The process of legal e-billing typically involves law firms submitting invoices to clients in a LEDES format with UTBMS codes, as per clients’ billing guidelines. Some law firms submit invoices into their clients’ e-billing systems through having login access to a vendor-side version of them. Others submit their invoices through the LEDES API and into their clients’ e-billing systems by utilizing a legal e-billing software or portal.
Either way, post-submission an invoice review is carried out by in-house legal departments, typically aided by an automation tool that flags invoice errors and general guideline non-compliance. This has led to a decrease in inaccurate billing, saving time and money for in-house legal departments. For the law firms, however, it has lead to a decrease of 6-11% in revenues due to billing guideline non-compliance, and an incalculable metric of time lost in dispute resolution to get invoices processed.
Law firms are now catching on and realizing that building out a strong internal e-billing process can ensure billing guideline compliance and therefore reducing instances of having invoice totals reduced and time wasted in dispute resolution. Many law firms are flocking to legal e-billing software solutions that provide an easier means of creating LEDES invoices and capturing UTBMS codes.
Though they have previously touted as a luxury for large law firms, these legal e-billing software solutions are now incorporated into the majority of mid-size US law firms and nearly a quarter of similar sized UK law firms. For these law firms, this means the ability to create and submit clean legal invoices directly from their legal e-billing software and into clients’ e-billing system, reducing time waste. Small law firms, however, may still be warming up to the idea of legal e-billing, or a cloud-based legal software in general. This could be due to a lack of familiarity with either LEDES or with the benefits of legal e-billing. Legal e-billing has brought about a variety of changes to how legal invoices are created and processed. They are not only good for clients, but also for law firms.
In this article we will cover the benefits of legal e-billing, as well as how a cloud-based legal e-billing software can drive absolute compliance to clients’ billing guidelines, improving law firm profitability.
It is easy to assume that in-house legal departments are using legal e-billing as a means to get the cheapest possible rates by being stringent against erroneous invoices. However, this is not the main or intended application of legal e-billing standards. Clients that use legal e-billing standards such as LEDES are looking to avoid a situation where they have to pay a partner to do the work of a junior lawyer, or even paralegal. In short, they are looking to make sure they pay the correct amount for the work that is completed by their law firms.
Law firms these days are becoming increasingly transparent due to the expectations of their clients. Not being open about line entry data is hazardous for client relationships. Legal e-billing standards such as LEDES provide transparency for every line item that law firms bill with e-billing codes. As an example, if a line item is recorded to capture work done during a deposition, codes are added to this line item that indicates that the line item was for a deposition.
Though you might think it is obvious and easy to understand what a line item is about when looking at the description, having dedicated codes allows legal e-billing software and client-side e-billing systems to automatically understand and interpret line items without the possibility of error. This, in short, lets invoices get validated and processed automatically while also making visibility into categories of spend/income much easier, both for law firms and for in-house legal departments.
A significant advantage of compliant legal e-billing lies in the long-term. With consistent compliance to clients’ billing guidelines, transparency increases and less work is required by both parties in dispute resolution. The relationship between clients and law firms then starts to evolve as the law firm offers an overall better billing experience. The establishment of trust with clients increases the likelihood of repeat business, as well as can aid with future client intake for law firms.
Reducing or eliminating dispute resolution between clients and their law firms improves the speed of payment. If an invoice is clean upon receipt, it can be processed and paid much faster and does not require communication or a back-and-forth with the law firm that sent it.
How can law firms ensure clean and compliant invoices, however? Well, timekeeping and e-billing go hand in hand. Legal e-billing software with automation-focused features can provide immense value to a law firm. Software solutions such as our Bilr tool enables lawyers to record their billable hours with their voice. This enables them to participate in best practice timekeeping from their car, the court house or even at home. In addition to this, Bilr offers something that most other legal e-billing software does not: AI/ML invoice review.
What does this mean? AI/ML refers to artificial intelligence and machine learning. Bilr utilizes this technology to automatically scan legal invoices for billing guideline compliance, prior to sending it to clients. With this tool, law firms can scan their invoices in the same way that their client will, enabling them to fix any potential error or non-compliance issue that the client would find, flag and point to during dispute resolution.
Legal e-billing software reduces the time a lawyer needs to spend with timesheets, tracking billable hours and reviewing line items and invoices. This frees lawyers up for more productive work and what they actually studied law for: practicing law. Legal e-billing software liberates lawyers to spend more time on tasks that are billable, and less time fiddling with timekeeping and e-billing.
Legal e-billing software can promote a relationship defined by data driven culture between clients and law firms. By creating in-depth data analytics from metrics captured from legal e-billing, law firms can make informed business decisions relevant to their pricing models. Decisions based on clients’ spend data can be made with the confidence that such pricing models are commercially feasible. Data analytics such as this are typically offered with legal e-billing software, building out reports based on law firms’ use of the systems.
This particular aspect relates back to the transparency needed by clients. By undertaking the analysis of spend data from various corporate clients, law firms can position themselves to determine their ideal universal charges and prepare estimates that are competitive and accurate in nature.
Knowledge of legal e-billing can be an effective marketing tool for law firms to attract new clients as they now expect law firms to bring legal e-billing expertise to the table. The role of a law firm is no longer to just offer legal advice; presently, law firms are frequently required to go the extra mile to appease clients’ in-house legal departments. Lack of legal e-billing knowledge or the capacity to create compliant legal invoices in LEDES formats can prove detrimental to client acquisition efforts.
Legal e-billing software help law firms overcome the barriers to getting a compliant, clean legal invoice out of the door and to a client, resulting in faster payments and an elimination of client-side invoice reductions. Uncoordinated e-billing processes plagued by human-manual tasks lead to inconsistent cash flows which have an adverse impact on the profits of law firms and only yield higher administrative costs.
The advent of AI/ML capable law firm software tools such as Bilr have made legal e-billing easier than ever. Relationships between clients and law firms have only been strengthened by the deployment of legal e-billing software solutions. Billing should never get in the way of a law firm’s relationship with their clients.
Legal e-billing software ensures that legal e-billing provides value to law firms instead of being a point of contention between the law firms and their clients. Law firms lose significant revenues due to instances of unbilled time, time waste and non-compliant invoices. Legal e-billing software ensures that this does not happen, while simultaneously streamlining the timekeeping process.
Interested in trying a legal e-billing software? We’re offering a 14-day trial of Bilr to any law firm, as well as product demonstrations and complimentary consultations to figure out the best fit for your specific practice.