BLOCKS ADSL : LADO HORIZONTAL

turnover in

the billing

department.

Human nature.

Human error.

Timekeepers

measured by

billable hours.

No mechanism to

track the varied

client guideline

agreements.

Early on when promoting the value of legal ebilling, it was common to hear in a sales pitch something like this, “So if your law firm is charging you .50 cents per page for photocopies the system will automatically adjust it down to your approved rate of .10 cents per page. “

Good stuff, low hanging fruit, immediate value – absolutely. But as systems have become more sophisticated and legal spend management programs have matured, the focus has been on managing the bigger cost drivers of time and task. And while this is the proper focus, I still come across programs where the photocopy rate allowed is above the industry norm of .10 per page. In one scenario, the excess photocopy charges added up to a hefty $265,000 per year.

Double check to see you are reimbursing expense items at a reasonable rate in line with your peers and industry standards. Specific to photocopies, the bigger questions is how many photocopies are even necessary; what are they for? With so many of us going Green, this is definitely a number that should be going down.

Director of Industry Relations, Legal Solutions [email protected]

In a conversation with a lawyer who utilizes Legal-X to send bills to a multitude of insurance clients, he told me the number one frustration within his firm wasn’t with ebilling, or even someone reviewing the bills, but rather the inconsistency of the bill review. He pointed to examples of where adjustments were taken for specific work on one invoice, but fully approved for the same work on another invoice. Handling invoice objections and appeals is time consuming, expensive, and adds friction to a relationship. Strive for consistency in your review by using standard practices within your organization.

Even something as simple as having common adjustments reasons among reviewers improves the consistency and message to the law firm on acceptable billing practices. It also provides you with better data so that when you speak with individual firms about poor billing practices, you can quantify the problem areas needing correction and benchmark for future monitoring

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Director of Industry Relations, Legal Solutions [email protected]

An important extension of any legal ebilling system is the ability for the law firm to create a budget online the client can approve and automatically track with each successive invoice. In a paper environment creating a budget in Excel and making manual edits once a paper invoices crosses your desk is an inoperable model. And given most clients come to us from the paper world, they are not in the habit of requiring case budgets from their law firms.

Some firms advise it is too difficult to budget at the outset as each case follows its own lifeline. Well, if clients were asking for a budget that was in actuality a fixed pricing agreement I would concur. But what our clients want, and what we’ve been able to help them automate, is a process where a firm provides a baseline budget used to proactively monitor cost. The budget might be for the life of the case or set up to track spending through a particular phase (e.g. discovery) that then requires a re-set if the case continues on. Alerts are built in to warn of potential cost overruns at various stages of the claim to avert surprises.

A client recently came to us with a situation where they uncovered $100,000 of legal fees on a claim with a settlement value of $50,000. A budget set up with proper alerts would have identified early on the mismatch between the value of the case and the efforts of the law firm. Approved budgets are now required before the firm can submit an invoice for payment. No one wants to be blindsided by runaway cost and a budget can provide both perspective and a safety net when managing a claim.

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Director of Industry Relations, Legal Solutions [email protected]

Last month we went over the $500,000,000 mark for review of electronic invoices submitted to our clients by independent adjusters. The results continue to prove that, just as with legal invoices, there are significant efficiencies, cost savings, and business intelligence opportunities available by converting a vendor from paper invoicing to electronic.

What we see in the legal world is a well understood and closely controlled approach to reimbursement for expenses submitted by the defense firm handling the case. Mileage, meals, hotel, transportation, photocopies, telephone, express mail, overhead, prior approvals are all defined areas of each client’s guidelines distributed to the firms. But the same agreements with independent adjusters and other vendors is either lacking, or there is no mechanism in place to monitor compliance.

Over 1,000 independent adjusters are ebilling ready! This is spend that can be monitored. .

Director of Industry Relations, Legal Solutions [email protected]

Legal spend management applications have given claims organizations the upper hand in tracking the cost of defending a claim. The line item detail captured in the electronic invoice provide the ability to instantly report on legal fees and expenses for a claim, subset of claims, or all claims by any number of criteria. One critical measure enabled by ebilling is the ability to compare and contrast historic results by firm so new cases can be assigned to the firms who drive the best results.

But how do you measure the best results? If you rely strictly on the data collected from electronic invoices, your measurement is limited to the Average Cost per Case - legal fees plus expenses incurred. After all, the invoice is only a reflection of the time and expense billed while working on the case. And though the Average Cost per Case is instructive, it leaves out the most important factor – the end result.

Total Cost of Outcome is the purest measure of law firm effectiveness as it includes the Average Cost per Case plus indemnity payments. Settlement data resides in the claim system but can easily be incorporated into a legal spend management system through simple systems integration or minimal data entry. Too many companies with legal ebilling programs overlook this important step or put it off as a project for another day.

Comparing your law firms only on cost provides a false picture as your lowest cost firms aren’t necessarily your most effective firms. Adding in case results may show that a firm who would otherwise rank in the middle of the pack is actually a top performers …and valued partner!

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Director of Industry Relations, Legal Solutions [email protected]