How to Get the Most out of Your Legal Billing Data – Fostering Transparency and Collaboration to Better Align Expectations
Legal billing data contains a goldmine of valuable information. The objectivity inherent in the data, when properly presented, can enhance trust, create opportunities for open discussion, and encourage transformational growth. When departments dig deeper into their billing data, they can find ways to improve billing hygiene, increase profitability and efficiency, gauge diversity efforts, and simplify project management.
While the raw information obtained from the billing process is invaluable, to maximize potential impact requires regular collaboration with outside counsel, organizational leaders, and other affected stakeholders. The resulting transparency and alignment expectations will in turn lead to a better internal billing culture and facilitate growth of client relationships, while streamlining spend management and generating cost-savings.
The first step is to understand any legal billing obstacles and identify areas needing improvement. Then, an organization can leverage tools and collaboration to better the process and procure operational insights backed by the billing data.
Overcoming Common Legal Billing Data Challenges
The billing process is far from perfect at many legal organizations, but legal and procurement should continue to invest in the work of attaining the highest level of data maturity possible. While lawyers are notoriously resistant to change, in recent years a new trend has emerged as many in the legal profession embrace transformation journeys. Here are some of the legal data challenges they face:
Task and Activity Coding
While uniform task-based management system (UTBMS) codes provide a good starting point for analyzing legal spend and identifying focus areas for similar matters, this information is a baseline. There is often lack of sufficient timekeeper training on proper coding application. A deeper review is imperative to determine value, gauge future investments, and isolate instances of misused coding or violations of outside counsel guidelines. Many also do not perform a thorough line-item analysis because it is time-consuming, but this is where most nuanced information resides that can best inform future decisions about strategy, client engagement, vendor needs, and technology investments.
Lack of Familiarity with Technology
Legal professionals may have wealth of valuable billing data but lack direction on how to leverage it for business purposes. This is where partnering with a provider offering AI technology can be helpful for addressing data analysis and information management needs. There are many customizable tools available for departments of all sizes with varying goals that can shed light on trends that leadership wants to see from their billing data. Failure to become educated about these tools inevitably leads to missed violations of outside counsel guidelines, failure to identify important trends, inefficient workflows, and a higher frequency of undesired outcomes.
Collaboration and transparency are crucial to aligning on outcomes, but many legal departments lack a strong project management process to ensure this happens from day one of an engagement. The most important time for communication is at the outset of a matter. This is when everyone should participate in a kickoff meeting to convey expectations, discuss budgeting, formulate game plans, and assess risk. Important players at this phase include inside counsel, outside counsel, clients, leadership, IT personnel, and partnering vendors. Other times where communication is often sparse but should be increased includes when approaching a budgeting limit, after bill review, and when data insights indicate that alternate strategies could prove more effective. Enhancing communication efforts will lead to increased awareness and smarter billing practices, which will open an opportunity to get better business insights to inform future decisions.
Ways to Improve Processes and Optimize Legal Billing Data
Legal billing data can help tell a story to law departments, their clients, and timekeepers. To address the issues noted above, legal departments need to make early investments in improving billing habits. This will lead to more effective billing, and ultimately translate into reduced expenditure of time and treasure. A place to start includes setting up timekeeper training to ensure time entries are being coded correctly, that line-item descriptions contain enough information, and compliance with outside counsel guidelines. Spending a little more time on billing review and having regular check-ins with law firm partners can make all the difference.
Even after billing processes are improved, comprehensive data analysis needs to occur on a routine basis. Look at what trends the billing data reveal. Is a certain technological investment proving unprofitable and why? Are there practices that do not align with the organization’s diversity and inclusion goals? Are lawyers not using certain tools that can expedite processes? These are just a few questions to consider during an audit to pinpoint areas of inefficiency that may require remediation. AI tools can help with this by reviewing billing data and internal systems faster while also offering contextual analysis. Using information from advanced automated review in conjunction with red flags that become apparent during manual efforts can help shine light on larger billing deficiencies needing attention. Whether it be a recurring administrative error or insight into underperforming areas of legal spend, these insights can be transformational and more importantly ensure everyone involved meets expectations. A provider with expertise in AI and legal spend would be a beneficial partner in this area.
Finally, clarity and communication are crucial elements when it comes to optimizing billing data. Proactive billing will greatly help not only with initial alignment but also with managing expectations. When it comes to the client, it is important to communicate why something was billed a certain way and when investment in advanced tools or vendor partnerships would be beneficial. With law firm partners, standardizing and auditing processes for outside counsel guidelines is of the utmost importance to maintain consistency, decrease administrative work, and limit unnecessary write-offs. Put simply, collaboration cultivates better billing practices which will create more opportunities for using billing data to enhance future business decisions.
Interested in learning more? Watch the recorded webinar with Epiq expert Julia Lane on “How To Use Billing Data To Communicate More Transparently And Align On Outcomes.
By Julia Principe Lane, Legal Spend Solutions Manager. Julia has over 10 years' experience in the legal industry, providing operational and advisory services to corporate legal departments and assists law department professionals to better understand their relationships with legal service providers and provide insights that have led to meaningful cost savings and increased department productivity.