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In-house counsel at large corporations don’t need to be propeller heads to realize the merits of e-billing. Once you turn those mountains of invoices from outside counsel into bits and bytes, a whole new world opens up for managing your legal services providers. Imagine being able to peruse that data and see where the money’s going, who’s giving you the best value, and who’s running up big tabs for “working lunches.” To get the full benefits of e-billing, consider farming out the work to a third party. Outside vendors can help you reduce support staff time and decrease your bean-counting hours. E-billing services typically offer tools that take the “first cut” at screening your invoices: They automatically flag exceptions and provide a nice summary report of your legal expenses. If the system is working well, it puts you in a great position to scrutinize rising costs and comparison-shop among outside counsel. TEAM SPORT But e-billing does have a few catches. For one thing, it is a team sport. You must have the tech and finance members of your outside counsel’s firm on the same side. If you are using a third-party go-between, all three parties must be in harmony. Before you bring in a third party, be prepared to address some legitimate concerns from your outside counsel: • Does the third party’s e-billing service effectively maintain confidentiality? Without adequate controls, an e-billing service could expose you to waiver-of-confidentiality claims. • Is the fee structure fair? Services offered by some third-party vendors tend to bestow more benefits on in-house lawyers than on outside counsel, yet firm lawyers are expected to chip in and share the cost of the e-billing services. Typically, the allure for firms is the promise of faster invoice processing. Are you prepared to deliver? • Invoice screening tools usually take some tweaking before they work right. Be ready to spend some time with your outside counsel’s billing staff and your e-billing vendor to fine-tune the software. For example, poorly installed invoice screening software can lead to “false positives,” where invoice items are wrongly red-flagged and payment is held up pending review. As a result, you and your outside counsel can spend time reconciling charges that were right in the first place. Be ready to spend time with your outside attorneys’ billing staff and your e-billing vendor to fine-tune the software. • Match game. There are two general standards to consider when setting up a system: task code standards and data exchange standards. Everybody’s systems must match and support the same standards (yours, your vendor’s, your outside counsel’s). If not, you’ll be forced to customize, which can take months, if not years. TASK CODES Task codes are associated with work performed by your counsel that is recognized by your e-billing software. While some companies issue task code nomenclature to be used by their outside counsel, the Uniform Task-Based Management System, developed by the American Bar Association and PricewaterhouseCoopers, is the de facto standard system for coding legal activity. Choosing an e-billing method that uses standard task codes takes you a step closer to categorizing, summarizing, and analyzing the fee charges you receive. Don’t get too excited, though. UTBMS is a developing standard — it’s currently limited to just a few areas of practice. When it’s comprehensive enough to tag just about any type of task for any type of law firm, it will be a wonder to behold. DATA EXCHANGE STANDARDS Data exchange standard formats tell where one billing line item ends and the next one begins. Think of it this way: The task code tells you what kind of work was done. The data exchange formatting tells your computer how to arrange the e-billing data it receives so it produces coherent information. The Legal Electronic Data Exchange Standard is the standard record format for legal invoices. Like UTBMS, the LEDES standard continues to evolve. Sure, writing your own data exchange protocol and devising your own e-billing system would really impress your geekier friends, but who has time for that? This article was distributed by the American Lawyer Media News Service. Lindsay McCall is a senior project manager at San Francisco’s Morrison & Foerster. E-mail: [email protected].

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