Hitting the billing bullseye

As appeared on Briefing Magazine on February 17, 2023
Written by Josiah Chaves, VP, Cloud Products at Aderant

Getting paid for work done is an increasingly challenging prospect for law firms, impacting pricing and profitability, says Josiah Chaves at Aderant. But law firms need not resign themselves to missing the target when it comes to meeting outside counsel guidelines.

In a period of global economic uncertainty, law firms – in common with other industries – face many challenges, including restricted budgets and rising salary costs, which threaten profitability. Though these obstacles have become acute only in recent months, other, older trends running in parallel have amplified their impact, says Josiah Chaves, VP cloud products at Aderant. “Five years ago, the industry was talking a lot about the struggle to ensure matter profitability. While that’s still a topic of conversation, we’ve increasingly been hearing that the pressures of outside counsel guidelines have become the most pressing constraint.”

That’s put pressure on firms’ ability to bill and collect revenue, he says – especially given the scale of the billing challenge. A mid-sized US law firm, as an example, may now be processing something in the range of several thousand outside counsel documents and engagement letters at any one time, he explains. These may include very detailed requirements relating to which categories of employees can work on specific matters and which types of tasks the firm can bill for. “If an entry on a bill violates any of those rules, that whole bill will be rejected. Making sure your firm actually gets paid for the work it’s doing has become a significant issue – almost every conversation I have with law firms these days involves this challenge.”

But it’s a challenge firms need to address, he says – even small errors can have a major impact on the firm overall. “If you’re getting rejected on a $1000 bill because of a disagreement on just a quarter of an hour time entry, that still has a direct impact back onto the firm’s efficiency and therefore its pricing model.”

“If you’re getting rejected on a $1000 bill because of a disagreement on just a quarter of an hour time entry, that still has a direct impact back onto the firm’s efficiency and therefore its pricing model.”

Josiah Chaves, VP cloud products, Aderant

Saving time entries

The result has been a large administrative burden, Chaves adds – which cuts into firms’ efficiency and profitability. “There’s often an army behind the scenes to help ensure the firm gets paid – meaning the cost of getting paid for every single time entry has become not only a massive effort but a cost in itself. We’re trying to make that process easier and help firms get paid for the work done.”

He says many automated tools have been developed to address this issue, some of which are intended to replace users inputting billing information. But that’s not quite the approach Aderant is taking with its time and billing solutions, including BillBlast, Chaves adds. “Maybe one day AI will replace end users for certain things, but that requires an understanding first of what ‘perfect’ looks like, and that takes a long time to get to.”

Instead, Aderant is trying to collect more information on what successful time entry and billing looks like, and then use that to support users. That entails using BillBlast, among other tools, to help firms better understand their own areas of greatest success and opportunities for improvement. Once that information is better understood, automated systems can suggest missing people, phases or other information crucial to a bill being accepted by a client the first time.

The solution also entails working closely with partners and associates to help them better understand successful time narratives, he says – without forcing them down a particular process or technological route. “How do we help educate lawyers on writing great narratives without being invasive or disruptive? We can take information around people’s regular processes – their calendar, the phase and tasks they’re working on against a particular matter – and build processes around that. They do things that way anyway, and integrating those processes into the technology will ensure time entries will indeed be paid for. That’s our non-invasive and assistive approach to using AI.”

“There’s often an army behind the scenes to help ensure the firm gets paid – meaning the cost of getting paid for every single time entry has become not only a massive effort but a cost in itself. We’re trying to make that process easier and help firms get paid for the work done.”

Josiah Chaves, VP cloud products, Aderant

Billing in context

Chaves also sees a throughline from law firms’ pricing, resourcing methods and ultimate realisation – a relationship that has consequences in both directions. “Another major challenge for law firms is getting the right people with the right knowledge to effectively execute on client deliverables. You want to understand, for instance, what the realisation rate is for a particular associate. As you’re pricing those matters, you’re taking that into account. And, if you can be better at collecting, the job of allocating resources also becomes easier – you’re not guessing what you will actually get paid for the work that you need to execute.”

Another of Aderant’s time and billing systems, Expert, captures a huge amount of useful information and data that can be used to make firms more efficient. “How do we take that information and help a firm understand what their problem areas are? How can they know how good they are compared to other firms? That’s what we’re investigating now.”

The end result of these technological advancements will hopefully be not only increased efficiency in planning, pricing and resourcing legal work but also what Chaves calls the “one-touch” time entry model. “That means the first attempt at time entry from the firm should succeed, reducing the burden of having whole teams dedicated to getting it right later.”