Increasing productivity while cutting down on wasted effort is often one of the core priorities of any successful legal department.
Between misaligned expectations and varying degrees of separation, working with outside counsel can be a major stress point in terms of maximizing efficiency.
However, data-driven solutions can be used to not only promote greater efficiency but also optimize transparency. This heightened transparency helps to get in-house and outside counsel on the same page and cut down on stymieing miscommunications in billing expectations.
Currently-existing technology can achieve this level of transparency, all while making the time-consuming task of outside counsel invoice review more efficient in its entirety.
You Set the Terms. Now Enforce Them
Managing and controlling legal spend, and dealing with billing inconsistencies and disputes can consume significant amounts of time and attention. Moreover, overly aggressive billing management can adversely affect relationships between in-house and outside counsel. Setting and maintaining previously agreed upon “Outside Counsel Guidelines” is a strong way to start on the same page and stay that way.
The goal of these guidelines must have a clear and demonstratively positive purpose. Setting arbitrary rules for outside counsel can just make things more difficult for the in-house counsel tasked with managing them.
These guidelines are primarily intended to avoid billing deviations and help manage expectations. So long as everyone sticks to the plan, in a uniform and consistent manner, billing disputes should be reduced if not almost entirely eliminated.
Transparency keeps everyone honest and manages expectations in a much more efficient way than relying on potentially idiosyncratic and erroneous human review. Fortunately, with the right tools, achieving this level of transparency can be effectively effortless.
Automated Standardization of Billing Data
The solution is to introduce billing automation. By implementing standardized billing automation, ambiguity is dramatically curtailed. Every invoice is subject to the same rules and practices, without idiosyncrasies and inconsistencies. Additionally, the more uniform data presentation is easier to review.
For instance, making the use of automated UTBMS (also known as “LEDES”) codes a condition of service for outside counsel ensures that everyone is playing by the same rules. It helps organize billing data, and remove the possibility of nebulous charges for vague billable tasks. Furthermore, the automated aspect curtails human error that can be far more rampant in idiosyncratic manual processing.
Indeed, a recent Thomson Reuters “Latest Trends and Best Practices in Managing Outside Counsel” report notes a significant reduction in billing disagreements can be achieved through the implementation of automated billing platforms.
Because every change and addition does not need to be manually parsed and implemented, billing can be processed in real-time, immediately catching causes for concern before they become full-on disputes. This functionality is a reality due to computer-assisted billing technology.
Transparency isn’t the only advantage of automated billing. As the Thompson Reuters report mentions, automated billing provides for a significantly billing review process – further expediting a non-billable task. The less time spent on non-billable tasks, the more time spent clocking billable hours.
Efficiency, productivity, and billing transparency are all markedly amplified when using artificial intelligence (AI) and machine learning technology to supplement already existing invoice and matter management platforms to better manage and control legal spending.
Outside Counsel Must Do Their Part
The onus for maintaining a successful relationship between all those involved does not singularly fall on in-house counsel. For example, the American Bar Association provides some guidance on outside counsel billing practices with its article “Working Effectively with Outside Counsel Checklist.”
Serving as outside counsel does not negate ethical and professional obligations such as reasonable client billing practices mandate in the ABA Model Rules of Professional Conduct adopted in most states in the United States.
In fact, Law.com lists ‘building trust – at all levels’ as one of its “10 Tips to Strengthen Relationships with Outside Counsel.” Trust is a two-way street. In-house counsel sets the terms, but it’s on outside counsel to stick to them.
Optimize Transparency and Efficiency
The technology to optimize transparency with your outside counsel billing needs is not just a far off concept. It exists and is available right now.
There are applications that provide the latest in artificial intelligence and machine learning working in concert to standardize law firm billing data, using features such as:
- Automated UTBMS coding
- Automated Outside Counsel Billing Guidelines compliance
- Automated flags to notify outside counsel in real-time whether they are charging too much for a particular task or an entire matter
Applications such as these allow for more seamless alignment of billing practices and expectations when working with outside counsel. The intuitive software will alert outside counsel to discrepancies before they fire off non-compliant invoices. If multiple outside firms are in use, having a streamlined and standardize invoicing system will save significant clerical headaches.
The beauty of this technology is that billing entries can be reviewed automatically. That means that should an issue arise, in-house reviewers won’t have exercise focused and time-consuming scrutiny to identify the discrepancy. Similarly, outside counsel can even receive advanced notice of billing issues with the exact location of the potential problem. The faster the issue can be found and addressed, the faster it can be resolved.
Moreover, it would understandably be a lot to ask of outside counsel to completely disregard the billing platforms they already have in place. Fortunately, some of the apps that use machine learning and AI for automated invoice review integrate directly with the most ubiquitous invoice formats and billing software systems already on the market. Instead of outright replacing outside counsel’s billing platforms, some of these programs function more in an enhancement capacity.
More tech-savvy firms have already started implementing this technology into their billing apparatuses. The more that do, the less room there will be for those who choose to stay behind the curve. Failing to make use of such useful and readily available resources may even start to rub up against ethical competency rules in the near future.
Anytime an opportunity presents itself to boost productivity, increase efficiency, and promote transparency in non-billable tasks, it would be foolish not to seize it. That is exactly what the machine learning and artificial intelligence enhanced billing applications provide.
These AI-powered applications are faster, less susceptible to human error, and put everyone squarely on the same page via standardization. This automated standardization allows for nearly unprecedented levels of transparency in billing to help in-house counsel more easily and consistently work with their law firm counterparts. When in-house and outside counsel don’t have to worry about billing discrepancies and disputes, it fosters a relationship that is far more mutually beneficial.
The digital world allows tasks that used to take hours to be accomplished in less than seconds. Because some of the apps featuring this technology work easily with existing invoice and matter management platforms, they minimize change-management issues, and decrease the burden on both outside counsel and clients alike.
As important as billing is, it should not be a point of contention between in-house and outside counsel. Automating and standardizing the entire billing process is a functional way to help ensure that it doesn’t become one. That time is better spent on more pressing matters.
This article was first published in Lexology on April 7, 2021.