Business Intelligence: How To Beat the LawyersBy Mel Duvall | Posted 2006-12-18 Email Print
Legal auditing firm Stuart Maue installed new databases and tools to help its clients red-flag counsel who might claim to work 36 hours a dayat Pebble Beach.
Stuart Maue has developed a reputation for being a thorn in the side of the legal profession. And for good reason.
Over the years, the St. Louis firm has helped corporations uncover some of the more, let's say, creative accounting methods used by their outside legal teams. Take, for example, the lawyers who bill clients for more than 24 hours' worth of work in a single day, or the firms that send four $150-an-hour lawyers to take a deposition when one would suffice.
Then there was the legal team defending a Texas golf course developer who thought the best way to truly understand the case was to fit in a few rounds of golf, on the client. It might not have been that bad if it weren't for the nature of the courses. Tour 18 Golf Course of Humble, Texas, was designed to take duffers on a journey down replicas of some of the most famous holes in professional golf, such as the 14th hole at Pebble Beach, the 3rd at Pinehurst and the "Amen Corner" 12th hole at Augusta National.
A Stuart Maue audit, which used a data warehouse and proprietary software to comb through hundreds of legal bills submitted in the case, found that counsel involved in a trademark suit researched the case by playing a few of the famously expensive courses on their client's tab.
"Some [law firms] see us as the bad guys that's just a fact," says Bradley Maue, the firm's chief technology officer, and son of founder and chief executive Harry Maue. "But more are beginning to understand the role we play and how we can validate their work for a client."
Stuart Maue's weapon of choice for reining in runaway lawyers' bills is business intelligence, in the form of databases, software and tools to analyze reams of bills and invoices. Since 2000, the company has invested more than $10 million in expanding its capabilities, creating portals for clients so they can better understand how and where their money is being spent.
It's an implementation that offers lessons for chief information officers on how database technology can be combined with business intelligence tools to peer deeper into even the murkiest areas of a company's business.
The senior Maue formed Stuart Maue Mitchell & James in 1985 with Ernest James, a colleague who had worked with Maue at Metro, the St. Louis metropolitan region's public transportation system. During his days at Metro, Maue's job involved trying to control costs resulting from claims involving bus accidents. It gave him a first-hand taste of some of the methods lawyers used both for and against Metro to inflate their bills.
The experience convinced him there was a market, and definitely a need, for a legal auditing business. The firm's big break came in 1986 when it was hired by Fireman's Fund Insurance of Novato, Calif., to audit suspicious legal bills it was receiving related to claims filed against a real estate scam. Stuart Maue helped uncover an operation being run by a group of 20 lawyers who had bilked insurance companies for as much as $100 million in dubious fees.
In the early days, much of the work performed by Stuart Maue was manual, with accountants and lawyers literally poring over bills looking for inconsistencies and non-compliant charges. Corporations usually develop a standard set of operating guidelines for law firms acting on their behalf, such as that no more than two lawyers may attend a deposition, or lawyers may not travel first class. If an audit finds that four lawyers took part in a deposition, that item would be flagged as non-compliant.
Maue realized early on that the key to growing the business lay in using computers and software to comb through mountains of legal bills. As early as 1988, Harry Maue hired software developers and purchased his first Oracle database system to create a platform for storing, searching and analyzing legal bills, fees and expenses.
The privately held firm does not release financials; however, Stuart Maue is estimated by the U.S. Business Directory to have revenue in the range of $20 million. It says it now audits more than $2 billion worth of bills annually on behalf of clients, which include the likes of Lorillard Tobacco, maker of Newport, Kent, Old Gold and Maverick cigarettes; Dollar General; and Juniper Networks.