Is E-Billing Obsolete in an Age of Alterative Fee Arrangements?

E-billing has been a no-lose proposition for general counsel, significantly bringing down outside counsel costs through automation while showing nearly immediate ROI. But since the recession took hold, alternative fee arrangements (AFAs) in one form or another with outside counsel have become commonplace, offering GCs much more budgetary predictability. Despite this rapid evolution in spend management, e-billing software is still very relevant. It still offers GCs the most cost savings.

E-billing software offers a variety of features to general counsel. It provides the opportunity to work more efficiently and demonstrate value to the organization. Tools such as shadow invoicing are similar to traditional invoices, produced under an hourly fee arrangement, but these do not post against a client’s accounts payable system. It shows what the client would have paid had there not been an AFA in place. When the GC receives the shadow invoice, he may see an amount that is astronomically higher than the monthly fee paid under the AFA.

The firm may think this demonstrates the value they offer to you, the client company, but it really shows an organization not structured to function efficiently. If the firm cannot make money on one particular deal, ultimately it will make up the difference down the road. Considering this, shadow invoicing is one of the most under-appreciated spend management tools.

In addition, it’s crucial to maintain an invoice database because of another powerful spend management tool: early case assessment (ECA). Relying on statistical data–as opposed to guesses from a few members of one law firm–is a much better way to develop a litigate or-settle strategy.

Finally, GCs can demonstrate the value their department adds to the company by leveraging the invoice database to determine which legal tasks should be brought back in-house, outsourced using an AFA or sent overseas under a legal process outsourcing agreement. Regardless of the spend management strategy, an e-billing system can precisely calculate the department’s value and promote the GC’s strategic position within the company.

Spend and matter management technology has become indispensable in reducing outside counsel costs, so it was natural for Mitratech to become a proud sponsor of the 2011 Legal Technology Leadership Summit, Sept. 6-8 in Amelia Island, Fla.

“Corporate legal departments that use technology to closely manage the value of outside counsel and their own efforts consistently enjoy reduced costs, and they accurately determine when to settle matters and when to litigate,” said Afshin Behnia, CEO of Mitratech. “We’re proud to deliver the tools to help them implement successful spend management strategies.”