Starting an In-House Revenue Recovery Program – First Steps

Topics: Billing & Pricing, Corporate Legal, Legal Innovation, Midsize Law Firms Blog Posts, revenue recovery

procurement

In the old adage of journalism, the important questions to answer with any story are “who, what, when, where, how and why.” My last two posts explaining revenue recovery programs explained the “why” — why they can be beneficial to you, your clients and your colleagues. If those posts have you revved up and ready to start a revenue recovery program, or even if your interest is just mildly piqued, then this new post should help stoke that fire. In this post, I will be covering the “who, where and when” while my next post will cover the “what” and “how” of revenue recovery programs.

Who should be involved in revenue recovery?

The first step to starting a revenue recovery program is identifying the key players necessary to move this effort off the ground. The legal department is the logical place to start looking for leaders. If you’re the general counsel, you likely will be able to initiate this. If you’re the head of a group within the legal department where these revenue opportunities might arise more frequently (e.g., intellectual property, insurance or antitrust), then you naturally may be in the best position to establish a program. But be sure to look outside the legal department as well.

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The best leader for such a program may be the manager of the business unit that might benefit the most from any recoveries, or someone from procurement who handles many of the vendor and other contracting relationships. Alternatively, perhaps your company’s controller or CFO, who would track payments to suppliers, might be in the best position to launch this program. The point of this analysis is to identify all members of your legal and business teams who could be interested and benefit from a revenue recovery program and then to start a conversation with them about who can and should lead the effort.

Where can potential revenue recovery be identified and prioritized?

The next step after determining who should be involved in leading your revenue recovery program is to identify the most likely sources of revenue recovery for your company. This step should be tailored to your company. Collaboration with your colleagues identified as part of the first step will likely lead you toward some areas to examine for revenue recovery potential. Key stakeholders within the company, especially if they are not involved in leading the program, should be consulted for their input and ideas.

For larger companies, an informal or formal audit process may be appropriate, where either an internal auditor or a third-party consultant examines various areas of the company’s operations, revenues and costs to see where the most likely revenue recovery opportunities exist. Smaller companies might opt to pursue revenues in a certain business unit, product line or geography. If the legal department is leading the effort, a certain type of legal claim, like IP or insurance, may present the best entry point for revenue recovery.

Most companies will need to decide whether the program will apply domestically, internationally or both. And for all of these decisions, a company may choose to phase the effort in over time or to start more comprehensively. The ideal combination of these factors will likely be affected by who is involved in the effort and what your goals are.

When should I start this process?

Ideally, the answer to when to start a revenue recovery program would be today! But that may not be realistic given other competing corporate and legal department goals that may more urgently need time and resources.

Look for opportunities when discussions occur about potential cuts to the legal department’s budget or to concerns from your business unit clients about their need to add to the top-line of their revenue. These occasions will present natural opportunities to raise the issue and demonstrate that you are listening to the needs of your clients and your company and are creating positive ways to respond to those needs. And even if the time may not be right when these occasions occur, you will have planted the seeds for the future of your revenue recovery program.