Technology

Surprise! It's Completely Wasteful For Clients To Impose Bespoke Billing Requirements.

The pursuit of efficiency isn't getting the job done.

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Over the years, in-house counsel have gotten more persnickety about law firm billing. And while it’s true that the days of “further work” diary entries took advantage of the relationship between firms and clients, the modern era led to clients producing tomes of idiosyncratic billing guidelines to micromanage the process. Legal departments claim it’s about efficiency, but at the end of the day it’s just gumming up the whole process and creating unnecessary waste.

There are providers out there helping law firms cope with these billing bibles. The iTimeKeep system, for example, gives guidance at point of entry that something might violate a client’s specific billing rules. But for all the technological help out there, there’s reason to believe that it’s not going to be enough to stay ahead.

Because at a certain point these variations are going to be too much for the technology to police and then firms and clients are going to have to bring on people to sort it out.

Human error may be one problem that e-billing technology never entirely trumps. Lisa Pizzo Maki, the director of legal administration at Fiserv, noted that some law firms “will always be sloppy.” And while LEDES may continue to roll out new billing codes as the need arises, there’s no guarantee that a firm will use them. “For example, if I told my law firm ‘I want you to use e-discovery codes.’ What if they don’t?” she said.

But to be sure, law firms may also be struggling with certain aspects of the e-billing process themselves. HBR Consulting’s Clem pointed out that a firm may be grappling with a large roster of clients, all with different variations on billing guidelines. How a legal department feels about paying for first-year associates, for example, could vary from company to company.

Yet it is the tragedy of dealing with lawyers that “our billing system has gotten so complex and time-consuming to manage” is met with “so let’s throw more resources at it” rather than “maybe we should reconsider the mess we’ve made.

[Nathan Wenzel of SimpleLegal] believes that the value in ALSP bill review is the ability to go a step beyond an analysis of whether a bill complies with a specific set of guidelines. “[ALSPs] are going to bring in legal knowledge to identify if that work should have been done at all. And that is very powerful,” he said.

So now we’re hiring ALSPs to look at the bills that the software already reviewed to see if there are other arcane mistaggings and — more incredibly — to second guess whether the work should have been done in the first place? Make no mistake, no one is questioning Skadden’s bills. This is where that gap between the law firm haves and have nots grows with clients nickel and diming the Am Law 51-200 firms to death while never daring to question the elite firms that they hired in bet-the-company matters just to avoid taking any heat from the board.

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This isn’t to say that there aren’t bad actors out there in the billing game, but if clients want cheaper options to remain viable they need to start reevaluating this drive to micromanage the billing process. Firms are already investing in tech and wasting more of their days complying with varying policies. Adding a whole other layer of cost in order to catch a sliver of overbilling and to compromise the firm-client relationship by challenging whether or not a research project was even necessary seems like a wasteful pursuit.

Can we all just get back to building a service relationship based on mutual trust? Is that too much to ask?

Legal Department Challenge: E-Billing Can’t Fully Automate Guideline Compliance [Law.com]

Earlier: In-House Counsel Make Increasingly Arcane Billing Demands And It’s Costing Firms Money

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