3 Myths about Outside Counsel Billing
- Business of law
- 6 min read
When it comes to the law, we work in an aspirational space. We work with bright, talented, and motivated people who are known for being the best in their practice area. These talented folks are intellectual, uber-thinkers who get results. However, because of their great work, our expectations of them are dangerously high and border on demands of perfectionism. Pragmatically, it is impossible to do everything, all the time, and to do it well.
One area where attorneys can sometimes fall short is legal billing. Legal billing takes time and energy to report with precise accuracy. With so many other items on their plate, attorneys often must choose between delivering quality work and tracking time meticulously. Not surprisingly, quality work always wins.
But, here is the good news: it is possible to create both top-notch work product and clean billing by implementing simple methods to reorient better billing habits. Here are the myths and remedies that can help cure billing woes.
Myth #1 – Law firm timekeepers are always familiar with your outside counsel billing guidelines.
Remedy – Make your guidelines clear and concise, vocally announce changes, and educate your outside counsel on content to see improved outcomes.
It may come as a surprise, but many timekeepers are unaware of their clients’ outside counsel guidelines (OCG). Rules are often agreed to in the engagement letter, and then circulated only once or annually, but not further distributed to the attorneys working on the matter. When it comes time to fill out a timesheet, many timekeepers do not know where to locate OCGs. They may not know there is requirement for them to work within specific parameters when they bill for services performed on your behalf. The best way to be certain your guidelines are respected is to periodically refresh them, announce updates, and consistently enforce them.
Additionally, attorneys are likely juggling dozens of different sets of billing guidelines, each of which contains slight variations. While many of the rules are common or merely variations on general themes, this adds up to a lot of diverging expectations to track and follow which creates an additional challenge for firms to comply with every set of client rules. An alternative legal services provider (ALSP) can help ensure that guidelines receive the attention they deserve and do not fall through the cracks.
The length of an OCG document is inversely correlated with the likelihood of its review. If the guidelines are lengthy and convoluted, they will be challenging for your attorneys to understand and follow. OCGs should not be a confusing licensing-style document, where the intent is to hide what the other party agrees to. Rather, they should be clear and concise, communicated often, and should help attorneys meet expectations. Here are some ways to encourage compliance:
Simplify the overall document. A billing guideline consultant can assist in you with creating a user-friendly, abridged version of your existing guidelines that will simplify review for outside counsel.
Distribute OCGs at the outset of every matter, and ensure they are provided to every approved timekeeper. This will ensure against claims of non-receipt and will present an opportunity to discuss your expectations.
Use analytics to highlight prior errors and use examples during periodic trainings with outside counsel. Please reach out to us here for more information on how to perform a historical eBilling data analysis.
Myth #2 - Attorneys vigilantly and consistently monitor how much time they spend completing tasks to ensure a high level of billing accuracy.
Remedy: Apply a pragmatic approach to guideline enforcement and use AI as an enhancement to the process.
Meticulous timekeeping is not necessarily a top priority for legal professionals. They have a long list of tasks to check off their to-do lists. They often have good intentions and try to stay on top of tracking billables, but the time commitment required and distraction from critical work get in the way. A disciplined approach to bill review and periodic spend analysis can help you understand what this might mean for your business in the long term.
The amount of time spent on a task is an estimate, and the description of the task is representative of the work performed. Timekeepers do not necessarily track the tasks they perform in real time. Timesheets are often put off until the last minute and cobbled together based on reviews of Outlook items and haphazardly written notes. Legal professionals are expected to track their time in six-minute increments. The end-product manifested on a timesheet approximates the essence of the task. The degree of the estimate’s accuracy depends on the volume of work, the level of oversight, and varies depending on the amount of pressure on the timekeeper to juggle and multitask.
Artificial intelligence (AI) software is a formidable weapon in the war-chest of legal operations and can handily find outlier patterns in eBilling data. Law departments should consider the benefits of an AI tool when building out an invoice review workflow. AI should be used in addition to a practical layer of expert review. An experienced person in the loop can still better grasp matter nuance, understand relationship dynamics, and apply appropriate exceptions. They intuitively recognize whether something passes the “smell test,” whereas the machine relies solely on objective criteria. In fact, the EU has recently sounded the alarm on heavy AI reliance and has decided to disincentivize the practice. While bill review is not likely in the high-risk category, law departments have a responsibility to ensure they maintain the highest level of integrity in all dealings. Quality assurance is key and cannot occur without a human at the wheel.
Myth #3 – Law firm invoices are always scrupulously reviewed before being submitted to clients for payment.
Remedy: Provide regular feedback to firms with thorough consistent invoice review, spend analysis, and regular candid discussion.
Everyone believes someone else is reviewing the bill. In many cases, this translates into no one reviewing the bill. In the same way law department employees are under resource strain and dread the monthly ritual of reviewing invoices, billing partners and administrators suffer from similar ennui. Quality control of billing is typically not a required step in the invoicing process. An ALSP can intervene to correct mistakes and prevent overpayment for non-compliant entries.
Firms often lack the tools and time to efficiently identify and correct billing errors. Furthermore, time spent on billing activity is often explicitly prohibited as a billable task. Consequently, the incentive to invest in clean billing submissions is removed. The responsibility then falls to in-house personnel to police bills and ensure against waste. It is a literal passing of the proverbial buck. Talk to an ALSP provider about training tools for your outside counsel to use to get them up to speed.
Firms generally expect some pushback on their bills. Some firms submit bills with the (unspoken) expectation that a certain amount will be reduced by the client before final approval. While these functional upcharges are not intentional, they function as a margin of error in billing accuracy. The plus or minus of that margin can lead to a hefty chunk of change over the long haul. The savvy legal department knows this and is always on the lookout for irregularities.
If your legal department is looking for help in managing your outside counsel invoicing process, or you just have questions about some of the actions you can take to better inform your in-house attorneys, Epiq spend solutions can help in these endeavors.
By Julia Lane, Manager of Legal Spend Solutions. Julia has over 10 years' experience in the legal industry, providing operational and advisory services to corporate legal departments. Along with her legal background, her understanding of data analytics and industry best practices enable her to assist 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.