The end results of an effective legal billing process are easy to recognize: Fair prices, fast payments, and friendly working relationships between law firms and in-house counsel.
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.
However, before we cover the respective responsibilities of in-house counsel and their law firms when it comes to cultivating an efficient legal billing process, it’s important to first underscore the impact of one foundational resource: legal billing guidelines.
The Importance of Legal Billing Guidelines
Legal billing guidelines (also known as outside counsel guidelines) establish a concrete set of rules for your law firms to reference to ensure a seamless legal billing process.
Without these written expectations, you’ll be inviting non-compliant fees that create frustration and disruption for both your legal department and your outside counsel law firms—and make managing your legal spend more difficult.
Legal Billing Guidelines Best Practices
Here are a few key tips for creating, distributing, and updating your own legal billing guidelines:
Tips for Creating Legal Billing Guidelines
The responsibility of creating a set of legal billing guidelines usually falls on an organization’s in-house legal team, or their legal operations professional.
Given how important these resources are for streamlining and simplifying the legal billing process, it’s important to invest time in crafting guidelines that account for your organization’s unique billing considerations.
For 20 best practices for creating (or optimizing) your own legal billing guidelines, check out Brightflag’s free sample outside counsel billing guidelines resource.
Distributing Legal Billing Guidelines
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.
Regularly Updating Your Legal Billing Guidelines
Legal billing guidelines are living documents and should be updated regularly as the needs and resourcing mix of the legal department change.
You should routinely review your guidelines for accuracy and relevance, and proactively alert your law firms to any updates or adjustments. This will preserve the clarity they need to submit correct and compliant legal invoices on the first attempt.
Client Billing Responsibilities
Though a clear and comprehensive set of billing guidelines is key to an optimized legal billing process, the client’s responsibilities don’t end there.
Here are a few other elements that should remain top-of-mind for organizations looking to cultivate a first class billing process.
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.
Learn how Brightflag streamlines and automates legal invoice review
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 legal spend management tool. Instead of assigning staff to read each and every line item description, automated legal e-billing 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 and your legal spend is under control. Proactive planning and accruals management will also help. That’s because they give both the legal department and Finance much-needed visibility into potential challenges. Which, in turn, allows them to flag issues 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 invoicing for legal services, some extra education may be needed to resolve their confusion. On the other hand, if outside counsel introduces a valid billing scenario your legal billing guidelines have not yet accounted for, you’ll want to be responsive to that as well. Continuously improving your outside counsel 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 law firm relationships is to appoint a mediator within the law firm who can give you legal 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 legal 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 legal 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 the legal 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 outside counsel guidelines. So be sure to 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. That’s because your law firm will then 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.
Legal Billing Process Best Practices Recap
So to recap, the client’s checklist of responsibilities for a seamless legal billing process include:
And on the law firm’s side, it’s important they work to implement:
- Prompt, reliable time tracking
- Concise (but sufficiently detailed) invoice descriptions
- Timely invoice and accrual submissions
First class, A.I.-backed legal billing software can help with all of the above. And with all parties aligned on their respective responsibilities, and standard processes in place, you’ll be well on your way to painless, more fruitful future law firm relationships.
Curious to see how Brightflag helped AccuWeather restructure their legal billing process and return a 20% cost savings? Check out the case study to learn more.
5 Minute Read