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Published by , 2018-10-18 14:13:18

Mattern SURVEY Booklet v2 10.18.18

Mattern SURVEY Booklet v2 10.18.18

Who We Are

Mattern assists law firms in developing an unbiased strategic direction

for their business processes while improving both the cost-effectiveness
and the recovery of expenses for these services. In addition, we provide
clients with unbiased, decision-making information on how to reduce costs
without sacrificing services and improve all levels of efficiency in areas such
as outsourcing, records management and information governance, mail,
reprographics, hospitality/conference room management, off-site records
storage, office supplies, print output, digital workflow, overnight services,
document (word) processing, lit support/eDiscovery and cost recovery.
First conducted in 2004, the bi-annual Cost Recovery Survey performed by
has been referred to by legal industry leaders as, "The most comprehensive
snapshot of cost recovery trends and practices available in the legal field.”


Cost & Efficiency Matters
We provide law firms with unbiased strategic
direction for back and middle office services.

Mattern is the leader in legal business process consulting Experience

and cost recovery solutions. We provide law firms with unbiased 20+ years of exceptional service and over 450 successful
strategies for measurably improving the efficiency and cost engagements with the nation’s leading firms
effectiveness of in-house and outsourced back and middle office
services. Unbiased

No other consulting company handles more engagements, has The Mattern business model ensures your firm’s interests
more industry experts on-staff, publishes more articles, conducts are at the core of every process
more industry surveys and speaks more about law firm back and
middle office operations than Mattern. Traditional Back Office Support Services

Mattern provides strategic and sustainable solutions in the form • Business Process Outsourcing
of legal middle and back office consulting services to law firms, • In-House Analysis
varying in specialty and location. Our solutions are powered by • Equipment
industry-leading process improvement, expense reduction, and • Output Management
cost recovery experts. They are customized to meet your specific • Records Management – On and Off-site
needs and preferences, unbiased and vendor-neutral. • Office Supplies Analysis
• Cost Recovery Analysis
We are your partner. Our solutions streamline and simplify • Implementation Oversight
your business while saving you money. Continuously updated • Contract Maintenance and Monitoring
and monitored, they are sustainable over time.
Leaders in Middle Office Service
We create a strategic plan for each area we touch with contract Offerings
terms that work in our clients' favor, and provide ongoing
monitoring and maintenance so our clients know they are • Litigation Support
getting what they pay for. Lastly, we incorporate a plan for the • Technology/workflow
recovery of costs associated with the back and middle office so • Off-site spend benchmarking & bid process
your firm recovers what it should. • Managed Services Procurement

• Document Processing
• Current-state assessment, recommendations and
solutions including head-counts, centralization
efficiency, workflow, etc.
• RFP process and contract negotiations

Benchmark Data

• Administrative Resource Services labor and
benchmarking assessments
• Library Services
• Secretarial Pool
• Accounts Payable
• Help Desk/Call Center

First-of-Kind Surveys and Benchmarking

• Mattern Cost Recovery Survey
• Mattern Outsourcing Benchmarking Report
• Mattern Managed eDiscovery and Litigation

Support Benchmarking Report

Process Survey Background

First executed in 2004, the bi-annual Mattern Cost • Traditional items such as facsimile (soft), telephone (soft)
Recovery Survey is an industry-recognized survey of cost and postage (hard) have been excluded due to an industry-
recovery practices. The 2018 Survey focuses on the wide decrease in usage.
following areas of cost recovery:
• "Soft" cost recoveries are defined as costs incurred by the
• Types of costs firms are recovering firm for which there is no formal documentation such as an
• Rates used to recover these costs invoice. Recovery rates are formulated from either market
• Percentage of these items identified as being recoverable rates or an internal allocation of costs.

from a client • "Hard" costs are defined as costs incurred by the firm for
• Percentage of the recoverable amounts actually which there is external documentation, such as an invoice
from a third party.
reimbursed by clients (realization)
• Emerging areas of cost recovery (new recoverable items)


The Survey was posted on the company website ( and conducted
online from April to July 2018.

• Potential respondents were notified of the Survey via email, Mattern Matters Newsletters,
Mattern of Fact (Blog), Mattern Minute, webinars and solicitation signs at seminars.

• A total of 212 law firms were provided with a secure link, login and password to complete
the survey.

• A total of 34 law firms participated (16%) falling into the following subgroups:

Regions where firms have a presence:

Mattern provides tremendous Geographic region where primary or main office/
value to the process. The team headquarters is located:
knows the questions to ask, Firm Size:
where to push on negotiable
items, and what other vendors
and firms have negotiated.
Mattern simply knows what is
happening in these areas today.
This all provides great leverage
to help ensure we get the best
agreement and service possible
from the vendors. Seeing the
process all the way through, and
then providing support on the
backend to help ensure we are
getting the service we agreed to,
in the time frames established,
for the price negotiated helps
to make the process complete.
The entire process saved me and
my team a tremendous amount
of time, and I know without
a doubt we got a much better
agreement and value than had
we done the process ourselves.
- Steve Wingert, Director of

Because of engaging Mattern
for the Phase III, our firm is
more pleased with our service
contracts, we have also
achieved significantly more
effective contracts. I consider
their team to be an invaluable
- Maria Casas, Operations Manager

Cost Recovery in 2018 and Beyond:

Has Pushback Leveled Off?

When do you call flat, net realization a positive sign? When the What will the future hold?
net realization is the recovery of costs, that’s when. The 2018
Mattern Cost Recovery Survey results show year over year flat Print and scan will be the new
or increasing net realization across back office service areas. vehicles on which to base law firm
This means cost recovery has stabilized. This is good news for cost recovery models; however, with
law firms—and could mean the end of the era of pushback. approximately 50% of the firms
recovering these items, it will soon
For example, after declining for the past four years, net become a population of haves/have
realization for Black & White Copy costs has remained level in nots. For firms that recover prints,
the 2018 survey. Other key indicators include: scans and lit support costs, etc., the
future holds a stream of recovery
• B&W print net realization increased 30% to offset increasing costs. Firms
• Legal Research net realization increased by 48% that do not will be faced with a
• Overall, Billable percentages and the “Billable actually declining recovery stream that will
force them to either absorb these
Billed” have stabilized or increased across the board costs into their overhead or turn
• Firms are more aggressive on charging for and recovering to a hard cost pass through model
such as Mattern Plan B®.
electronic data storage
Regardless of which cost recovery
Along with a multitude of other data points in the 2018 Survey, camp your firm falls into (print/
we are interpreting this as the bottoming out of cost recovery. scan capture or not), the strategy
As a matter of fact, firms that have established their cost that your firm employs toward
recovery strategies, whether for traditional recovery, print and recovering or not recovering and
scan, or have established an acceptable model for recouping the structure of your expenses
lit support and data storage costs, these firms have now clearly (hard or soft), is critical in this new
emerged as having created a viable, long term model to recover day and age of law firms.
justifiable costs.

The traditional model of cost recovery is still the method of choice
however alternative models are gaining traction.

Despite the continued pressure on the
recovery of costs, the traditional soft
cost recovery model continues to be the
dominant model in the marketplace.
However, non-traditional models are
gaining traction with close to 25%
of respondents having explored and
implemented an alternative.

Alternative Methods
that were implemented

by the respondents:

Have foregone charging Adjusted fees to include Implemented a combination Modified strategy
cost recovery all together cost recovery revenue of strategies that include

foregoing charging, building
cost recovery revenue into fees

If you have maintained soft cost recoveries, what areas are
clients “pushing back” on or renegotiating rates?

As you can see from the above data, client pushback is still prevalent in the areas that historically have encountered it – Legal
Research, Black & White and Color copies, Telephone and Word Processing. Some moderation is seen on telephone and word
processing which we attribute to firms backing off on trying to recover these costs.

The positive takeaways from this data is the leveling of pushback on prints and scan recovery as these items become accepted in the
recovery marketplace.

It is interesting to note the increasing
pushback on Lit Support costs as firms
struggle to solve this delivery model and
recovery. However, in light of the level of
pushback on other areas, Lit Support and
Data Storage remain relatively low.

Some telling comments from respondents
that seem to capture the recovery mood:

• Clients don't push back; attorneys
write off, so they aren't nickel &
diming clients

• Since baking it into fees – client
pushback on soft costs are gone

What are clients
refusing to reimburse?

Although many firms continue to
employ the traditional cost recovery
practices, clients continue to pushback
and/or refuse to reimburse firms for
certain costs.
In answer to the questions - If you have
maintained soft cost recoveries, what
areas are clients refusing to pay?

These data points track identical to the pushback/renegotiate
data points which indicates that firms are differentiating between
pushback/refusal to pay or the trend is that clients start by
pushing back and then migrate to refusal.

How does your firm handle clients who refuse to pay for
soft cost disbursements at the onset of an engagement?
(Please check all that apply)

These data points
are consistent
with past surveys
in that the most
prevalent action is
to charge the client
matter number
and then write-off
these items in the
pre-bill process.
These write-offs
are reflected in the
“Billed Actually
Billed” percentage.

How does your firm apply payments when Our overall experience with Mattern
received from your clients? has been very positive but also very
productive. The entire team has gone
above and beyond to ensure that every
aspect of service that was contracted for
was provided in the most professional
manner. Additionally, we requested
additional services as our project
evolved into more than originally
anticipated. The Mattern Team has
been a wealth of knowledge and
resources. Both our COO, and I feel
like this entire transition would never
have happened in the way it has had
we not engaged Mattern. This has been
a very rewarding working experience
for me as it is not often that a vendor
or service provider will go above &
beyond to make the client feel like “we
got this.”

- Joe Soileau, Director of Facilities
and Office Services

Billable, Actually Billed and Actually Paid – Leveling off?

Using Black & White copies as a bellwether,
one can see a decrease in the number of
impressions being designated as Billable
(13% decline between the average of 2004 to
2014 versus 2018 and 4% from 2016). The
Billable Actually Billed increased 9% from
2016 to 2018; however, it still represents a
6% decline from the 2004 to 2014 average.
The 2018 Billable Actually Paid roughly
stayed the same from 2016 and only
decreased 5% from the Average of 2004 to

The overall result is a stabilization of net
realization at 37% from 2016 to 2018,
though it represents a drop of 15% from the 2004 to 2014 average.

What are the good and bad points here? Obviously, the stabilization of Net Realization is a positive point. In our opinion, this
stabilization represents the bottoming out of the cost recovery pushback movement. The increase in the Billable Actually Billed
percentage is also extremely good news for the legal market which means Attorneys are billing more/ Clients are open to being
billed more. The decrease in the billable percentage is concerning in that it is one of the avenues in which firms handle clients
who refuse to pay.

Overall, more positive than negative news for the legal industry.

Prints and Scans – The New Vanguard of Cost Recovery

As firms continue to expand their workflow The Mattern team performed a comprehensive analysis of
into the modern era of print and scan, the our operations prior to the RFP. Their level of detail could not
burden of recovery rests on firms’ willingness have been replicated by the firm due to staffing/management
to effectively recover prints and scans. For constraint, not to mention that they have much more experience
firms that do not elect to go this route, then conducting these assessments since it is their business. I was also
it is a matter of time before cost recovery happy that their work was non-biased and relationships were kept
becomes impractical for them due to the intact with those companies not awarded the contracts.
declining volumes associated with the non-
print and scan areas. - Mike Czerpak
Director of Operations
As we see from the data from 2018, the
percentage of firms recovering print has
leveled off to 50% -60% with net realization
hovering in the 30% - 40% range. It is still
surprising, that over 90% of firms recover
copy, but only half of that recover prints when
the output is the same.

In the area of scans, the percentage of firms
recovering has leveled off in the 40% range
with net realization in the mid 30%.

I think it is safe to say, that at this point in
the life cycle of cost recovery that the firms
recovering print and scan have made the
leap, and the ones who haven’t, won’t be.
Compounding this issue for firms that are not
recovering prints is the fact that 76% of firms
indicate that their copy volume is decreasing/
remaining the same while 76% of firms
indicate that their print volume is staying the
same or increasing.

Hard vs. Soft Costs Net Realization

When firms were asked, “What is your
net realization after internal and external
write-offs on hard cost (3rd party invoice)
disbursements (percent of hard cost invoices
reimbursed by clients)?”, the average of the
responses was 90.42%. On the other hand,
the average net realization for copies, prints
and scans equaled 36% or less than half the
net realization of hard costs.

Why the difference between hard and soft
cost net realization? The answer is obvious:
the hard copy invoice from a third party.
When examining the numbers closer,
clients pay hard costs at an extremely high
percentage. It is important to note that
the average for soft costs is still a robust
85%; however, the complete answer is in the billable percentage and the “Billable Actually Billed.” These, combined, illustrate that firms
are less likely to bill soft costs and more likely to write them off. Contributing to the lower “Billable Actually Billed” is the fact that a
percentage of the write off is attributed to the method the majority of firms write off charges for clients that refuse to pay soft costs.

No matter how you examine it, hard costs are still the most effective way to recover costs.

Legal Research – The news of its demise was greatly exaggerated.

In 2014, we reported that legal research had its lowest net realization since the inception of our cost recovery
survey – 36% and that it probably wouldn’t go much lower. In 2016, net realization had declined even further
– sinking to 25%. This decline was attributable to a lower billable percentage combined with a 13.6%
increase in internal write-offs. We boldly predicted the demise of legal research cost recovery within in
the next decade.

2018 brought an increase in billable percentage of 14%, “Billable actually Billed” of 6%, and
“Billable actually Paid” of 5% resulting in a 12% increase in net realization – an amazing

The cost to remove the old equipment and install the new was
exactly what Mattern predicted it would be – and the significant
savings we were promised became reality too… I constantly
recommend Mattern to other firms. They are fair, honest and
transparent and the vendors have a high level of respect for the
way they conduct business.

- Bill Migneron
Chief Operating Officer

Electronic Data Storage - How are firms hosting their data?

In 2018, 60% of firms host their electronic data How effective are these recovery methods?
storage, while 30% outsource this function – a
35% increase. 10% of firms responding use a As mentioned earlier in this overview, the hard cost model employed by firms
combination of in-house/outsourced services. that outsource this area, are substantially more successful at the recovery of costs
than the soft cost model.
How are they recovering their costs?

From a recovery viewpoint, 56% of respondents
recover the cost of storage from their clients,
up from 36% in 2016. 100% of firms utilize a
gigabyte based model for recovery.

On-Site Litigation Support

Over 90% of firms staff these services with their
own in-house employees with 65% of the firms
recovering these costs through the charging
of billable hours. The balance of the in-house
departments (35%) use unit charges to recoup
these costs.

For firms that outsource some aspect of these
operation, 81% use a unit charge with the balance
(19%) relying on the billable hour model.

For firms that utilize the billable hour as a
recovery model, they report on average that 23%
of the hours are written off. Of the remaining
77%, 84% are paid by the client.

The biggest challenge of utilizing the billable hour
for the recovery of costs is the escalating volume
of storage and being able to charge a high enough
rate and have it escape being written off internally
in addition to getting the client to pay for it. A
much more effective model that Mattern sees in
the marketplace is a combination of hourly rates
and unit costs which mimics the outsourcing
recovery model.


Mattern Assists Am Law 200 Firm Create New Cost Recovery
Model to Recoup Charges for Litigation Support Solution

Opportunity: This Am Law 200 firm with over 380 attorneys in seven office across Texas offered clients

a full end-to-end litigation support solution that included collections, forensic analysis, early case assessment,
data processing, document review, and production and trial presentation capabilities. Unfortunately, the
firm’s hourly billing model stopped covering the true costs of litigation support services delivery, and the firm
needed a new model to recoup overall costs for labor, infrastructure, and software while continuing to deliver
first-class, market-leading service to clients. The firm also sought a current state assessment with roadmap
recommendations to ensure its capabilities remained aligned with future client needs.

Solution: The firm engaged Mattern to assess its capabilities, workflow and skill-sets, as well as the

creation of a new cost recovery model. Utilizing Mattern’s database of industry benchmarks for labor costs,
billing rates, and net realization percentages, the firm was able to ensure its labor costs and associated
collections for billable hours were competitive with peer firms. Additionally, Mattern analyzed the firm’s
litigation support workflow. This included efficiency recommendations for document handling —from
collection through review and production. Staff skill-sets and certifications were addressed, and a continuous
improvement process was presented for inclusion in annual reviews, incorporating goal-setting and billable
hour targets.
The technology tool-set was analyzed with a focus on efficiency and recommendations to cut down on
the back-and-forth requests between attorneys and litigation support staff. Future-state capabilities were
recommended along with associated products that would allow the firm and its attorneys to provide
increased value to clients (e.g., having attorneys directly utilize early case assessment capabilities).
As for litigation support-related chargeback, the firm was only charging for the billable hours of its litigation
support staff. The net realization of these receivables no longer covered the cost of labor, software, and the
infrastructure required to deliver service. This problem was compounded by the exploding data storage
requirement of E-Discovery, the rise in software-related charges, and client push-back on billable hours
related to mundane tasks such as ‘staging data’ and ‘processing.’ Mattern recommended a new model where
the billable hour would cover the fully burdened cost of labor, with the introduction of a new unit-based
model for data storage to cover the infrastructure and software costs.
To ensure simplicity in client billings, all software and infrastructure were bundled into an associated per
GB per month recovery plan for data storage under active review within the firm’s repository database. The
model was limited to one unit of recovery (data storage) and avoided the inclusion of processing, analytics,
and software user fees to simplify the conversation. In addition, speaking points were developed for the
attorneys on why the client benefited from this type of model - a market-leading solution at a below-market
rate. The firm’s management committee signed off upon the implementation plan, and the new model was
implemented on new matters.

Result: Mattern conducted a thorough audit of the firms people, processes, and technology that supported

its litigation support offering. Layered across this audit was the creation of a cost recovery model that
recouped the true costs of delivering the service. The model is scalable to meet the growing costs of
infrastructure, software, and exploding data storage.

Client Comment: “I thought Mattern did an excellent job of collecting the information they needed to

support the report and presentation. The committee signed off during the meeting on the charge back model
we recommended. I didn’t expect endorsement that soon, but I believe most of that was attributable to how
well Mattern presented the model. Nice work and we are very pleased with the outcome.”

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