objective
recommendations based upon the client’s support service needs. With our
industry benchmarks, on-site expertise and our RFP process (otherwise known
as the Mattern Method®) we are able to deliver excellent results in both
these areas.
I want to take a moment to fill you in on some recent developments at Mattern
over the last six months:
❖ In May of this year we started our blog Mattern of Fact (www.matternoffact.com). The purpose is to educate and inform the legal community
about in-house and outsourced support services, cost recovery and the
vendor contracts that support these functions. It includes strategies for
making these operations and contracts more cost-effective and efficient in
addition to improving your billable cost recovery revenue. The goal is to
provide unbiased information to you so that you can make intelligent,
well-informed decisions concerning these areas. The blog is updated weekly so if you get a moment, please stop by and post a comment.
❖ Is your Firm getting hammered on soft cost recovery realizations? –
Mattern & Associates may have the answer for you. After analyzing what
has been happening in the legal community regarding cost recovery for the
past few years, we have recently developed a new cost recovery strategy for
law firms to increase their soft cost realizations – Mattern Plan B Cost
Recovery™ - US patent pending. Please visit our website for additional
details or contact Brady Schoenrock at [email protected] or
myself at [email protected] to discuss further.
❖ Many of our clients are enlisting our services for Phase III – which is the
monitoring and maintenance aspect of our client relationships. This is
where we oversee the implementation and stay involved throughout the
term of the contract, approving monthly invoices and addendums, implementing recommendations identified in our initial analysis and working
with the vendor to maximize our client’s satisfaction. In light of this
increased demand, we are dedicating additional resources to this area and
centralizing this function within Mattern. Starting in October this facet of
our company falls under our Director of Strategic Relationships Brady
Schoenrock and will be spearheaded by Consultant Ed Warren.
If you would like to discuss any of the above, please do not hesitate to reach out
me either by phone 610-459-7750 or email – [email protected].
That’s it for this edition of Mattern Matters. Have a great Fall.
Rob Mattern M
major Midwestern law firm had a
problem. They were generally
satisfied with the services being
offered by their current vendor but their
account was being impacted by the
following:
A
❖ Implement performance standards for
the new/current vendor
❖ Absent account management
❖ Analyze the current workflow and
instill processes to improve and
minimize unnecessary charges by the
off-site records storage vendor
❖ Inaccurate invoices
❖ A decade-old contract that did not
protect the firm from unauthorized
price increases or fees
To compound this issue, whenever they
tried to get competitive pricing from
another vendor, the permanent withdrawal fees under their current agreement were
in excess of $400,000.00, making it costprohibitive to switch to another vendor.
In order to address this situation, the firm
retained Mattern & Associates to benchmark their current contract and outline a
strategy to address the following:
❖ Reduce costs
❖ Create a strategy to reduce and eliminate permanent withdrawal fees
❖ Put a contract in place to protect the
firm from unwarranted and unauthorized charges
❖ Create a strategy to reduce the
amount of records being sent off-site
and to eventually eliminate the firm’s
off-site records storage
After a careful review of the Firm’s
contract and on-site operation, Mattern
recommended an open Request for
Proposal to create a competitive environment in order to achieve the goals as
outlined by the client.
The strategy decided upon by the firm,
derived through Mattern’s strategic
recommendations and the results of the
open RFP process, were as follows:
continued inside
Unbiased Support Services Analysts and Cost Recovery Experts
Conscientious Cost-Cutting
Cost-Cutting
Building a Strategy to Reduce Expenses Across the Firm
By Rob Mattern
I
n the past year, law firms have focused
more than ever before on substantial
cost-cutting initiatives, with every
element of the business scrutinized. Many
decisions, however, were made based solely on cost, with other factors being
ignored. What does a firm do when that
isn’t enough – after requests for proposals
(RFPs), short lists, vendor switches and
tough contract negotiations still have not
had a big enough impact on the bottom
line? This is when a firm needs to unveil
“The Strategy” – a fundamental, 180degree shift in how the organization
approaches, structures and manages its
support services operations. Why are the
firm’s copy, mail, records, cost recovery
and printer operations – which are usually
a firm’s fourth- or fifth-highest expense
area – so ripe for a change in direction?
Many factors are involved, including the
explosion of new technologies dedicated to
this area, the plethora of excellent vendors
and the upside of recovering your firm’s
costs.
OUTSOURCE VERSUS INHOUSE TARGET SAVINGS:
25% TO 35%
Approximately 70 percent of firms outsource their support services, and now may
be an opportune time for your firm to
revisit exactly how and why the firm outsources or maintains certain services inhouse. If the firm is not outsourcing, now
may be the time to restructure its operations. Some alternatives:
❖ Consider moving the firm’s centralized off-site operation to a less expensive location. With the advancement
of electronic job submissions and
other technologies, it is entirely feasible to separate centralized support
from the end users and to maintain satisfactory while reducing the
operating costs.
❖ Consider eliminating the firm’s on-site
centralized operation altogether and
utilizing the outsourcing vendor’s dedicated off-site facility as your centralized operation. Issues to consider with
this option include confidentiality,
capacity and scheduling, but the cost
reductions can be significant.
VENDOR CONSOLIDATION
TARGET SAVINGS: 15% TO 23%
When I meet with prospective clients, I
sometimes hear that they would never
consider consolidating off-site records
storage, outsourcing or equipment
vendors. Their concerns usually center on
vendor performance in non-core cities and
a desire to let individual cities remain independent in their decision making processing. One area that has seen such consolidation has been office supplies, with firms
enjoying savings of 15 percent to 23 percent when one supplier services all of their
locations. The lack of dedicated on-site
labor has been one reason for the success
of this movement. Despite some valid concerns about vendor consolidation, doubts
can easily be overcome via a well-structured RFP that articulates the performance
standards and requirements for each city.
Support for non-core cities must be
addressed in detail by RFP respondents
and should be a key focus of their presentations. All supplier promises and commitments must be formalized in the
contract, with appropriate penalties if service and staffing levels are not maintained.
The concept of deleting on-site centralized
services as discussed previously will only
make this less of an issue because on-site
labor will no longer be a factor. If the labor
component is still present, vendors have
been successful in addressing these concerns by overstaffing the sites and utilizing
alternate resources for support. Vendor
consolidation efforts often yield substantial
savings and may be worth a closer look.
The key is to structure the RFP to establish
precisely how the services are going to be
provided and note them in the contract.
OFF-SITE RECORDS STORAGE
TARGET SAVINGS: 12% TO
22%
Off-site records storage – the storage of
documents at an off-site location whereby
firms are charged for storage, retrieval and
destruction – is an area eligible for a
change in strategy. The basic concept of
storing paper is antiquated, as are the pricing structures utilized by many storage
companies. One way to reduce prices is
through the RFP process and vendor negotiations, but the real key is to create a strategy that reduces the amount of paper being
sent off-site, while at the same time minimizing the volume that is already being
stored off-site. In addition, your next contract must be structured correctly. Current
agreements that upset firm administrators
are often the result of poorly outlined contracts that allow vendors to demand such
charges. Contract points to consider:
❖ Permanent withdrawal and termination fees. There is no valid reason to
agree to pay these charges for any new
boxes that are being sent off-site. The
archaic reason behind such charges is
that the building where documents are
stored was built to house these documents, and that the off-site storage
company would suffer harm if firms
(continued next column)
(continued)
withdrew the documents, leaving the
company with an empty building. For
existing boxes, concentrate on these
charges in any RFP process and contract negotiation. Ask for a certain
amount of “free” permanent withdrawals in every contract negotiation
and view these charges as just as
important as the cubic foot storage
charge. Another way around these
charges is to reuse boxes that are
stored off-site already and never permanently withdraw them. Just bring
them back, destroy the unwanted contents, refile them with new contents
and update your records management
software. A good annual goal for this
area is to have no new net boxes stored
off site.
❖ Reduce documents stored off site.
With the explosion of scanning capabilities and the fact that most documents are already in electronic formats, there is little reason for new
boxes to be sent off site. Create a
firmwide program to scan any documents that are not already in digital
formats.
❖ Reduce documents already stored.
Many firms are waiting to create document retention policies prior to the
destruction of any documents already
stored off site. Other firms have
destroyed older records – including
human resources, accounting and
miscellaneous correspondence – without such policies in place. Some firms
without retention policies are also
comfortable with destroying older
records: for example, anything created
30 or more years ago.
SECRETARY-TO-ATTORNEY
HEADCOUNT RATIO TARGET
SAVINGS: 16%
Virtually every firm is trying to reduce the
number of secretaries needed to provide
service to its attorneys. There are numerous ways to implement this strategy, but
one excellent method is to strengthen the
support services operation so that the secretaries can delegate some of their routine
duties (such as copying and scanning) to
service providers. Industry studies reveal
that these “routine” duties account for 60
to 90 minutes per day of a secretary’s time.
A well-managed support services operation can be a tremendous asset to secretarial staff. For example, with a one-hourper-day addition of time to each secretary,
it would be possible to increase the firm’s
secretary-to-attorney ratio by 16 percent.
OUTPUT MANAGEMENT
TARGET SAVINGS: 50%
With the placements of multifunctional
devices that are capable of printing and
scanning in addition to copying, firms
now have ideal avenues to decrease overall
output costs. If contracts are structured
correctly, black-and-white output from
multifunctional devices will cost up to 50
percent less than the same output from
laser printers. The same can be said of
color output. Also, if the physical layout of
your office is set-up in a “pod” arrangement (or your office layout allows it), then
the correct placement of multifunctional
devices can also help you to avoid printer
redundancy.
THE BOTTOM LINE
As outlined, the support services arena
offers a tremendous opportunity to reduce
costs beyond routine RFPs and contract
negotiations. To achieve significant savings, the development and implementation of a comprehensive strategy is necessary – and the process positions the firm
administrator as a valued strategic asset in
M
the organization.
Firm Created LongTerm Strategy
continued from page 1
1. The Firm decided to keep the current
boxes with the incumbent vendor in
the headquartered city under the contract terms negotiated by Mattern.
Result: The Firm was going to be in a
major destruction mode and Mattern
was able to achieve a 17.6% decrease in
permanent withdrawal fees and a
10% decrease in retrieval fees. Overall
savings were projected to be 13.9%,
2. A new vendor was chosen in the
headquarter city.
Result: This new vendor agreed to
eliminate permanent withdrawal fees
and waive all handling fees for the first
5,000 boxes. The contract negotiated
by Mattern resulted in 11% annual
savings.
3. In the Firm’s largest regional office, a
new vendor was chosen.
Result: The new vendor assumed all of
the incumbent boxes at no cost to the
firm, reduced the permanent withdrawal fees by 29.4% and reduced the
firm’s overall costs by 11.7%.
In summary the Firm reduced their
monthly storage costs by more than 11%;
put in place vendor contracts that had
performance standards and air-tight
language on unauthorized increases and
charges; and in the long-run eliminated
and/or reduced their hostage fee situation.
M
MATTERN MATTERS is a semi-annual publication offering business and support services information. Should
you have any questions about your support services, or if you have any comments on this newsletter, please do
not hesitate to call us at (610) 459-7750. You can e-mail us at [email protected] or contact us through
our websites at: www.matternassoc . com or www.supportquestions.com.
© November 2010