(Checklist) Anatomy of an Effective Legal Billing Process
But what do you do when it feels like one (or two, or three) of those traits is missing from your everyday operations?
The answer begins by understanding all the parts contributing to the whole — and who is responsible for maintaining (or improving) each element.
Client Billing Responsibilities
Clear billing guidelines
To ensure a seamless legal billing process, the first step is establishing a concrete set of rules for your law firms to reference. Without these written expectations, you’ll be inviting non-compliant fees that create frustration and disruption for both sides.
As for distribution, a centralized storage location for your billing guidelines will ensure quick and easy access. You and your team won’t have to spend time replying to email requests from each individual collaborator.
You should also routinely review your billing guidelines for accuracy and relevance. Proactively alerting your law firms to any updates or adjustments will preserve the clarity they need to submit correct and compliant invoices on the first attempt.
Efficient invoice review
Reviewing and approving invoices is commonly the most time-consuming phase of the legal billing process. Because, when tasked with balancing both speed and accuracy, most departments will understandably err on the side of diligent cost control. The good news is those two objectives are no longer mutually exclusive.
By graduating beyond manual processing and embracing technology-assisted review, savvy teams are now significantly shortening their billing cycles. The best (and easiest) way to do this is to automate your invoice review and approval process using an A.I.-powered tool. Instead of assigning staff to read each and every line item description, text analysis software can now rapidly identify the few issues that truly deserve human attention.
Easy integration with Finance
Approved invoices don’t become bank account balances until they pass through Accounts Payable. Linking closely with your finance team will help limit the transition time between those two states.
Keeping colleagues in the loop on budgets and forecasts will ensure your invoices get paid on time. Proactive planning and accruals management will also give both Legal and Finance the visibility necessary to identify potential challenges weeks or months before they have a chance to wreak havoc on the billing process.
Formal resolution plans
Even the most precise billing processes will eventually be stretched by the variety and complexity of legal services. So when issues inevitably arise, you’ll want a plan in place for how to deal with rejected invoices and conflicting opinions.
If your law firms are consistently submitting non-compliant services, some extra education may be needed to resolve their confusion. On the other hand, if outside counsel introduces a valid billing scenario your guidelines have not yet accounted for, you’ll want to be responsive to that as well. Continuously improving your billing guidelines and addressing your law firms’ concerns will show your humility as a fair business partner while simultaneously solving future debates before they arise.
These social dynamics are easy to overlook when outlining legal billing strategies but often turn out to be surprisingly impactful. Perhaps the most efficient way to preserve positive relations is to appoint a mediator within the law firm who can give you matter and invoice updates as they emerge.
Law Firm Billing Responsibilities
Reliable time tracking
In an industry defined by billable hours, it’s essential to make sure your law firms are promptly and accurately tracking their time. This includes every timekeeper or employee working on the matter.
The general rule of thumb for lawyers is to bill for approximately 70% of their total worked time. While this may be the commonly accepted practice, the billing guidelines you create are ultimately the most objective point of reference for you and your law firms. So make sure your instructions address the timing as well as the nature of services provided.
Billing guideline awareness
Once you have detailed and distributed clear billing expectations, it’s up to your law firms to uphold their end of the bargain. If your law firms are repeatedly including non-compliant fees in their invoices, that’s a strong signal that your documentation has not been sent to or internalized by everyone in the firm.
Your appointed law firm contact should have ensured everyone working on the matter was made familiar with the billing guidelines, so you should flag it with them as soon as possible to avoid any further breaches.
Informative invoice descriptions
Nobody wants to review needlessly lengthy narratives, but you also don’t want your law firms to withhold information that could be important. Any ambiguous descriptions within your invoices will disrupt your approval workflow as your law firm will need to clarify what they actually intended.
The trick is to make sure the invoices you receive are concise yet sufficiently detailed. Work with your law firms to gradually find the right balance so they can create invoices that will encourage efficiency, not hinder it. (This is one variable they definitely can control when it comes to accelerating time-to-payment.)
Timely invoice submission
You can’t pay an invoice you haven’t yet received. While this may sound obvious, law firm billing behavior sometimes suggests that it’s not. Make sure your law firms stick to a billing schedule so you can pay your invoices within the agreed timeframe.
Your law firms should also be submitting their accruals on time. Those accruals must be accurate to allow for a more efficient billing process.