Category: Enterprise Legal Management

The Panama papers and Paradise papers cyberattacks against law firms. The issues of data harvesting emerging from the Cambridge Analytica scandal. The volume of reported data breaches. Cyber-attacks and data breaches are becoming inevitable as increasingly high quantities of information are stored electronically. In addition, GDPR has introduced requirements to notify the relevant supervisory authorities and individuals who may be adversely impacted much more promptly (within 72 hours of becoming aware).

As a result, there is a greater need for stronger controls around data security, both within your organization and for companies holding your data. A robust records management policy is integral to your company’s ability to understand what information is available, where it is, and in what format. Most importantly, it sets a clear framework for handling, managing, and storing that data.

You may have agreements with your external partners on how they manage and handle your data; historically, companies may have relied on this with little further investigation.

However, if you have ever handled the fallout of a data breach by one of your suppliers, you will appreciate the pressures of trying to assess the potential risk and exposure the breach might have on your company. All of which must be done within very tight timescales if you need to notify the authorities and individuals concerned.

USING LEGAL SPEND MANAGEMENT SOFTWARE TO IMPROVE DATA SECURITY

One often-overlooked tool that can help (both with an immediate investigation and future risk assessments) is a legal spend management system (Onit’s European legal spend management solution BusyLamp eBilling.Space). Integrated legal spend and matter management software can provide a wealth of information to help legal operations understand and manage the data that the law firms hold for you and can support you in building a records inventory.

Legal spend management tools can provide clarity on the following:

• The external law firms used,
• What type of work outside counsel are undertaking, and
• Who at the law firms has worked on the matter and therefore had access to your data.

Knowing the data shared with your law firm is vital for an immediate investigation. Access to the matter details in your legal spend management system will provide you with a good starting point to gather information. Basic information will include the law firm’s name and the person(s) in your firm who may be working on the matter(s). It will also provide a contact point at the law firm. Finally, based on the work, you will have a rough idea of the documents shared with the firm.

If you are looking to assess the risks of sharing your data both now and in the future, legal spend management software will provide details of the number of times your company has used the firm. With this, you can assess the risks and controls in place with all your outside counsel and carry out appropriate system security assessments. You can also more easily check that the law firms have implemented and are complying with your records management and retention policies.

The amount and sensitivity of the data sent to your law firms comes from the type of work undertaken. Most companies will generally share similar types of data for specific categories of work with their external partners. As an example, for an employment issue, details about the employee and the grievance will be shared with the external counsel. Using the information in a legal spend management system about the types of work done by the law firms will help you assess the risks and controls each law firm has in place to protect your data and consider the best and most appropriate ways to transfer your data. Furthermore, it can help you build your records inventories.

Finally, as law firms record the time that a timekeeper spends working on a matter, invoice data captured by e-billing software will allow you to see who has access to your information at the firm.

Knowing and understanding the type and volume of data that your company has shared with your law firms will help you a) respond to and manage any data breach or data loss and b) understand the potential risks to your data. This knowledge will help you assess whether you are using the best legal technology for sharing your data and whether the processes you have in place to transfer your data are appropriate.

Learn more about BusyLamp from Onit, our end-to-end legal spend management solution built for European corporate legal departments. 

As legal data is highly sensitive, data privacy, cybersecurity, and compliance are the top corporate organizational focus areas. Yet despite the scrutiny in-house legal rightly applies to business activities and counsel, they are not necessarily applying this same focus when evaluating the legal technology, they use within their departments. The sensitive nature of the information that passes through legal systems means that data security should be paramount.

Anecdotally, we hear of legal tech projects where data security requirements are raised late in the game, sometimes after IT becomes involved in the project, and can result in the favourite vendor getting immediately disqualified from the selection because of weak security features and policies.

This is understandable. Most lawyers and even technology-savvy legal operations managers are not data security experts. The main focus when buying legal software are the features that assist in daily work and decision-making, so the “under the bonnet” functionality is not always front of mind, nor do in-house counsel necessarily know the right questions to ask.

The following list of security considerations will aid you in asking pointed questions so you can address system safety at the same time as the ‘core’ functional requirements of the technology. This will save you time in the selection process and make picking the right solution for you that bit easier. There is already a lot of cyber risk that could be affecting your company, your legal technology should not be one of these worries.

ENCRYPTION (“AT-REST-ENCRYPTION”)
Legal documents contain sensitive data. Therefore, encrypt with a secure and up-to-date algorithm. Many legal tech vendors encrypt the hard disk while storing unencrypted data in the database. This interpretation of at-rest encryption is a measure that prevents data leaks in the unlikely event of the theft of a hard disk. Onit’s European legal spend management solution BusyLamp eBilling.Space takes at-rest encryption to the next level by using AES256 to store customer data (including backups) with individual keys securely on the hard disk and in the database. The latter means we apply an additional layer of security as a countermeasure for potential cyberattacks.

ENCRYPTED TRANSMISSION (“IN-TRANSIT-ENCRYPTION”)
The data must not only be stored in encrypted form but must also reach the user securely. Therefore, all communication should be encrypted. Since the methods are prone to attack, always use an up-to-date secure version. BusyLamp uses TLS with the version >= 1.2.

DATA SEPARATION
Especially with software as a Service (SaaS) offerings, it is common for an application to be used by several customers. In this scenario, store client data separately from that of other customers. This prevents access to your data by other users “by accident” (e.g., due to software programming errors). There are several ways to separate data, and BusyLamp offers the most secure options. We can provide physical separation, i.e., a customer has their own server, or the most effective logical separation, i.e., a customer owns its database on shared servers.

DATA ACCESS RIGHTS
GDPR and other internal and external regulations often require access rights to be set at a need-to-know level. Therefore, the legal software must allow data visibility to be set individually for each user. BusyLamp works according to the “principle of least privilege” – the normal user can initially see nothing. Then, specific data access for in-house and outside counsel users is activated on an individual or via group logic.

DATA LOCATION
Everyone is talking about the U.S. PATRIOT Act, CLOUD Act, CCPA, GDPR, and similar data security regulations that can have a massive impact on our client’s data hosting strategies. Onit’s BusyLamp legal spend management software is a German product and hence not subject to any potential claims by the U.S. government under such acts. We store data securely at your preferred geographical location.

FIREWALLS AND SERVERS
Any application is only as secure as the servers it runs on. Every application connected to the Internet becomes a daily victim of automatic or targeted attacks. Therefore, a well-thought-out strategy to defend against these attacks by the legal software operator is essential to ensure the protection and integrity of your legal data. This strategy should include several nested measures (the “onion technique”). First, a web application firewall protects the application itself. In addition, the server group gets protected by a firewall. The last link in the chain is an optimally configured server that fends off all unauthorized access. An independent service should monitor all components and actively report deviations from the norm. Regularly updating all systems involved should go without saying to guarantee up-to-date and optimal protection.

INDEPENDENT SYSTEM PENETRATION TESTS
Precautions taken always look good on paper. But is the vendor keeping their promises? To find out, the legal software provider should have their systems tested regularly by an independent third party. This “planned attack” attempts to remove all security measures before a malicious attacker does. All vulnerabilities found are documented and submitted to the vendor for an immediate fix. BusyLamp is tested at least once a quarter by a team of experts; we also allow all BusyLamp customers to view the corresponding test protocols.

SOFTWARE PASSWORD PROTECTION
Robust passwords are essential to prevent unwanted access to the legal system. BusyLamp has configurable password settings that administrators can set to ensure user passwords are sufficiently strong and meet your company’s password policies.

DATA SECURITY RIGHT FROM THE START
The ability to mitigate the impact of any security breaches is important, but security gaps should not arise in the first place. Therefore, your chosen legal tech vendor must deliver regular training to those involved in developing the software to maintain a consistently high level of data security. When testing the software, check the actual functions and search known security holes (e.g., OWASP Top 10).

Request a demo of BusyLamp eBilling.Space today.

A lot has happened in the world of legal electronic invoicing (or legal e-billing) over the last two decades. The pioneers of the e-billing market were vendors working on behalf of in-house counsel; in the late 1990s, those using legal e-billing software in Europe were predominantly US head-quartered investment banks and insurance companies. This migrated over to Europe soon after, albeit driven by US companies.

In Part 1 of this story, we explore the history of legal e-billing in more detail, highlighting early drivers and barriers to adoption.

EARLY DRIVERS OF LEGAL E-BILLING IN THE USA

The early drivers of the e-billing market remain relevant today. Different companies and jurisdictions are simply at various stages of their e-billing maturity; the early adopters are driving the industry’s developments as they seek even more value from their law firm relationships. Those at the start of their journey will find that these early drivers resonate with them currently. In the early days of e-billing software in the US, in-house legal teams had begun to formally review their legal bills and had laid down billing guidelines and rules for their law firms.

MOST COMMON BILLING ISSUES DURING INVOICE REVIEW:

• Failure to comply with client billing rules/guidelines
• Exceeding estimate or budget without authorization
• Duplicate time charges and the billing of disallowed expenses
• Insufficient delegation of work, e.g., tasks performed by over-qualified fee earners and excessive supervision.
• Poor billing procedures, e.g., excessive bundling of tasks
• Vague invoice narrative, e.g., “document review”

The highly manual process of invoice review transposed into standards and software that required law firms to deliver billing information to their clients in electronic format using a third-party system. This gave the in-house lawyer the tools to analyze billing information and take appropriate action – usually related to saving external costs.

From some early case studies in the United States, this seemed possible. For example, Suzanne Hawkins, former senior counsel of General Electric (GE), said that e-billing saved the company over $1m in legal spend in its first year of use and that any in-house legal department should be able to save more than 15% of its costs by picking up incorrectly charged disbursements and unnecessary time entries. Likewise, Kevin Harrang, the deputy general counsel at Microsoft, said that e-billing helped Microsoft reduce legal costs by $2m annually. PLC’s General Counsel survey in 2007 showed that 10 out of 15 corporate legal departments claimed to have recovered their investment in e-billing within the first 12 months of operation. To this day, e-billing software remains one of the easier investments to prove ROI on due to its ability to save on the bottom line.

While there is no doubt that the initial motivator for e-billing and a formal bill review process was legal spend management, what is clear from the US experience is that the improved quality of data (and, with it, the ability to analyze legal spend across law firms) allowed a much more informed discussion to take place with outside counsel. The result improved spend management, vendor management in general, and value for money.

Against this backdrop, the industry began to see requests for e-billing sent to European law firms. While spend management was a minor driver – law in Europe was not perceived so much of a commodity as in the US – many European corporate legal departments saw e-billing software as an opportunity to refine their legal panels and build a more strategic relationship with their external advisors.

THE INTERNATIONALIZATION OF LEGAL E-BILLING

Legal e-billing software was well established in the US since the late 1990s, but it didn’t begin to impact the UK legal market until about 2003.

In the early 2000s, for many UK law firms, a request from a client to “do” e-billing meant sending a PDF copy of a paper invoice as an email attachment. Those of us in law firms engaged in the billing systems and processes had a big learning curve to undertake before we could even begin to address the actual systems and organizational changes that would be needed. Those with global offices could draw on their colleagues’ experience “across the pond” for some advice and guidance on what this new business process was all about.

The reality was that only a few law firms in the UK had time and billing systems that could support e-billing, and it required a lot of manual work to produce a file acceptable to the e-billing vendor systems. The LEDES 1998B file format was heavily used in the US but did not support the features required for successful e-billing in Europe. For example, there was no support for VAT accounting, multi-currency billing, or cross-jurisdictional transactions.

A group of law firms and corporate counsel – mainly based in the UK – decided to cooperate, and they designed and proposed a modified LEDES format to address these shortcomings. This LITIG (Legal IT Innovators Group) organization was the leader in developing what became the now widely adopted LEDES 1998Bi (international) standard.

LIFE AFTER LEDES 1998BI – ADDITIONAL BARRIERS TO LEGAL E-BILLING

Even after the modified LEDES format addressed international billing requirements and made the work faster and less manual for law firms, there was considerable European skepticism surrounding e-billing.

Even if a corporate legal team decided they wanted to obtain the benefits of legal spend management software and had achieved executive buy-in, budget, and resources to implement, they could still experience significant barriers. Even the most dedicated teams faced mammoth hurdles that prevented full e-billing implementation, resulting in numerous failed e-billing projects in Europe.

In 2007, Caroline Poynton, editor of FD Legal magazine, made this somewhat downbeat comment: “There is much negativity around e-billing systems in the UK; some of it borne out by US experiences, the rest stemming from logistical confusion as to how this can develop smoothly in the UK market without costing huge amounts of time and money. But the fact is that e-billing is unlikely to go away because of the huge potential benefits, particularly for large corporates. In the long-term, firms are going to have to embrace the change and be prepared to make the necessary investment in time and resources to make e-billing work if they want to retain such clients and progress.”

One such logistical confusion Poynton was referencing was how to automate the highly regulated nature of the European legal environment, mainly the rules that apply in the generation of legal bills. This level of regulation of legal invoices does not exist in the US.

One of the main obstacles to full e-billing in the UK was the fact that under the then-existing legislation (Solicitors Act 1974 Section 69), for a law firm to be able to sue a client for non-payment of fees, any bill sent to the client had to be “delivered under the cover of a letter signed by a partner in order for the law firm to be able to sue for costs.” In other words, so that law firms could remain covered in the event of non-paying clients, this Dickensian-sounding rule – redolent of quill pens and crusty lawyer’s offices – was a significant barrier to full legal e-billing. This all changed in March 2008 when Commencement Order No.1 came in place as part of the Legal Services Act, which removed the requirement for a legal bill to be sent in this way and cleared the way for real e-billing to happen in England and Wales.

It didn’t stop there, though, as further statutory/regulatory concerns, such as tax rules, needed consideration. Again, using the UK as an example, many firms produced a legal “bill” and a separate tax invoice. If the “e-bill” were to replicate both documents, these statutory and regulatory issues would have to be satisfied. Firms had to ensure that their e-bills and other information sent to clients and e-billing systems complied with, among others, the requirements of the Solicitors Regulation Authority (SRA), HM Revenue & Customs, Data Protection laws, the Business Names Act and EU billing regulations. Firms also had to ensure that the e-billing intermediary system handled these issues correctly and that the e-bill, as seen by the client, complied with all the appropriate regulations. With most e-billing vendors of the time being US-centric, there were many hurdles to overcome.

As if regulatory and legislative problems weren’t enough, organizations themselves had issues to resolve internally. Such issues prevented widespread adoption in the USA too:

• Financial barriers to e-billing were common, particularly in smaller corporates and firms. An e-billing implementation was time, resource, and cost-heavy, and this cost continued beyond implementation. Costs of e-billing included setup, licenses, and the resources required to run e-billing from an IT and administrative perspective. Law firms may face billing department reshuffling, overhauling processes (uploading bills and managing queries and rejections), and even investment in other systems to support e-billing, such as practice management systems that could produce matter and timekeeper lists and time recording.
• IT resources were a luxury not given to most legal departments. The e-billing implementation would join a queue for corporate IT resources and the rest of the business. In-house legal teams frequently found their project pushed back behind more pressing business technology projects. Even after implementation, on-premises solutions require ongoing IT support in maintenance, integrations, troubleshooting, and upgrades to new versions.
• Change management continues to be a barrier even today but was more widespread when e-billing was new. E-billing fundamentally changed how firms billed clients, and the impact on teams, infrastructure, and processes was huge. As matters would be visible to the corporate client and billing guidelines put in place, it required law firms to be completely accurate with their timekeeping and narratives, right down to the task and activity codes. This data entry level was alien, a drain to learn, and in many cases, extremely manual. On the in-house side, ensuring teams didn’t “bypass” the system to continue managing their matters in the old, manual way was also a significant challenge, and legal leaders could not be confident 100% of the spend was passing through the system accurately.

With many of these vast logistical obstacles overcome by legislation changes and software developments, the last decade has seen more legal departments mandate their law firms to use e-billing so they can better manage to spend, budget accurately, and make strategic matter resourcing decisions. Part 2 explores the changes that have led to widespread adoption of e-billing software and identifies where the industry is headed.

Digitalization creates new business models. Uber provides mobility services without owning cars, thus displacing classical taxis. Airbnb offers private apartments for rent and thus creates competition for long-established hotel chains. All industry leaders must ask themselves if their traditional value propositions are still intact or if innovative players can use disruptive and networked technologies to push them out of the market.

This is also true for the legal industry, which, for decades, appeared to be immune to substantial changes caused by technology. While the core of legal services, i.e., the assessment of facts concerning the law, in most practice areas and cases, is still too complex to be executed by machines, this assessment of facts remains supported and surrounded by many operational activities such as document analysis, contracting and project management for which clients are no longer willing to pay high hourly lawyer rates.

The deconstruction of legal work has led to the standardization of high-volume and low-value tasks and the emergence of legal process outsourcers (LPO). In essence, corporate legal services today are in a situation like the one corporate information technology, financial, and human resource services were in some 30 years ago: Chief financial officers (CFO) now also expect in-house legal departments and law firms to use technology to deliver legal services better, faster, and at lower costs.

But legal departments often don’t know where to start with legal digital transformation. Often, they ask themselves questions such as: What differentiates legal technology projects from classic IT projects? Are legal departments per se a special/different audience? Do legal departments have the necessary funding? Can legal departments work/carry out the project in isolation?

This blog offers an overview of the basic steps to take in your legal technology journey.

STEPS FOR LEGAL TECHNOLOGY SUCCESS

1. Identify pain points. Don’t get tricked by all the exciting legal technology on the market. It’s critical to detail the pain points first so you can work out what the solution is. Example pain points are a high volume of trivial (legal) work, insufficient reporting capabilities, cumbersome admin tasks, and increased external legal spend.
2. Plan the budget. Work out the potential of the legal digital transformation project and create a business case. Costs at this stage will be rough, but you can make estimates and assumptions about benefits to calculate the potential ROI. (If high legal spend is a pain point, this guide to “Building a Business Case for Legal Spend Management” will help.)
3. Initiate the digital legal project. Develop a project and resource plan and assign team members and roles.
4. Consider the solutions. Define your requirements and evaluate build vs. buy (vs. do nothing) options. At this stage (when you have clear requirements), you should contact legal technology vendors. Ensure you include potential future users at some point during the solution review. This ensures the users have demoed the product you will consider their opinions. This will help with the adoption of legal technology after implementation.
5. Go live! Procure, install, and test the solution. Consider onboarding users in stages. Embrace failures and adjust accordingly for a successful full implementation.

These five steps are just five essential stages and only scratch the surface of how to approach a legal digital transformation project. For more detail on tackling each of the steps above and more steps, read our three-part series on seamless legal tech implementation or download the Right Legal Spend Management Solution Guide.

Despite legal operations being a relatively established function (only 2% of organizations are not focusing on it), 44% of organizations assign legal ops responsibilities to a corporate lawyer rather than a dedicated person. However, the broader trend is toward creating dedicated legal operations positions and building teams. So how do you prepare and train your existing team for legal operations success?

WHAT IS LEGAL OPERATIONS?

“Legal operations” has been around longer than you might realize; for example, the Corporate Legal Operations Institute (CLOC) formed in 2010. Many legal operations functions have been around for years, just without the name attached. The focus is usually on driving efficiencies, controlling spend, monitoring external counsel fees, and deriving KPIs.

Generally, legal operations encompasses all the functions of the legal department that are not the law itself. CLOC breaks these areas into 12 competencies at three maturity levels; you can find this resource on their website. The typical skills and responsibilities of legal operations are to:

• Define and drive initiatives to improve efficiency and process workflows.
• Manage outside counsel guidelines, legal spend (visibility, control, and reduction), and department budget.
• Optimize law firm performance for maximum value for money.
• Implement, measure, and analyze metrics that inform decision-making, turning them into actions that deliver improvements.
• Implement technology to achieve departmental and business goals.
• Work cross-functionally to demonstrate the legal department’s value within the organization.
• Understand and monitor the risks, risk appetite, and risk profile of the legal department within the organization’s framework.

So why the recent focus on legal operations? As businesses grow in scope and complexity, the volume and breadth of legal expertise required increases, and costs also go up. General Counsel are under more pressure than ever to justify their legal costs, improve the efficiency of their department, and collaborate with the broader business.

Legal operations will bring the legal department closer to the business and thus to the other specialist departments, resulting in Legal playing a different, more critical role in the company. With this demand to make the legal department act more “like a business” comes a need for cost control and process improvement. The problem with this for a traditional legal team is two-fold. First, the legal department’s priority will always be to advise on legal matters. Operations will take a back seat during busy periods or with an insufficiently staffed team. Second, achieving operational and business goals requires skills that are not necessarily part of a lawyer’s standard repertoire.

DEVELOPING LEGAL OPERATIONS SKILLS IN THE CORPORATE LEGAL TEAM

Whether your legal department has a dedicated legal operations resource, a whole team, or legal counsel doing legal operations as part of their “day job,” now is a vital time to future-proof your entire legal team and get them thinking beyond the practice of law. In-house lawyers have many skills that will enable them to succeed in legal operations, including law firm management, company knowledge, and a deep understanding of the legal department’s day-to-day operations and challenges. However, more is needed, and lawyers’ skills gaps tend to be in technology and software, change management, budgeting, and analytics.

Finding people with all these skills will be rare; whether your legal operations head should be a lawyer or non-lawyer is a matter for debate, but most agree that the end goal should be a diverse team of lawyers, non-lawyers, and specialist experts supported by the whole team having at least a basic knowledge of all the functions of legal operations.

Some of the ways to build these additional skills into your corporate legal team include:

JOB SHARING/SHADOWING

Consider placing lawyers with finance, sales, marketing, operations, product management, and data analysis – any area of the business that will broaden their skillset in a way that addresses one of the functions of legal operations. The challenge will be finding colleagues from these other departments qualified to do a genuine “job swap” into Legal. Shadowing is a desirable alternative in these scenarios. Also, try to upskill the non-lawyers in the legal operations team. Allowing them to shadow lawyers will enable them to better understand the different roles, responsibilities, and challenges facing the lawyers and hopefully build stronger working relationships within the function.

LEADING PROJECTS

It’s more than likely that your team members will have already been involved in large projects such as a merger or acquisition, but only from the legal perspective. If they lead the whole project, they will get exposed to other areas of the business and their impact on the overall recommendation and outcome. It doesn’t even have to be such a big project. An internal re-brand, product launch, or HR initiative will all work. Involvement in a software roll-out would be beneficial. Managing projects that involve stakeholders from multiple departments to deadlines and budget is a key part of legal operations, so leading any cross-functional project will build these skills.

TRAINING COURSES, CONFERENCES, NEWSLETTERS

The most obvious way to build the skills you need in your team is through training courses, but conferences can also impart knowledge and inspiration. Training doesn’t have to be an external cost as many of the skills will exist in the company already, and colleagues from other departments can help train. For example, lawyers should gain insights into data analysis, cloud, cyber security, AI, and commercials. Likewise, the business background professionals about the practice of law and the legal market so that they can provide the most value.

IMPLEMENT AND USE TECHNOLOGY

In today’s digitalized world, goals such as transparency, efficiency gains, and data analysis come through the combination of skilled personnel and software. The legal operations discipline is no exception to this; just look at the world’s leading legal operations teams. Each one relies on tailor-made legal operations tools in their daily work.

For this reason, empower your team to think about what slows them down at work daily and investigate if technology could solve these challenges. Encourage them to research and recommend software tools to help them and the wider team and lead the roll-out project.

REGULAR PRESENTATIONS AND OPEN Q&A ABOUT COMPANY REVENUE, PROFITS AND GOALS

If your company does regular “town halls” where they present financial updates and mission statements, encourage your team to attend these or start doing them just for your Legal team if they don’t exist on a company level. Get your team interested and educated in the organization’s financial health and how legal can contribute. A modern legal team must be fluent in financial terminology and confident with budgeting and reporting.

Request a demo of BusyLamp eBilling.Space today.

E-billing and its parent discipline of legal spend management came from the desire to serve in-house teams. The process requires law firms to submit invoices in a consistent LEDES format, enabling automated invoice review by the corporate legal departments and consistent data for reporting. This saves the legal department time and money by improving productivity, reducing erroneous bills, and enabling rate comparisons and data-driven decision-making.

Learn more: What is Legal E-billing?

E-billing is now well understood and not only in large firms. Over 70% of US mid-sized firms’ revenue is e-billed, and 25% in the UK. Many firms now have dedicated e-billing teams. Despite this, some firms remain resistant, mainly smaller firms processing smaller revenue amounts or unfamiliar with e-billing and LEDES, as they will have a steeper learning curve and initial cost and resource impacts. These firms can be reluctant to use a tool they perceive comes forced on them, especially in the short term; it will also mean their revenue decreases if the software spots and rejects invoices that do not meet the client’s billing guidelines.

BENEFITS OF E-BILLING FOR LAW FIRMS

The lessons will come from larger law firms, some of whom have been e-billing their clients since the 90s. While some of these firms will have also initially met e-billing with hesitation, they accept it is a cost of doing business with in-house clients, have fully functioning billing teams, and are now reaping the benefits and realizing that it can be a strategic revenue driver for the firm.

CORPORATE LEGAL DEPARTMENTS DEMAND TRANSPARENT RELATIONSHIPS

The knee-jerk reaction to e-billing is that corporate clients want to crack down on billing errors and get the cheapest rates. Instead, legal departments are looking for transparency and consistency. They want to be sure they are paying the appropriate cost, not necessarily the lowest cost. For example, this means not paying a partner for work a junior could do. Law firms unwilling to be open about line entry information may get thought of as hiding things. With so many law firms happily sharing this information, those who refuse to may need more work. With corporate legal teams looking for transparent relationships, refusal is a big risk.

HAPPIER CLIENTS LEAD TO HIGHER REVENUE

Yes, automated billing guidelines will likely result in the exposure of erroneous billing practices by the firm and a reduction in short-term revenue as these invoices are corrected. The gain for the firm is longer-term. The purpose of e-billing is not to “name-and-shame” and then fire non-compliant law firms. Billing guidelines can be complicated, and we’ve yet to find a law firm that doesn’t bill some errors. Corporate legal departments understand that this is a combination of human error and learning curves, which comes as part of the implementation process.

The benefit comes when the billing guidelines get created, reviewed, and amended so they are win/win for the client and firm. Using guidelines means that any conversations about disputed charges are less aggressive. Data can set future fees and expectations. The relationship becomes more fact-based and strategic. Happy clients that trust their firms will stick around and direct more work their way – we are seeing this trend already with many in-house teams reducing their panels to focus on fewer, higher-value relationships instead.

LAW FIRM INVOICES WILL GET PAID FASTER

Automated invoice review removes the need for manual checking of every bill. Those that meet the guidelines are approved automatically and can get paid faster. Many of our in-house customers commit to shorter payment cycles for electronic bills. This commitment can be a gesture to their firms that they view e-billing as a process that should be win/win. Some tools, like BusyLamp, allow law firms to submit “Work in Progress” or draft invoices for review or approval before submitting the invoice. In these instances, bills get paid even faster.

DATA-DRIVEN RELATIONSHIPS BETWEEN IN-HOUSE TEAMS AND FIRMS

Much of the conversation around legal spend management data and its benefits go towards the corporate legal department and the savings they can make using data analysis to inform decision-making. Law firms also benefit from this data; both parties can use spend data in negotiations, detailed matter information makes for more thorough reviews, and firms can offer different charging models, alternative fee agreements and fixed fees based on facts. With confidence, the pricing models are commercially viable. This also comes back to corporate legal departments wanting transparency; they’ll be confident and happy that the agreed charging models are fair. Taking it a step further, the law firm can set universal rates and prepare more accurate and competitive estimates by analyzing spend data from multiple corporate clients.

COMPREHENSION OF E-BILLING IS A VALUE-ADD

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 clients on e-billing issues, best practices, and tailoring data to meet the in-house team’s needs. Prospective clients in today’s business environment will expect and require law firms to know about e-billing and demonstrate that they can offer this service when making new business pitches. In this age of “new law,” a law firm that can provide more than just legal advice appeals to in-house teams. A lack of e-billing understanding may hurt client acquisition efforts.

IMPROVE LAW FIRM PROCESS EFFICIENCY

While the initial onboarding process may have its hurdles and learning curves, e-billing will help the law firm identify and rectify internal billing and processing inefficiencies, allowing for more time on higher-value work.

REDUCING POSSIBLE NEGATIVE IMPACTS OF E-BILLING

Despite these benefits, getting up and running with e-billing can be costly, time-consuming and sometimes frustrating for the law firm. Here are some ways the corporate legal department and e-billing vendor can help reduce and eliminate negative experiences and impacts.

• Some legal spend management solutions have pricing models that charge the law firm up to 100% of the subscription cost with no cost to the in-house team. Since the corporate legal department (rightly, so it fits their needs) gets to choose which e-billing tool to use, we think it’s unfair to charge the firm. We also believe that if the in-house team is paying for the tool, they are more motivated to use it to its full potential, which demands collaboration with the firm and maximizing the value of data that is input, so firms aren’t wasting effort entering unnecessary data. BusyLamp doesn’t charge law firms; ultimately, it’s up to the corporate legal team which solution and pay model they select.
• Training lawyers to use new software can be a significant, time-consuming challenge for law firms. One way around this is to set up dedicated e-billing teams – all the larger firms have these. If fee-earners are to use the tool, then thorough training and support from the legal spend management vendor are essential at onboarding and beyond. Vendors may charge different amounts for different levels of training. While “online help” is usually included, higher-value training such as face-to-face can carry an additional fee. As the in-house team would foot this bill, the corporate team needs to understand the value and importance of investing in training. However, no amount of training can rectify the frustrations that accompany a poorly designed software interface. The software buyers on the in-house side should review the user experience (UX) and interface (UI) for the law firm and the corporate side, as the law firm experience can be below par with some solutions. The BusyLamp interface is the same for law firms and corporate clients to ensure both sides have an equal experience.
• Corporate legal teams can reduce the number of rejected invoices (and therefore law firm frustrations) by including the law firms when agreeing on billing guidelines. Even if they do not, they should make them readily available and ensure the law firm understands them. Suppose an in-house team/law firm is currently unfamiliar with billing guidelines. In that case, we recommend starting with a few vital ones, as a large list from the off is more likely to cause confusion and inaccuracy. Law firms should also note unexpected rejections and errors, and the in-house team should be prepared and open to accepting and discussing this feedback.
• Data security is an important issue, and law firms can be understandably reluctant to start uploading their information to a system they have yet to review and select themselves. The corporate legal department should ensure they choose a vendor with comprehensive information and data security policies (BusyLamp holds ISO/IEC 27001), including GDPR.

Find out more about data security considerations in our in-house legal tech data security checklist.