Category: Enterprise Legal Management

There are well-documented benefits of e-Billing for corporate legal departments. With digitally created billing files and automated processing and checking of invoices, e-Billing saves a huge amount of administrative resources and tracks external legal spend in almost real-time, ensuring adherence to guidelines and budgets.

Less talked about is how the legal procurement function can benefit. Legal spend management software captures detailed invoice line-item data on matter information and bill totals, as well as timelines, timekeepers, and expenses coded using the UTBMS (Uniform Task Based Management System) code set for tasks, activities, and expenses. This creates an extensive data set to analyze and make future decisions.

Organizations can use the powerful reporting and analytics capabilities in modern e-Billing solutions in the following ways:

1. BENCHMARK SERVICE PROVIDER PERFORMANCE WITH E-BILLING

E-Billing ensures consistent entry of billing data points for all service providers. This allows for accurate comparison of performance metrics such as timekeeper rates, experience levels, time to complete a matter, budget adherence, and billing guidelines compliance. Some solutions allow the in-house team to rate the firm, though this data point is subjective. Benchmarking metrics give legal procurement visibility into the service and value they receive from each service provider, leading to open and honest conversations.

2. INFLUENCE FUTURE LEGAL PURCHASE DECISIONS

The data generated by Legal Spend Management can ensure the right option is selected when deciding how to resource legal work. Longer term, the right analysis will lead legal procurement to the right purchase strategy based on past data and comparisons. This works even better when legal procurement is open with providers about using this approach and sharing their goals so external providers know how to meet expectations.

3. REVIEW AND RESTRUCTURE EXISTING PANELS

Panel reviews can be time and resource intensive because of insufficient data from which to compare levels of experience, performance, and expertise across firms, a lack of spend data, and an inability to track service delivery methods across providers. E-Billing removes all these problems, reducing the resources needed to conduct a review and generate a confident outcome. One positive of a panel review can be a reduction in panel size, which usually leads to more significant discounts by consolidating work to fewer firms. The potential downside is a lack of specialist firms on the panel. Weighing up these risks can cause conflict between procurement and the legal department and is much harder to evaluate without the data generated from Legal Spend Management software.

4. RENEGOTIATE RATES AND TERMS

By comparing fees and rates and reviewing service provider performance, legal procurement can enter negotiations with an arsenal of data to help them reduce costs and create more valuable relationships with external providers. Firms often do not have access to this level of data and may be surprised by legal procurement’s findings. They want satisfied clients and are open to these discussions.

The above benefits drive savings and confident decision-making and create a healthy competitive environment within the industry, raising standards for all corporate clients and ensuring maximum value from legal service providers. With procurement helping with financial management activities, the legal department can focus on their external legal business relationships, improving the in-house relationship between legal and procurement as they work together to achieve company goals.

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

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.

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.