Legal E-Billing: A Guide for In-House Teams
For in-house legal teams, sifting through stacks of paper invoices, reviewing thousands of invoice line items, and ensuring timely payments takes too much time and effort.
Enter legal e-billing, a modern solution designed to streamline, standardize, and simplify the entire billing process.
Modern corporate legal teams are turning to e-billing because it improves accuracy, saves time, and increases outside counsel guideline compliance rates.
What is Legal E-Billing?
Legal e-billing is the electronic submission, review, approval, and payment of legal invoices. It streamlines the traditional paper-based billing process by leveraging technology to manage and track legal expenses more efficiently. This is particularly beneficial for in-house legal departments that manage a significant volume of invoices every month from various law firms.
How Legal E-Billing Elevates Legal Operations
E-billing is more than a digital version of your traditional billing process. It transforms how in-house legal departments operate. Here are some of the ways it does that:
- Centralized repository: Invoices submitted by email are difficult to manage. It’s easy to lose them and difficult to retrieve them when they get sent to the wrong person. In-house legal teams eliminate those risks by transitioning to a legal electronic billing system that automatically routes invoices to the correct approver and tracks the invoice’s approval status.
- Quicker approvals: Automated systems significantly speed up the invoice review and approval process. Less time spent on review means your team’s time is freed up for higher-impact work. Plus, faster approvals lead to quicker payment, which keeps your law firms happy.
- Enhanced accuracy: Electronic billing reduces the chance of invoicing errors. E-billing software has built-in validation checks to make sure information is accurate, and immediately kicks errors back to your law firm to correct. This reduces the time legal and finance need to spend fixing billing mistakes.
- Better cost tracking and analytics: Many e-billing systems have built-in analytics tools that allow clients to track their legal spend and review cost metrics. This is invaluable because it allows legal departments to confidently budget, forecast, and make data-driven decisions around resourcing and vendor selection.
- Increased transparency: With electronic billing systems, you can quickly review detailed breakdowns of billed hours and expenses. This ensures you only pay for services that meet your guidelines and deliver value to your business.
- Standardized billing formats: E-billing systems present invoices in a standardized format, making it easier for clients to understand and review invoices.
- Integration with Accounts Payable: Legal e-billing can be integrated with your finance team’s AP system. This ensures finance get the legal invoicing data they need, while the legal team can manage spend in a system tailor-made for legal invoices.
What an Effective Legal E-Billing Process Looks Like
An effective legal e-billing process aims to streamline the invoicing and payment process between in-house teams and their outside counsel, increase visibility into spend, and ensure accurate tracking and reporting of legal expenses. Each element—from standardizing your invoice forms to soliciting feedback for continuous improvement—contributes to the transformation of your legal department into a strategic business partner than can confidently control costs and save time by automating routine tasks.
Accept Invoices Through a Single Portal
In a well-designed e-billing solution, law firms can submit their invoices electronically through a secure portal. This stage often includes automatic validation checks that screen for common errors or non-compliance with billing guidelines and significantly reduce the time spent on manual checks.
Some e-billing systems require that law firms submit invoices using the Legal Electronic Data Exchange (LEDES) file format. However, international and boutique firms may not have the ability to produce a LEDES file. In addition, your finance team may require invoices in PDF format. For both these reasons, it’s best to search for an e-billing system that fully supports the submission and review of both LEDES and PDF invoices.
Classify Legal Work
It’s important to classify the legal work carried out on invoices into a common set of legal tasks and activities so that you can better understand the work your outside counsel are billing for and whether it delivers business value.
The Uniform Task-Based Management System was established 30 years ago to do just that. It aims to standardize how timekeepers describe and define their work on legal invoices. It’s a great system, but it’s still fallible. After all, every attorney interprets work a little differently. This inconsistency makes it difficult to trust your data.
So, an effective e-billing tool should rely on artificial intelligence to analyze and classify invoice line items. A machine is better at standardizing definitions for tasks, expenses, and billing rates, which eliminates any ambiguity.
Review and Approve Invoices
Once an invoice is submitted and the legal work it contains is classified, automated workflows within the e-billing software route it to the appropriate person or department for review. Invoices that appear to violate billing guidelines can be flagged for further scrutiny. Automated notifications can be sent to reviewers to remind them of pending invoices, making the process more user-friendly.
Report on Spend
Legal spend reporting is another crucial aspect of an effective e-billing process. Your e-billing system should allow for easy tracking and analyzing of legal spend. It should offer customizable dashboards and reporting features that can break down expenses by matter, practice area, or outside counsel.
You can also generate reports based on various metrics like law firm performance, cost by matter type, or historical spend. This lets you identify trends, monitor budget compliance, and evaluate the return on investment for your outside counsel engagements.
Continuous improvement is vital for the long-term success of any e-billing process. Regular meetings with internal stakeholders and outside counsel can provide valuable feedback that can be used to refine and improve the process. Billing guidelines and policies should also be reviewed and adjusted periodically to ensure they align with the objectives of your legal team.
Why Software Makes It Easier to Manage Legal Invoices
By making the billing process more efficient and transparent, software saves the legal team time and money and improves the working relationship between legal departments and their external service providers.
Using software in the billing process introduces a level of automation that is impossible to achieve with manual methods. Automated systems can instantly scan invoices for violations of billing guidelines, such as non-billable tasks or incorrect rates, and flag them for further review.
This eliminates the need for time-consuming manual checks, reduces errors, and speeds up approval. Automation also simplifies the tracking of outside counsel billing practices, making it easier to identify areas for improvement and cost savings. This can be especially useful when understanding how to resource future work, including making insource/outsource decisions, and moving work to more cost-efficient vendors.
Greater Cost Control
Legal costs can quickly spiral out of control. It’s impossible to manage those costs properly if your data is siloed in emails and spreadsheets.
Legal e-billing software centralizes that information. You gain immediate visibility into what you’re spending, and with whom, which you can use to make data-driven decisions to better manage your costs.
Reduced Human Error
While human oversight is still crucial, software reduces the margin of error in the invoice review process. Automated checks and validation processes can catch errors that might be missed manually. The can save time by preventing redundant data entry and reducing mistakes.
By streamlining the process and ensuring that information is consistent on every invoice, billing software helps to ensure that data is accurate and up to date.
All of these factors contribute to the improved accuracy of financial data, allowing organizations to make more informed decisions.
Billing software can provide real-time feedback to law firms at the time of invoice submission. This immediate feedback allows for quick corrections, leading to greater billing accuracy and and faster payment times for your firms.
Billing software can also alert your outside counsel when outside counsel guideline violations are found on their invoices. This drives greater adherence to billing guidelines in future submissions.
One of the significant benefits of using billing software is the centralized documentation it provides. Every action taken on an invoice, from submission to approval and payment, is recorded in the system. This provides a clear audit trail and ensures accountability and traceability.
Having a comprehensive document management system makes it easier to meet regulatory requirements like those in the Sarbanes-Oxley (SOX) Act, which mandates strict financial reporting and record-keeping standards.
Invoice and payment records can be quickly accessed and searched, making it easy to identify discrepancies in billing, ensure accuracy, and flag any potential issues. This helps prevent fraud and ensures that all billing processes are conducted promptly and accurately.
Embrace Legal E-Billing and Streamline Your Invoice Review
If you still use emails and spreadsheets to handle your billing, consider this your cue to upgrade to a cloud-based management solution.
Brightflag’s e-billing software solution has unique AI capabilities that allow corporate legal teams to make faster and more informed legal spend management decisions. Our system makes it easier to follow outside counsel guidelines for external legal counsel, potentially cutting your legal expenditures by as much as 20%. If you’re ready to take control of your legal spend, book a Brightflag demo.
Book a Personalized Demo
See how Brightflag's legal e-billing software can help your legal team to reduce costs, increase productivity and make better decisions.