Legal AI Invoice Review Explained

Over the past couple of years, the hype around AI has increased exponentially. You’ve probably encountered an AI integration for almost every piece of tech you interact with daily.

Naturally, AI has been making waves when it comes to legal work as well. Many legal operations teams are busily evaluating the top solutions to add to their in-house team’s tech stack. That means there’s a LOT of noise to cut through. So, if you’re struggling with how each one improves legal workflows and saves your legal department time and money, you’re not alone.

Fortunately, some clear-cut use cases exist for artificial intelligence in legal operations. One of the most straightforward is AI invoice review. Let’s break down how it benefits your team.

What Are the Benefits of Using AI for Legal Invoice Review?

1. Time Savings Through Automation

Let’s be honest: Manual legal invoice review is a huge time sink, and your legal team could be spending their hours—not to mention their knowledge and expertise—much more productively.

By using AI to review and reject or approve invoices, legal departments regain hours every week that they can reallocate to higher-impact work. AI also doesn’t tire, so the tedious process of invoice review doesn’t slow down over time as human eyes tire and minds start to wander. It just happens consistently and quietly in the background.

And even when invoices require a set of eyes to review them—for example, when mistakes or billing guideline violations get flagged—AI streamlines the process. With Brightflag’s AI Invoice Summaries feature, for example, the AI system:

• Reviews the invoice
• Provides a summary of the work being billed for
• Flags billing guideline violations found on the invoice
• E-mails all this information directly to the invoice reviewer

From there, the person reviewing can approve or reject the invoice directly from their inbox. You can also decide to examine the invoice in more detail on the platform, review invoicing errors, or make any necessary changes.

2. Cost Savings Through Outside Counsel Guideline Application

You know the drill: Your team creates meticulous outside counsel guidelines to establish a framework for how law firms should resource and bill for work. But your law firms occasionally fails to comply with them.

It’s a frustrating experience, and oftentimes requires someone to manually catch the violations to ensure compliance and optimized cost control.

Legal billing review using AI makes enforcing outside counsel guidelines much easier. AI automatically flags billing issues that are non-compliant with the legal department’s outside counsel guidelines, and highlights anomalies for your in-house legal department to review.

From there, your in-house team can decide whether to reject or amend the invoice, ensuring you don’t waste time sifting through invoices to enforce compliance. Or worse, simply pay non-compliant invoices automatically without addressing the billing issues. Legal teams using AI invoice review for cost control save millions of dollars (and a massive load of work hours).

3. Better Visibility into Legal Work and Spend

One of the biggest challenges many legal teams face is a lack of visibility into their legal spend. Especially when tracking matter progress and real-time spend against budgets. For legal leaders, like GCs, this lack of visibility makes it difficult to optimize resource allocations fully, or to evaluate outside counsel performance objectively.

However, when using an AI-powered platform for invoice review, all the data on legal work and spend is collected and housed in one place. That means you have the data about specific matters at your fingertips, and you can track whether they’re pushing up against the limits of your budget.

Additionally, a good platform simplifies the process of generating and pulling reports, because the in-house team doesn’t have to track down information across multiple emails and spreadsheets to collate everything they need.

4. More Strategic Data Insights

With your legal spend data collected in one place, leveraging that data for strategic decision-making becomes much easier. For example, your team can easily check:

• Law firm compliance with outside counsel guidelines
• Which firms have delivered high-quality work at cost-effective rates
• When spend has spiked historically, including patterns and trends
• Which vendors offer better rates for specific types of legal work

Using that data, the legal department can benchmark rates, compare firms, and make cost-efficient resourcing decisions. It also opens a pathway to negotiating better rates or bulk deals with your most trusted firms.

5. Fewer Errors

Reviewing invoices manually can be a tedious process. And no matter how efficient your team is, mistakes like inconsistent compliance with billing guidelines do creep in. In most cases, these are simple oversights, but they all add up and may significantly cut into your department’s budget.

An AI invoice review system can apply the same guidelines, in the same way, across every invoice the legal department receives. This results in fewer mistakes, less inconsistency in the invoice review process, and peace of mind that nothing is slipping through the cracks.

How Does AI Invoice Review Work?

Most AI invoice review systems rely on similar core technology and follow a few standard steps. However, the secret to effective legal AI invoicing is the depth and quality of data used to train the system. Here’s what it looks like in Brightflag’s case:

Brightflag’s solution uses two core technologies, natural language processing (NLP) and machine learning (ML). NLP is the branch of AI that allows computer systems to autonomously recognize, interpret and respond to human language (think ChatGPT). Meanwhile, ML handles the training of machine systems, including how to analyze data, learn through experience, and improve output accuracy over time.

In Brightflag’s case, we use a process called supervised machine learning (SML) — a subset of machine learning focused on training a computer system to recognize inputs and predict outputs by supplying it with examples of known input-output pairs (also called “labeled” data).

By combining NLP and SML, Brightflag has developed a solution that interprets legal invoices with the speed of a machine and the intelligence of a lawyer.

It starts with NLP, as our software reads line item narratives and recognizes key phrases, like “contract review” or “research”. Next, that text is classified into corresponding legal tasks and activities. And it’s this step where the depth and quality of our training make all the difference.

Brightflag has been refining its SML model since 2014, presenting our software with new and refined, labeled training data so it can learn to automatically classify an ever-expanding range of real invoice text into the correct categories.

A vital layer of human insight has exponentially accelerated the pace of its learning. Our internal team of analysts act as expert supervisors, reviewing cases where the A.I. is not yet confident in its interpretations and providing corrective feedback that helps the software grow smarter daily. That’s what we mean by “supervised learning,” and it’s why Brightflag’s AI system is so accurate.

To sum up, a sound legal AI invoice review system should:

• Effectively interpret natural language, including the nuances of legal text
• Learn from past data using machine learning
• Be trained on an expanding set of legal-specific data supervised by experts to improve performance over time.

The Next Step After AI Invoice Review: Generative AI Legal Assistants

As we noted at the start of this blog, invoice review is one of the most clear-cut use cases for AI deployment in legal workflows. But it’s far from the only one.

The next frontier? Generative AI (GenAI) assistants and agentic AI.

You’ve likely already used AI tools like ChatGPT or Microsoft Copilot during the workday — systems that can generate text, answer questions and even help with specific job functions, like writing code. And you’ve undoubtedly noticed these “agentic” tools don’t just respond passively. They can interpret context, extrapolate, take action and assist users through multi-step tasks.

Many of these agentic offerings have a “general purpose,” but AI assistants are also being developed to service specific business functions or verticals, including legal.

GenAI is the next logical step in a legal department’s AI journey because, when paired with an AI-powered invoice review platform, GenAI tools can easily analyze and pull data to deliver actionable insights. This means that in-house legal teams can instantly answer questions about matters, spending, and outside counsel performance.

For example, Brightflag’s generative tool, Ask Brightflag, helps legal teams access their legal data quickly, using natural language queries, like: “What’s our legal spend this year, broken down by department?,” or “List our top matters by spend.”

As these types of tools grow increasingly sophisticated, they make it easier for legal teams and decision-makers to derive real insights into how their department functions, and to take quick, data-driven decisions that improve everything from budget allocation to vendor relationships.

This means that over the next few years, you should expect legal GenAI to form a core part of every legal team’s toolkit.

Building the Future of Legal AI

The savviest in-house teams are staying at the forefront of legal tech as it develops and using these tools to improve how their department delivers value to the broader business. But keeping up with it all can often feel like another task on an endless list, so Brightflag aims to simplify adopting the best legal tech.

Our team has been at the cutting edge of applying AI to invoice review software for over a decade. We’re also in charge of the use of generative AI in legal contexts, which is why hundreds of legal departments already depend on Brightflag’s patented AI technology to improve their processes and simplify tech adoption.

Interested in how your team can save time, control legal costs, and gain complete visibility into your in-house team’s work and spend? Book a demo with Brightflag today.