I attended a session on Approaches to Client Security Audits at the recent CIO Forum and there was a discussion about Matter Team Security. One of the law firm panelists said that many of their clients were requiring that only members of that specific matter team were allowed to access documents and other information about the matter. I thought about the cost implications of this requirement on additional administrative overhead, maintenance of a team member change and the software required to maintain the matter team-based security. I asked the panel: Do you think that the law firms will move to a two-tiered pricing structure and charge additional fees to support the additional costs related to matter team-based security? I also asked if they thought that the law firms would move to the airline model of imposing baggage fees as a way to keep the hourly rates down and competitive but accommodating and paying for the additional security requirements? There is an analogy here: Airlines are faced with tough competition and have dramatically increased their revenues by charging for something that once was included into all ticket prices – checked baggage. Previously the cost of checking a bag was absorbed into the ticket price whether you checked a bag or not. Now the cost of checking a bag (which involves additional administrative overhead, baggage tracking tags, software costs for the airlines) is paid directly by the person checking the bag. Law firms are faced with tough competition and right now absorb all costs associated with security into their hourly rates. So a client that does not require matter team-based security is allocated part of the cost (through hourly rates) of other clients requiring matter team-based security.
The reaction of the two law firm panelists was that their firms had not considered “baggage fees”. The representative from the corporate legal department said that they visit lawyers in their “palatial offices in Manhattan” so they expect security to be bundled in.
I don’t know. One way law firms may be able to keep hourly rates competitive is to start breaking out client specific security costs that were previously bundled into the rates and allocated across all clients. Who knows, maybe Frequent Litigation Points will be next!