What’s this going to cost?
The eternal question that every client wants to know before signing your engagement agreement. Now, imagine being able to give a clear, confident answer even in the most complex cases. Providing this level of financial predictability isn’t just a dream; it’s achievable.
In this Financially Legal episode, host Emery Wager sits down with Michael Sander, founder of LexPipe, to discuss how law firms can use data to bring financial predictability to complex litigation. Michael shares his journey from patent litigator to legal tech entrepreneur, highlighting the innovative tools and strategies LexPipe employs to help firms offer clients more transparency and confidence in legal costs.
When it comes to managing legal costs, unpredictability can erode trust between law firms and their clients. Clients want to understand not only what their cases might cost but also why those costs arise. Financial predictability helps address this issue by giving clients clearer expectations.
Michael’s path to this work began with DocketAlarm, a tool for tracking court data, which was later acquired by Fastcase. His current project, LexPipe, combines public and private data to help firms calculate litigation costs more accurately.
For many clients, the sticker shock of a legal bill isn’t about the size of the bill—it’s about the mismatch between expectations and reality. Emery and Michael highlighted that legal costs influence a client's strategic decision-making, saying, “Why would I spend $100,000 to solve a $50,000 problem?” This fundamental question underscores why law firms must proactively address financial transparency.
Flat fees, discussed in our earlier episode, are an excellent solution for some matters, but they’re not always practical, especially in complex litigation.
Michael highlighted common challenges in estimating legal costs:
Case Complexity: Discovery, depositions, and motions can vary widely in scope.
Data Gaps: Firms often struggle to integrate billing data with case details.
Shifting Case Dynamics: Cases evolve, making initial cost estimates outdated.
To address these challenges, Michael recommended:
Analyzing Past Cases: Look at previous matters to identify patterns and benchmarks.
Merging Public and Private Data: Use both internal records and public case data to build cost models.
For firms interested in financial transparency, Michael outlined a clear process:
Organize Billing Data: Compile all billing data into a standardized, accessible format. This is the foundation for effective analysis.
Track Key Metrics: Break down cases by type, jurisdiction, and major phases like discovery or depositions to determine what impacts costs the most.
Incorporate Public Data: Merge internal billing data with publicly available case information to gain a complete picture of case timelines and activities.
Build Predictive Models: Use historical data to create benchmarks and cost estimates for future cases, identifying typical ranges for similar matters.
Refine Through Feedback: Regularly review outcomes against predictions to improve accuracy. Adjust your models based on new insights.
Michael’s long-term goal is ambitious: to reshape how legal services are delivered by reducing the cost and complexity of dispute resolution. While the billable hour remains dominant, tools like LexPipe aim to shift the industry toward greater transparency and efficiency. By leveraging data, law firms can foster trust, deliver value, and ultimately improve access to justice.
If you want to learn more or connect with Michael Sander, visit his website at lexpipe.com or connect with him on LinkedIn. To explore more conversations at the intersection of finance and the business of law, follow Confido Legal on LinkedIn and listen to upcoming episodes of Financially Legal.