The use of technology within in-house legal departments is increasingly catching up with the IT that has been available to the lawyers in larger external law firms for some time. This is particularly true of international firms with solid bases in the US or UK, where a significant percentage of fee income goes toward leading-edge IT systems. These solutions include such business applications as Document/Records Management, Knowledge Management, Matter Management, Litigation Support/eDiscovery, Cost Tracking, Resource Planning, and Advanced Data Analytics. This extends to the latest technology trends, including using Machine Learning and AI (Artificial Intelligence) in document drafting, contract comparison, and due diligence. These systems are increasingly available to lawyers and support staff in the office and increasingly “on the move” or working remotely.
Corporate Legal Operations is now becoming a significant focus, and these applications are increasingly available to in-house lawyers with the strategic vision to deploy them efficiently and effectively. One key area to look at is that of e-billing (electronic invoicing) which is not just the provision of a legal bill as a PDF but a file of structured billing data – broken down into individual line items – enabling in-house lawyers to gain a considerable amount of added value from this cost and expenses data.
BACKGROUND OF E-BILLING
Like many legal technology systems, e-billing began in the US in the mid-1990s. The interest in the UK in e-billing began in 2003 when UK branches of US insurance and finance organizations started demanding such functionality from their regional law firms, which led US e-billing solution vendors to set up offices in the UK. Over the past decade, many e-billing projects have been undertaken, with several law firms successfully e-billing their largest clients to millions of pounds per year. In terms of market penetration, estimates put around 90% of repetitive litigation work is now e-billed in the US. Recently, Tim Arvidson (Director of Accounting and Billing at Hawkins Parnell) reported that many mid-sized US firms collect around 70% of annual revenue via e-bills.
While the UK is not yet at this level, e-billing currently accounts for 15-20% of the total volume of bills issued by the largest law firms in the UK market. With e-billing clients being among these firms’ largest and most important clients, this typically equates to approximately 25% of total revenue.
BENEFITS OF E-BILLING
What is the driver for legal e-billing, and what returns do corporate legal departments expect e-billing to deliver? Conventionally an e-billing implementation has been driven by a desire to control external legal spend but to realize other non-financial and unplanned benefits. The older “traditional” e-billing solutions have delivered some real benefits, such as:
- Clarity, consistency, and transparency in the billing of legal services
- Compliance with the corporate legal department’s billing rules, e.g., what will the client not pay for?
- Cost and expense tracking for every matter
- Access to data analytics and allowing comparisons across all external legal service providers
- Knowledge of what every external law firm is working on and who instructed them
- Assisting the decision-making process on which is the best option for undertaking legal work
- Improving the department’s internal processes – speedier workflow and paper reduction
LIMITATIONS OF CONVENTIONAL E-BILLING
Some of the criticisms leveled at these older e-billing systems are that they are very cumbersome, if not “clunky,” and do not sit well with the current trend in IT for software to require “no installation.” Furthermore, they can only reflect the position “after the event,” i.e., the legal bill goes to the client. Other negative comments often made are that the e-billing vendors are too “corporate” and are inflexible in their approach. Also, many law firms, especially those not using the large time and billing systems already, cannot produce LEDES files, and e-billing has yet to deliver on the promises often made to clients and law firms.
MODERN LEGAL E-BILLING SOLUTIONS
Over the past few years, new solution providers have come into the market – both in the US and from within the EU. Interestingly some of these, e.g., Onit’s European legal spend management solution BusyLamp eBilling.Space, have been founded by lawyers who realized that many clients (and law firms) were resisting the more “traditional” e-billing solutions. These new solutions bring a fresh perspective to legal spend management and utilize tools and techniques that are breaking ground in the delivery of IT services. While not all products have these features, they employ many, including ease of set-up, use of AI for the bill review process, and a high degree of collaboration – allowing legal departments to review cost and expense data in the pre-billing stages of a matter. They also offer a low cost of ownership, integration with other legal department applications, and support for a wide range of business processes from RFP and budgeting through billing to a comprehensive management information and reporting suite.
MAKING THE BUSINESS CASE FOR E-BILLING
Quite rightly, in-house departments want to know the return on investment (ROI) of e-billing solutions and whether they can measure it. (BusyLamp has a whole paper dedicated to making the business case for legal e-billing) Several examples of what has been achieved in terms of in-house departments getting a positive financial return. Most of these results arise from such billing practices as eliminating duplicate time entries, removing “block” billing, ensuring utilization of the right resources, and minimizing the possibility of erroneous charge-out rates. The fact that external lawyers know that the billing data is under closer scrutiny often improves the accuracy and ensures more prompt time recording.
Further non-financial benefits can arise from an e-billing implementation. We know that e-billing helps form closer ties between law firms and in-house, adds value to the relationship, and makes client/law firm meetings more productive. When both parties have access to more accurate billing information, it reduces potential conflicts, allows the law firm to provide more than just basic billing data, and can assist in discussions about alternative charging models. Indeed e-billing is not just for charging billable hours but can support various billing models – including fixed fee, retainer, and value-based pricing.
E-BILLING DATA SECURITY AND DATA PROTECTION
Buyers and users of e-billing systems need to ensure that the vendor understands and complies with all Data Protection regulations and has a high-security rating for their data storage and communications functions. As legal data is especially sensitive, providers must have high data protection standards to ensure privacy and security. The GDPR and other regulations already set those high standards, but providers should look to go “above and beyond” to secure these top-notch privacy standards in the future. Read our handy checklist of legal tech security considerations.
SECURING A SUCCESSFUL E-BILLING PROJECT
The successful implementation of an e-billing solution requires a serious approach from all parties, the in-house team, the law firms, and the solution provider – with the right level of resources to bring the “buy-in” to the project. Even the best application cannot deliver the right results without the people who use it applying the appropriate effort. Finally, it is fundamentally important to choose the right provider. We know that modern e-billing vendors are gaining new business and winning customers from established providers. Indeed, clients must decide which e-billing solution offers the best mix of usability, service, IT security, project experience, and price TODAY. It is also essential to talk to existing customers and not only rely on the statements of the respective salesperson.
Request a demo of BusyLamp eBilling.space today.