Outside Counsel Guidelines: A Working Guide for Insurance-Defense Firms
An insurance-defense matter rarely answers to one simple billing policy. The firm may have its own time-entry standards, the carrier may issue litigation management guidelines, and the individual matter may carry additional instructions. The attorney still has to produce an accurate record of the work while meeting the duties owed to the insured client.
That is why outside counsel guidelines (OCGs) should not live only as PDFs in a shared drive. They need an operating process: someone receives them, interprets them, approves the rules that will be enforced, applies the right rules to the right matter, and reviews what happened before an invoice leaves the firm.
This guide explains how to build that process. It is operational guidance, not legal advice. When a payer’s restriction may conflict with a lawyer’s professional duties, the firm should consult its professional-responsibility counsel and the rules in the applicable jurisdiction.
What an OCG actually controls
Outside counsel guidelines are broader than narrative style. The Association of Corporate Counsel describes guideline topics that can include acceptable work, staffing, rates, expenses, budgets, accruals, training, invoicing, and practice-specific instructions. A firm’s control system therefore needs to distinguish several different kinds of requirements:
- Entry requirements: task itemization, sufficient narrative detail, prohibited terms, billing increments, and timekeeper identification.
- Coding requirements: permitted task, activity, and phase codes, including client-specific uses of UTBMS.
- Staffing and authorization requirements: approved roles, limits on particular kinds of work, and work that requires advance consent.
- Commercial requirements: negotiated rates, budgets, caps, and permitted expenses.
- Invoice requirements: file format, identifiers, submission timing, supporting records, and correction procedures.
- Professional and operational requirements: reporting, confidentiality, cybersecurity, record retention, and case-management expectations.
These categories matter because no single control can test all of them. A time-entry tool can detect a block-billed narrative before approval. It cannot necessarily determine whether cumulative spend exceeds a budget, whether a receipt is attached to an invoice, or whether a required report was sent on time.
Public guidelines make the distinction concrete. The University of Rhode Island’s outside counsel guidelines include per-task entries, one-tenth-hour increments, narrative expectations, and approval or documentation requirements. The FDIC’s invoice validation criteria separate mandatory validation failures from configurable review flags across identifiers, dates, timekeepers, rates, codes, increments, expenses, and narrative terms. These are examples from particular organizations, not universal carrier rules.
A seven-step OCG workflow
1. Register the authoritative document
Give every new guideline a named owner, an authoritative source, the date it was received, and the clients and matters that may be affected. Keep the original document rather than only a summary. If a carrier sends a replacement or amendment, do not silently overwrite the record the firm relied on.
At this stage, the goal is control, not automation. Billing should be able to answer: Which document did we receive? Who accepted it? Which matters need review? Who decides what an ambiguous clause means?
2. Classify each requirement
Break the document into rule categories before turning clauses into system settings. This prevents an entry-time checker from being treated as a complete OCG program.
For each requirement, record:
- the source clause;
- the operational interpretation;
- the client or matter to which it applies;
- the person responsible for validation;
- the stage at which it can be tested; and
- what should happen when it fails.
A prohibition on block billing can usually be tested on one entry. A monthly budget cannot. A required task code may be checked both when the entry is created and when an invoice file is validated. Assigning the correct test stage is as important as encoding the rule itself.
3. Require human approval
Document extraction can accelerate setup, but extracted text is not an approved policy. Tables, cross-references, exceptions, and ambiguous language can change the meaning of a clause. A billing administrator or other named owner should compare every proposed rule with its source before activation.
The same principle should apply to later changes. A deduction or reviewer comment may reveal a missing rule, but it may also be a one-off decision or an incorrect application of the guideline. Treat feedback as a proposed update, not permission for software to rewrite policy automatically.
4. Map rules to the correct scope
A single firm-wide checklist is rarely enough for insurance defense. At minimum, the firm needs to know whether a rule applies across the firm, to a particular client, or only to a matter. When two instructions appear to conflict, the resolution should be escalated to the designated owner instead of left to a timekeeper’s guess.
Avoid making carrier names the only mapping key. The practical assignment may depend on the contracting client, insured, matter, office, role, or written instruction. Your process should identify which of those dimensions the systems can actually represent and define a manual control for the rest.
5. Test before activation
Each rule should pass a small, deliberate test set:
| Test | Example question |
|---|---|
| Compliant | Does a clear, itemized entry pass? |
| Noncompliant | Does a known prohibited pattern produce the expected result? |
| Boundary | What happens at the exact increment or duration limit? |
| Ambiguous | Does uncertainty reach a human instead of producing false certainty? |
| Scope | Does the rule apply to the intended client or matter, and nowhere else? |
Testing is especially important when the response can block an entry. A false warning creates noise; a false block interrupts legitimate work. The billing administrator should approve both the interpretation and the enforcement level.
6. Apply the rule at the earliest useful point
The least disruptive correction usually happens while the timekeeper still remembers the work. An entry-time control can explain why an entry was flagged, show the applicable rule, and suggest an accurate correction. Depending on firm configuration and the rule’s importance, it may warn or prevent release.
The purpose is not to substitute harmless-sounding words for prohibited work. The revised entry must remain a truthful description of what occurred. Good feedback helps the timekeeper correct an incomplete narrative, select the right code, or separate distinct tasks; it does not teach someone how to evade review.
Every draft should still require human approval. Automation can prepare and check an entry, but the timekeeper or authorized reviewer remains responsible for its accuracy.
7. Recheck what entry-time controls cannot see
Keep prebill, billing-system, and e-billing checks even after adding earlier feedback. They serve different purposes:
- At entry: narrative detail, block billing, increments, permitted codes, prohibited activities, and entry-local staffing rules.
- At prebill: patterns across entries, supporting documents, exceptions, cumulative limits, and partner or billing review.
- In the billing system: rates, matter configuration, invoice assembly, and approved entry data.
- At e-billing: file syntax, required identifiers, portal validations, and payer responses.
LEDES defines exchange formats, while UTBMS provides coding structures. Neither one proves substantive compliance with an OCG. A technically valid invoice can still contain work, staffing, or narratives the client will challenge.
Who should own each part
OCG compliance is a shared workflow, but shared ownership should not mean ownerless work.
| Role | Primary responsibility |
|---|---|
| Billing administrator | Registers guidelines, validates proposed rules, sets enforcement, and coordinates updates |
| Practice or relationship leader | Resolves commercial and client-specific interpretation questions |
| Timekeeper | Reviews the evidence, narrative, duration, matter, and codes before approval |
| Prebill reviewer | Tests invoice-wide conditions, documentation, exceptions, and patterns across entries |
| Finance or revenue team | Tracks deductions and rework by cause without assuming every reduction was preventable |
| Professional-responsibility counsel | Advises when payer instructions may affect duties to the insured client |
The ethics boundary matters. ABA Model Rule 5.4(c) states that a person who pays a lawyer may not direct or regulate the lawyer’s professional judgment. Billing controls should support accurate invoices, not override the lawyer’s duties.
Where Hourglass fits and where it does not
Hourglass lets a firm upload an OCG and turn it into proposed rules, but a person must verify and approve them. Rules can apply at firm, client, or matter scope. For supported entry-level requirements, Hourglass can explain a problem, suggest a correction, and either warn or block according to administrator configuration.
Current entry-level checks include areas such as block billing, narrative requirements, increments, prohibited activities, task and activity codes, and supported staffing rules. The code sets are defined by the firm and can be synchronized from the billing system. The timekeeper still reviews and explicitly approves every entry before export.
Hourglass does not replace controls for expenses, rates, budgets, negotiated exceptions, or written waivers. It also does not perform controls that require cross-entry, matter-wide, invoice-wide, or historical analysis. Submission timing and other obligations outside Hourglass remain the firm’s responsibility.
Billing integrations import the data needed to configure the firm’s environment and receive approved time entries from Hourglass. That does not mean downstream deductions and appeals automatically return as structured data; those processes are often manual. When feedback is supplied to Hourglass, it can propose a rule update, but a billing administrator must approve that proposal before it becomes active.
You can see the broader billing-compliance workflow and the current billing-system integration catalog on the Hourglass site.
Measure friction, not just deductions
A useful OCG program measures the process before making outcome claims. Start with operational questions:
- What share of active OCG matters has an approved rule set?
- Which valid issues are caught while context is fresh?
- Which warnings are repeatedly dismissed, suggesting a poor rule or scope?
- How many entries require repair during prebill?
- Which requirements cannot be tested until invoice assembly?
- Which deductions point to an approved process change rather than a one-off reviewer decision?
Do not attribute every deduction to time-entry quality. Rates, budgets, staffing decisions, invoice formatting, authorization disputes, and substantive disagreements can all affect payment. The defensible goal is narrower: catch machine-testable, entry-level issues early, preserve human judgment, and keep the remaining controls in the stages where they belong.
For an insurance-defense firm handling many client and matter rule sets, that division of responsibility is what turns OCGs from documents people are expected to remember into a repeatable billing process.