Improving Billing Practices

As I mentioned in my first blog post on this topic, corporate law departments may be negatively impacted by the inefficient practices of their law firms – from incurring unnecessary costs to experiencing poor data collection. Fortunately, new tools are helping bridge the divide and curtail the inefficiencies between corporate counsel and their outside firms.

To start, having an Enterprise Legal Management (ELM) platform that includes e-billing and business intelligence provides the necessary standardized data capture and reveals the insights that departments need in order to improve the billing practices of their firms over time.

While a robust e-billing solution can be a buffer against non-conforming billing activities leading to unnecessary spend, some negative billing practices occur in a pattern over time. Most invoice reviewers aren’t able to detect these practices when examining a single invoice. To find these, the e-billing solution should reside on a platform with sophisticated reporting capabilities that can aggregate invoices over time and then use business intelligence to generate actionable metrics that identify and quantify those questionable timekeeping practices.

Streamlined Report Implementation

To ensure business intelligence has a positive impact on the bottom line, legal departments should use a reporting solution that can be implemented quickly and cost effectively as an extension of their existing legal management system. A legal department with an ELM platform can avoid purchasing a separate point solution, which requires a costly and time-consuming integration process, by implementing that platform’s business intelligence module.

When the goal is to optimize spend and prevent waste, quick and seamless ramp-up of billing practices reports is particularly critical. Pre-configured billing reports on an existing ELM platform are not costly and offer a very rapid return on minimal investment. A typical legal department incurs excess costs of about 2% due to non-conforming billing practices. For a department with a $50 million annual budget, this represents $1 million dollars that can be saved each year by curtailing these practices.

Because improvement of billing practices is an ongoing effort, reports that support it must offer a simple process to easily and routinely re-examine law firm performance, with results clearly tracked over time for each firm and timekeeper. Presenting those results as clear and easily understood metrics is the best catalyst for departments to have conversations with their law firms.

Working with Firms

The most reliable method for making these conversations productive and successful is providing reports that show more than just the statistical data. Law firms need to see results that identify specific individuals whose practices are extraordinarily unusual, along with supporting data taken from the very invoices and line item entries that generated the results. This gives firms the specific information they need to self-manage in a way that meets client expectations.

Client-oriented firms welcome any tools that can help them focus on the things that are most important to the client. In my experience, law firms are often unaware of billing issues until clients present them with data that reveals a problem. When that data goes all the way down to the timekeeper level and even the invoice line item level, it allows firms to see the actual improper billing entries and then take quick action internally to improve the client relationship and optimize the client’s investment. This is always a mutually beneficial proposition.

When I speak to corporations that are implementing these types of reports, I encourage formal incentives and recognition for firms that make clear progress in improving their billing practices and efficiency. The ultimate goal is to award more business to those firms who embrace the opportunity to deliver better value for the service they provide. Part of that is formalizing the sharing of performance metrics among the department staff to ensure that everyone who refers matters to outside counsel is aware of the high-performing firms.

All law firms strive to distinguish themselves from their competitors.  Most have not developed the metrics and business intelligence described in this blog series, but when provided the information, will embrace it and use it to support their clients’ objectives.  Outside counsel differentiate themselves by their levels of quality, cost, and service.  Billing practices metrics deliver the information supportive law firms crave in order to better compete on these measures and win more of their clients’ business. 

In my next and final post in this series, I will describe how you can leverage metrics and analytics to ensure continuous improvement in outside counsel billing practices.

For information on how Actionable Insight reports for Passport® and TyMetrix® 360° can help you quickly and easily identify non-compliant billing practices, visit our website.

About The Author

Bill Sowinski

Bill Sowinski directs all decision support services at ELM Solutions. In this role, Bill leads an expert team in the design of client legal spend analyses and benchmarking disciplines based on each organization’s specific needs. He works with clients to structure and analyze their legal data, helping to develop and deploy measured strategies that improve legal and claims department performance. A litigation expert and a pioneer in the legal analytics space, Bill has extensive experience working with key clients across myriad industries.