Year: 2017

The conventional view of electronic invoicing (e-billing) focuses on managing legal spend, potential cost savings, and the ability of in-house counsel to compare the efficiency of their panel firms. Consequently, there are less obvious — but real and measurable — benefits arising from a successful e-billing implementation.

Some known benefits for clients claimed for e-billing are that it reduces false charges, enforces compliance with the billing guidelines, and ensures that the seniority and, thus, charging rates of lawyers working on a matter is known to the client. Some clients rigorously enforce their billing rules, and e-billing provides a way for stricter application of these rules than paper-only bills. While this strict compliance with the rules is more prevalent in the US, we are also seeing more rigour brought to bear in enforcing what can (and cannot) appear on legal bills in the UK and mainland Europe.

Typical billing restrictions of this nature are that clients will not pay for certain expenses – for example, telecom charges, administrative overhead, and online research. Some further examples of external counsel guidelines are:

• Law firms should use appropriate resources for performing specific tasks – such as partners not being used on more junior-level tasks/activities.
• The client will only pay for time spent traveling if that time was productive (i.e., the lawyer worked while they were traveling).
• Clients can specify that only one external firm lawyer should attend certain types of meetings and will be able to verify that this happens.
• That several distinct tasks are not “block billed” in a single amount and to avoid using vague time narratives.

Download “Getting Started with Billing Guidelines” for more examples.

STRENGTHENING THE RELATIONSHIP WITH LAW FIRMS

There are, however, further indirect benefits gained from e-billing in terms of establishing closer working relationships between clients and their external advisors and opportunities to form mutually positive ties on a longer-term basis. Examples of these types of “added value” benefits are:

Law firms can offer more access to internal data not ordinarily available to the client, for example, written-off /unbilled time and nonchargeable work done for the client. Firms can also categorize billed time by the client’s work breakdown/cost codes and improve the value to the client of the information in the e-bill. It means that more comprehensive information about each matter is available to both law firm and the client. This improves the quality of the discussions at relationship meetings, for example.

Law firms should see e-billing as a marketing tool and something to offer to new and existing clients. Many law firms are experienced in e-billing and can advise on e-billing issues and how to best tailor billing data to meet the client’s needs. Prospective clients now require law firms to be knowledgeable about e-billing and demonstrate that they can offer this service when making new business pitches.

E-billing can facilitate a fresh dialogue between law firm and client about the pricing of legal work and the use of more flexible cost models. An example is where part of a matter gets priced with part according to time-based billing, and part is fixed-fee work. This costing type only gets achieved if both parties are comfortable with the work done and at what stage or phase of the transaction. E-billing is the only way to measure and make visible this work breakdown for both parties.

Finally, several studies have shown that using e-billing software results in faster payment of the lawyer’s bills. E-billing tools significantly reduce the client’s manual workload for invoice validation, resulting in quicker invoice approval and payment.

All this shows that using e-billing software can improve the relationship between law firms and clients. Regarding business life, there is probably no closer relationship than that between a lawyer and a client. Such a close relationship is based on transparency and, therefore, must avoid information asymmetries. This applies not only to the content of the case in which the law firm is advising the client but also to the costs arising from that advice.

Modern e-billing providers like Onit’s European legal spend management solution BusyLamp e-billing.Space contribute to strengthening the relationship in this respect. They have set themselves the goal of establishing the use of e-billing for the client and the law firms as a smooth process.

The business process of legal e-billing (electronic invoicing) between an in-house team and outside counsel is rapidly growing; we can learn lessons from many successful implementations. Some key factors can assist with the implementation of e-billing and help ensure that both the in-house legal department and the law firms benefit from the changes.

While there is now a general level of knowledge in the legal marketplace about e-billing, there still seems to be a need for more detailed information and expertise regarding the exact steps required by both the client and the law firm to make e-billing a success.

On the surface, e-billing, from a client’s perspective, may seem straightforward. But we believe that many in-house legal departments are unaware of the issues that may arise from poor initial resourcing or project management with e-billing. There are also several “best practices” that client organizations need to be aware of and apply to maximize the opportunities from e-billing.

In our experience, clients have some work to do to prepare for e-billing, even before they can approach their law firm panel regarding an e-billing project – either directly or through one of the e-billing intermediaries.

E-BILLING CHECKLIST: ASK THE RIGHT QUESTIONS

It is important that an e-billing implementation is a two-way process and not just something imposed by the in-house legal team. A standard e-billing checklist identifies the key questions the law firm needs to know to ensure successful implementation. Ideally, work should start after answering all questions; otherwise, significant implementation delays may occur.

• The checklist should include questions on the following:
• What LEDES format does the client want to use?
• What UTBMS codes and timekeeper classification does the client want to use?
• What billing rules is the client seeking to impose?
• What is the project’s scope – including client entities and types of matters?
• What does the firm have to do to achieve a successful bill?

In return for a stricter, more transparent billing discipline, the client could commit to a minimum bill payment period following approval of the e-bill. When not agreeing to these conditions at the outset, it is difficult for the firm to impose conditions after the event.

E-BILLING PROJECT RESOURCING

E-billing is a relatively resource-intensive process. The larger law firm will likely deal with upwards of five different e-billing vendors and several varying LEDES formats. The team responsible has to be able to log into each system, understand the differences, and know what to do for bill rejection to minimize bill turnaround time. In addition, the team must constantly update systems with new fee-earner information and any changes to billing rates; otherwise, the system will reject them. For every 200 e-bills issued monthly, a firm must employ approximately one individual to administer the systems. Without the experience, skill, and discipline to administer the systems, you could face significant collection time delays.

In-house legal departments must appreciate this and ensure they have chosen an e-billing provider that is always available to law firms for any queries. Professionally set up e-billing providers like Onit’s European legal spend management solution BusyLamp e-billing.Space focus on responding quickly and with high quality to law firms’ questions to ensure that the client and their firms get the best possible service and keep the flow of instructions and invoices moving.

ENGAGE E-BILLING STAKEHOLDERS FROM THE OUTSET

E-billing needs to be owned and driven at a senior level and requires the input of all stakeholders that touch on the process. Within law firms, e-billing is not just a function of the billing department. It needs to be understood and contributed to by the fee earners, business development, finance, revenue, credit control, and billing. Strategic implementation becomes even more critical when several e-billing projects with competing priorities roll out simultaneously. Likewise, within the client organization all the stakeholders must be engaged in the process – including the legal teams, General Counsel, and, more recently, the Corporate Legal Operations Teams.

IN-HOUSE BILLING PROCESSES

The introduction of e-billing also requires resources from the in-house team. Introducing an e-billing system does not differ from any other process change of comparable scope. Legal departments need to ensure that their internal processes and systems can maximize the benefits that can accrue from e-billing. This may mean changes to the Accounts Payable system to enable electronic acceptance of e-bills once approved for payment. Also, the internal invoice processes should be capable of meeting the requirements that a move to e-billing brings. This may mean changes to existing procedures for budgetary approval, giving matter instructions, and the processes for authorizing and paying law firm invoices.

A glance at the many successful introductions of e-billing systems shows that the effort will undoubtedly pay off. While this is evident from the in-house point of view due to the significant cost savings, the advantages for law firms are often only apparent at a glance. Law firms strengthen and improve their relationships with clients if they support them in making e-billing a successful project.

Request a demo of BusyLamp eBilling.space.