Creating Effective Billing Guidelines
When to start and when to review?
We often speak to smaller legal departments who are growing and are seeing their external spend move above seven figures. If you have reached this size of external spend and don’t yet have a standardized guideline document for your firms – it’s probably time to put one in place.
We also speak with larger departments who may already have guidelines in place – but perhaps have not revisited them for a number of years. Industry norms are changing, and revisiting your guidelines annually is best practice. It allows you to tweak the parameters, or begin to include/exclude requirements if you feel they aren’t in the best interests of your department or norms in the market have changed.
What to include?
As a starting point, it is best to keep things simple. There are many useful templates available online. The Corporate Legal Operations Consortium (CLOC) is a great source of best practice information, including recommended guidelines*.
Level 1 – Functional
The first level to consider is the functional elements of invoicing – you will want to outline how often you expect to be invoiced (monthly), to whom the invoices should be submitted and in what format (pdf/Ledes etc.). These criteria are easy to define and play a major role in improving efficiencies and ensuring regular communication and updates from counsel are systemized to avoid large unexpected invoices arriving without warning.
Level 2 – Resourcing
The second level is guidelines to set expectations around how you want your work resourced. If you don’t have clear guidelines currently with your firms in these areas, it can be an extremely effective way to bring cost efficiencies to your department.
For example, you will want to outline that any research costs should be pre-approved, that you won’t pay for timekeepers performing administrative work (such as photocopying), that each piece of work should be resourced at the appropriate level of seniority, and that only a specified number of timekeepers should attend meetings or calls.
The CLOC guidelines include all the common areas to cover here*.
This second level of resourcing guidelines is harder to effectively monitor than the first functional level. Ensuring these guidelines are adhered to can be difficult and time consuming. Despite the fact that it is often a huge source of savings and efficiency for a legal department – a granular invoice review is not feasible given in house time and resourcing constraints. Often invoices are simply paid without close scrutiny.
For a truly effective programme, you will want both clear guidelines, and an efficient and effective way to ensure they are followed.
Tools like Brightflag can help. It can read and understand narrative text and make recommendations on where adjustments should be made – replacing the need for in house lawyers to go through an invoice narrative line by line.
Achieving a balance
Of course you don’t want your guidelines to hinder your counsel’s work. What looks like a breach of a guideline, may be justified due to an unforeseen complexity or change in the scope of a matter.
Achieving a balance between close monitoring and providing reasonable flexibility for your outside counsel requires context and open lines of communication. Tools like Brightflag help by bringing context and giving you information to decide quickly when a charge should be addressed with a firm and when it should be permitted.
Clear expectations set out in guidelines combined with an open and transparent review policy is the best context for relationships with outside counsel, engendering real trust and true collaboration.
In our next post, we will show how to review invoices effectively and efficiently.
*The CLOC standard guidelines are currently being revised and have been removed temporarily from their website until updated.
Sample billing guidelines
Looking for examples of specific guidelines used by global legal teams? Download your copy below!