In aviation, a pre-flight checklist is a list of tasks that should be performed by pilots and aircrew prior to takeoff. Its purpose is to improve flight safety by ensuring that no important tasks are forgotten. Failure to correctly conduct a pre-flight check using a checklist is a major contributing factor to aircraft accidents.
Although nowhere near as critical as air safety, several law firms have established the principle of running “pre-flight checks” on their e-Bills before submitting them to a legal spend management or e-Billing system such as BusyLamp. This is done to correct any obvious errors on the e-Bill and therefore reduce the % of invoices that get rejected in the first stage of the validation process. This leads to invoices being accepted and paid by the client faster. Over time, common errors can be identified and processes at the firm made more accurate and efficient. It also improves customer satisfaction as it’s frustrating for in-house clients to receive non-compliant invoices.
One useful tool to support such “pre-flight checks” is an e-Billing Operating Procedures (e-Billing OP) document. Usually, one exists for each e-Billed client entity which covers not just the key validation rules for each e-Bill but the wider policies and protocols for working with that specific client and legal e-billing software.
Such documents are becoming more common at law firms. Billing Standard Operating Procedure documents are widely mandated in financial and government organisations. Several law firms have adopted the idea and tweaked it to have something specific to legal e-Billing. With the increase in corporate counsel buying legal e-Billing software comes an increase in the number of clients that need to billed in this way. It also adds to the volume and variety of billing guidelines that firms are required to remember. Operating Procedures documents allow these to be easily recalled and accessed and helps prevent “simple mistakes”.
In this blog post I’ll cover how to create and maintain your e-Billing OP document, sample ‘pre-flight checks’, and how to deal with billing errors.
Documenting the e-Billing Operating Procedures
Many law firms have either already written or are developing e-Billing OPs for every e-Billing client and/or for every generic e-billing tool. In order to gain the maximum benefit from this exercise you need a consistent template against which to write all the e-Billing OPs. Your e-Billing OPs should include:
- The overall client e-Billing process flow and project scope.
- Timescales for valid billing e.g. within xx days of the work being done.
- How to submit WIP and invoice data?
- How to use/invoice alternative fee arrangements?
- What data validation rules apply?
- How are disputed invoices/time entries handled?
- What is the escalation process for correcting rejections within the law firm?
- When will the valid invoices be paid?
- What expenses/activities may be disallowed?
- What UTBMS codes are required?
- How to amend/resubmit invalid data?
- Are any statutory/regulatory statements required?
- Are there any budgets set/how handled?
- Who to contact at the client for queries?
The Operating Procedure may also include the non-e-Billing agreed Protocols and Policies governing the client/law firm commercial relationship. These may be edited if access to sensitive data is to be restricted.
Pre-flight checklist: Validation of e-Bills
In addition to the policies mentioned above, your Operating Procedure document must include the checklist of validation criteria to avoid unnecessary invoice rejections. These cover quite basic e-Billing criteria for common and avoidable oversights. Taking the time to do these checks will save time in the long run. Some validation checks that are typically covered in the pre-flight checklist include:
- Are the hourly rates correct and as agreed?
- Are the timekeepers valid and, if required, are they pre-approved?
- Is the time being billed within agreed time limits?
- Is there evidence of block billing?
- Are the narratives clear? Is there a minimum number of words required?
- If required, are there UTBMS codes for tasks/activities/expenses?
- Are there any disallowed expenses (e.g. Online Research, Local Travel), activities (e.g. Reviewing File) or timekeeper classifications (e.g. Intern or Trainee) on the e-Bill?
- Are there any budgets or caps on this matter? Are we still within these limits with this bill included?
Subject to a few exceptions, most of the errors detected at this stage can be easily corrected. Some errors can be resolved by the e-Billing team, for example missing timekeepers or incorrect rates. Other more significant errors i.e. missing activity codes, vague narratives, block billing issues, tax errors or other billing guideline breaches will have to be referred to either the revenue controllers or the firm’s legal team. This may inevitably delay the submission of the e-Bill. It’s important to note that the invoice would be rejected by the client in this case anyway, so it’s still faster to catch the error prior to submission.
Regardless of the type of error, they should be documented and their resolution communicated to the legal team. This helps your firm identify common errors and improve the billing accuracy (and therefore efficiency of the processes) going forwards.
Many law firms have implemented additional processes upon matter opening and will set an e-Bill indicator or flag in their Time and Billing system to show that this matter must be e-Billed. This will trigger a notification to the matter partner/lawyers and e-Billing co-ordinator that key data items, which would stop the matter being billed if missing, are required. The firm’s e-Billing team can then run audit reports on a client by client basis to check that the expected data is present before the matter is billed. (As noted above, you should have processes in place to refer many of these issues back to the business to resolve.)
Collecting client requirements for e-Billing Operating Procedures documentation
Now that you have the template for building your operating procedures document, you may still be wondering how to identify the clients’ e-Billing requirements in the first place! Ideally the in-house client will have supplied you with a billing guidelines document signed off by both parties. You then use this to populate a “client matrix”, which includes the client’s data and billing requirements, your law firm’s data requirements, and any administration and special installation guidelines. In the interests of centralisation, I recommend that the client billing guidelines and other specific e-billing requirements are included in the e-Billing OP documentation. They must be visible to the relevant parties and adhered to by both the legal team and the firm’s e-Billing/finance function.
The client matrix is primarily a series of tasks with dates for completion. The main sections are:
- New Client set-up – includes client id, e-Billing software vendor details, bill format, contact details, timekeeper types and entities in scope.
- New Client Implementation Checklist – includes UTBMS codes, invoice template details, login and password details, validation lists, expense codes, testing requirements and go live dates.
- Portal set- up – includes client and law firm data set up, user set up, rates and timekeepers and reporting metrics.
The information from this checklist is cross-referenced and included in the e-Billing OPs. Completing the checklist will highlight other tasks to be completed for a given client such as:-
- Is any timekeeper mapping required? – Typically from the law firm’s system to the client timekeeper classification.
- Are any data extracts needed? – e.g. existing open matters, timekeeper uploads and agreed rates etc.
- Communications to the legal team – mandatory task/activity codes/Narratives etc.
- Client work types, is a PO number needed?
As with the Operating Procedures, the data gathering checklist is owned by the law firm’s e-Billing co-ordinator/team. Although these main sections refer to “new clients”, the client matrix should be updated if billing guidelines, or any other procedures from the client, change.
Operating Procedures make e-Billing easier
There is no “one way” to do e-Billing and it is different in many law firms. One core difference is whether e-Billing is centralised or decentralised, and the associated consequences of that approach. What does seem to be consistent (and works) is when firms create a dedicated e-Billing specialist team. These carry various names but are essentially a team that is responsible for successfully uploading e-Bill files to the e-Billing vendor/client portal. This team can be in-house, near-shored or off-shored but will need clear Operating Procedures for each client with all possible outcomes and options documented, as well as a clear escalation path for all unresolved queries. They will also require a general support model covering other non-client-specific scenarios. Obviously, this level of documented support may be more important if the team is working offshore or otherwise remotely.
The scope of e-Billing is changing and is now far from the original concept of just loading e-Bills into a portal, handling the rejections, resolving issues and getting the bills accepted. Evolving from this original requirement came the addition of matter budgets to the portal and a responsibility on the law firm to maintain them and ensure they are adhered to. More recently we have seen clients make “added value” requests, such as the addition of client-only data added to the e-Bill (such as their own work types) and unbilled time and WIP uploaded to the e-Billing portal. This extension to the scope will only increase as the adoption of “beyond e-Billing” legal spend management technology, such as AI and machine learning, is spread wider. These requests are all helping in-house clients better understand their matter budgets and legal spend, and your law firm is a vital partner in helping them achieve these goals. But with this additional service comes complexity, making the need for clear e-Billing documentation at your firm even more critical.
Bryan King, Independent Legal e-Billing Consultant, April 2020