Six Advantages of Modernizing Law Firm Billing

legal software

Six Advantages of Modernizing Law Firm Billing

By Marie Burgess, Director, Product Management, Aderant

A general counsel for a large global company didn’t think twice when he authorized payment on a “considerable” law firm invoice. However, several months later he received one for a mere $70 and objected to it.

Why? The former had details that demonstrated value, while the latter was sent without explanation. Consequently, he began to call into question the entire billing process, including the invoice he’d already paid.

This example, which was originally reported in Corporate Counsel, has in part, led to the advent of outside counsel guidelines (OCGs) and eBilling systems.  These tools have proliferated among legal operations within law departments with the intent of controlling costs.

The impact on law firms has been overwhelming, mainly because these tools are non-standard, and because the law firm billing process itself isn’t standardized.  As a result, firms struggle to comply with a dizzying array of unique requirements – and the frustration among business of law professionals, if not lawyers, is real.

It’s turned the invoicing process within law firms into a dreaded monthly event that drags on for too long amid a flurry of hand-marked paper invoices being passed back and forth. For some firms, the time to move to a digital and regimented paperless billing process is long overdue.

Advantages of Modernizing Law Firm Billing

Most firms want to speed up the process, but they don’t want to sacrifice accuracy or compliance. Invoices that go out as such tend to come back for another round of write-downs and add weeks to the collections cycle.

Modern billing technology, designed specifically around processes central to large law firms, can significantly accelerate the speed and accuracy of billing. More importantly, it can ensure compliance with OCGs and facilitate a smooth eBilling process.

Here are six advantages of modernizing law firm billing:

1) Tighter collaboration and improved efficiency

Electronic pre-bills mean edits, corrections and updates are immediately visible to the entire team. A partner who prefers to see a preview of the draft invoice – including custom notes or commentary – may do so at any point they choose during the editing cycle.

Once an individual reviewer has finished their step in the process, the invoices are automatically routed along the workflow to the next required review or approval until the process is complete. It is a faster, more accurate, and a collaborative but accountable way to efficiently complete invoices.

2) Ensure OCG compliance at time-entry

Modern billing software automation ensures compliance with OCGs by drawing from a library of common billing guidelines. These guidelines will trigger an alert when a timekeeper’s entries appear to violate those guidelines.

This improves the process by moving it upstream to the beginning of the billing cycle rather than the end. This gives the firm the opportunity to proactively manage the process from the outset, rather than deal with the surprise and frustration of a rejected or short paid invoice.

3) Manage the billing process from a mobile device

Mobile versions of modern software provide the same depth and breadth of functionality law firm staff have come to expect from a desktop. The point of mobility is to allow lawyers and law firm staff to be more productive from anywhere, for example, the capability to review and edit pre-bills on a tablet, rather than printing stacks of paper.

4) Create an audit trail for accountability

Manual or paper-based billing systems put firms at a significant disadvantage if a client disputes a charge several weeks or months later. Law firms need the capacity to audit and trace changes as a pre-bill evolves into an invoice.

It’s also essential for accountability and process improvement, as it provides greater detail for analysis including:

  • Which invoices were written-down?
  • Why were those bills written-down?
  • Who (or which practice area) is writing down the invoice?
  • Which invoice types experience the most rejections?
  • Are invoices already written-down also being written-off?

The answers to these questions also enable a law firm to aggregate data, analyze trends and determine the root cause of lower realization rates.

5) Real-time visibility into the financial impact of pre-bill edits

With old systems, law firm leaders must wait days, or even weeks to see the impact of write-downs on the financial health of a firm. In a digitized process, they can see this as these changes are being made. This enables partners and the billing team to understand when and if a pre-bill has been written down more than once, or if charges were transferred to another matter or invoice.

6) Improve service quality and enhance client relationships

A modern billing process should not only improve realization rates – but it ought to serve to strengthen the client-firm relationship. Law firms spend a lot of time and effort trying to attract new clients and in the competitive landscape today, can’t afford to have the relationship go awry the moment the invoice is transmitted. More importantly, rather than the source of a dispute, invoices should communicate the value the firm is providing.

* * *

Whether the client invoice is $70 or $700,000 – it ought to be tabulated and published with the same efficiency every time. Modernizing law firm billing ought to be a liberating decision that improves both collections and client relationships.

This piece is adapted from a Legal Business Report titled The Partner’s Business Case for Modernizing Law Firm Billing. The full report is freely available for download without registration.

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