Known benefits of e-Billing
The conventional view of electronic invoicing (e-Billing) has been focused on the management of legal spend, potential cost savings and the ability of in-house counsel to compare the efficiency of their panel firms. Consequently the less obvious “benefits” arising from a successful e-Billing implementation are not always identified – but are real and measurable.
Some of these known benefits for clients claimed for e-Billing are that it reduces erroneous charges, enforces compliance with the billing guidelines and ensures that the seniority and thus charging rates of lawyers working on a matter are known to the client. Some clients rigorously enforce their billing rules, and e-Billing provides a way for these rules to be more strictly applied than with paper-only bills. While this strict compliance with the rules is more prevalent in the US, we are also seeing more rigour being brought to bear in the enforcement of 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 telecoms charges, administrative overhead and online research. Some further examples of external counsel guidelines are:
- That law firms should use appropriate resources for performing certain tasks – such as partners not being used on what are considered more junior level tasks/activities.
- That the client will only pay for time spent travelling if that time was productive (i.e. the lawyer worked while he/she was travelling).
- That clients can specify that only one external firm lawyer should attend certain types of meeting, and will be able to verify that this happens.
- That several distinct tasks are not “block billed” in a single amount and that vague time narratives are not used.
Strengthening the relationship with law firms
There are, however, further indirect benefits that can be gained from eBilling 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 are able to offer more access to internal data not normally available to the client, for example, written-off /unbilled time and nonchargeable work done for the client. Firms are also able to categorise billed time by the client’s own work breakdown/cost codes and improve the value to the client of the information in the e-Bill. All in all, it means that more comprehensive information about each matter is available to both law firm and client, and this is shown to improve 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 very experienced in e-Billing and are able to advise on e-Billing issues and even on how billing data can be tailored to best meet the client’s needs. Prospective clients now require law firms to be knowledgeable about e-Billing and demonstrate that they are able to offer this service when making new business pitches.
- The use of 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 of this is where part of a matter is priced according to time-based billing and part is fixed-fee work. This type of costing can only really be achieved if both parties are comfortable with the work being done and at what stage or phase of the transaction. E-Billing is the only way that this level of work breakdown can be measured and madevisible to both parties.
- Last but not least, several studies have shown that the use of e-Billing software results in a faster payment of the lawyer’s bills. The use e-Billing tools greatly reduce the client’s manual workload for invoice validation, so that invoice approval and ultimately payment of invoices can be carried out more quickly.
All this shows that the use of e-Billing software can improve the relationship between law firms and clients. With regard to 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 with regard to the content of the particular case in which the law firm is advising the client, but also with regard to the costs arising from that advice.
Modern e-Billing providers, such as BusyLamp, are predestined to make a contribution to strengthen the relationship in this respect. They have set themselves the goal of establishing the use of e-Billing not only for the client but also for the law firms as a smooth process and I personally know many representatives of law firms who confirm that the cooperation with these providers works very well.
For further insights on this topic, download a recording of my webinar, strengthening the relationships between in-house counsel and law firms.