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You may not know it, but your firm is probably sending electronic bills to some corporate clients, whose systems audit, analyze, revise, and report on every charge. Like many others, our firm has multiple clients who have asked us to use several different e-billing systems. This year’s annual Association of Corporate Counsel/Serengeti Law survey of several hundred law departments found that while use of electronic billing is still low (roughly 6 percent of law departments), it has tripled since last year. And, with more than 28 percent of law departments currently considering e-billing, this exponential growth is likely to continue. Why should law firms get involved in selecting e-billing systems with their clients, rather than waiting to see what their clients pick for them? What should firms and clients look for in an e-billing system? LawNet, the leading organization of legal technology professionals, conducted a survey of law firms last year that uncovered a broad base of negative opinions about e-billing. Dissatisfaction stemmed from two main areas: cost and difficulty of use. The vast majority of law firms felt that the fees charged by e-billing vendors were unreasonable. “We have been billed by the client for the privilege to bill them,” one firm complained. “It is unfair for a law firm to have to pay to participate in a third-party e-billing program which was at the client’s request,” groused another. Although there are some vendors that do not charge law firms to submit e-bills, most charge annual fees ($1,000 to $2,000 per client), or a percentage of the bills sent through the system (about 2 percent). The bottom line is that most law firms do not believe that the benefits to them justify the costs. Law firms have also found that e-billing vendors often require time-consuming implementation, a real burden for smaller law firms without strong IT support. In the LawNet survey, law firms specifically reported that many vendors require additional work such as coding for time entries and modification of industry data standards. One respondent complained that rather than sticking to the standardized format, “each company has taken it upon themselves to customize it, greatly complicating matters for firms with limited IT resources.” Another reported that the system foisted on the firm was “absolutely impossible to integrate into our billing practices. I think they expect an attorney to sit down and make corrections to task codes, etc. which will never happen in the real world.” Many law firms have therefore found that initiating e-billing can be frustrating and costly. The good news is that there is a wide variation in vendor practices, with some systems that are relatively easy for law firms to begin using. Rather than sit back and see what systems their clients chose for them, firms should let their clients know that they would like to be involved in the selection of an e-billing system. Many law firms have used multiple e-billing vendors, and can provide practical knowledge to clients about the differences among such systems. OPPORTUNITY KNOCKS Given the large percentage of companies currently considering e-billing, law firms have an opportunity to enhance their role as a trusted adviser while helping their clients select a system that works well for everyone. It’s simply a matter of contacting key corporate clients, letting them know about your firm’s experience with e-billing, and offering to provide useful input if they are considering an e-billing system. Factors to consider include: Cost. Costs to law firms should be taken into account by the client when evaluating the overall cost of the system. Because e-billing is used only by certain clients, most law firms are probably recovering e-billing charges from those clients, either directly or indirectly. Charges to law firms vary widely, from no charge (Serengeti Law) to annual fees/client (DataCert), to a percentage of the fees billed (Tymetrix). Law firm charges can be a significant factor for companies setting up e-billing with a large number of law firms. Data Standards. The Legal Electronic Data Exchange Standard (LEDES) was adopted by a consortium of law firms, corporate clients, and vendors in 1998. Essentially, it permits law firms to generate a uniform set of billing data no matter what their time and billing system. To output LEDES data, law firms generally purchase a module from their software vendor. The problem is that many e-billing vendors require modifications to the standard LEDES output, negating the purpose of having a standard. It is therefore important to ask any vendor whether they require LEDES and, if they do, whether they require any modifications to the standard output. Obviously, the more modifications necessary, the more problems for law firms coming onto the system. Most clients prefer LEDES bills because they come through in a single format that can be analyzed by their e-billing system. However, clients that work with a significant number of smaller law firms or foreign law firms may need a system that can also accept non-LEDES formats (Word, Acrobat, etc.) in order to get all of their firms onto a single system. Therefore, in addition to finding out about LEDES invoices, you may want to ask whether the system will also accept non-LEDES bills from law firm systems that cannot generate LEDES. Billing Codes. Some e-billing systems also require Uniform Task-Based Management System (UTBMS) task and activity codes for every time entry in the bill. As noted above, this can cause significant problems for lawyers not used to entering codes when recording their time and for billing clerks who generally have a hard time coding time entries recorded by lawyers. The UTBMS codes were released years ago by the American Bar Association and the American Corporate Counsel Association with much fanfare about how they would permit clients to compare the costs of performing legal work across multiple firms. In practice, many law firms and clients have found them difficult to use and of questionable benefit. The annual ACC/Serengeti Law survey found that only 4 percent of companies currently require such coding from any of their firms, down from 7 percent the year before. And about one-fourth of these companies admitted that they don’t use the coded data they receive. As a result, you may want to check to see whether an e-billing system requires that all time entries be coded with UTBMS task and activity codes, and discuss with your client whether this is worth the effort involved. Ongoing Ease of Use. You may want to ask vendors how long it takes to implement their system with all of a company’s law firms, and whether they have had any incomplete implementations where not all firms could get on the system. These questions will provide valuable information regarding the relative ease or difficulty of getting started. Once an e-billing system is set up, it is also important to consider the ease of submitting bills and dealing with the inevitable errors that result. It is worth taking the time to go through the bill submission process step by step, and to find out if the process differs for LEDES and non-LEDES bills. You may also want to find out how budgets, expense receipts, and other bill-related information are submitted. Finally, you should check to see what types of errors are caught during the invoice submissions process, how the firm is notified, and what information is given to the firm so that errors can be quickly corrected. International Capabilities. Many companies now are working with law firms that bill in international currencies, which can present a problem for e-billing systems that can process only a single currency. Most clients want to have all their law firms on a single e-billing system, so that their spending reports are complete. If a client has international legal work, you may want to help them find a system that can handle international currency bills, currency conversions, value-added taxes, and other information unique to foreign bills. Client Features. It is probably safe to assume that the client will carefully evaluate the bill processing, auditing, and reporting capabilities on their side of the e-billing system. However, law firms may want to specifically check on how bill revisions are handled, whether law firms receive clear and timely explanations of why bills are revised, and how law firms will know which bills have been approved for payment. Some systems now permit clients to make line-item electronic comments to bills, which are conveyed to law firms with the approved bill. Such features can streamline the process for resolving billing questions through e-billing. Law firms can increase their chances of having their bills paid on time and without revision if they can also find out what electronic audits are being performed on their e-bills. It is not uncommon for such systems to flag violations of client expense reimbursement guidelines, changes in hourly rates, etc. By understanding what audits the system runs, law firms can make life easier for everyone by catching such problems before the bills are sent. Exchanging Other Information. Once you have the e-billing connection established, it may make sense to use the connection to send budgets, status reports, calendars, contact information, documents, and other information into the organized online files kept for e-bills. Find out if the vendor provides matter management features, in addition to the e-billing. System Growth. No system is perfect, so when selecting one, it’s important to consider how it has grown and will grow in the future. You should ask how many users are now on the system, talk with some of them, and find out how system upgrades are handled (including costs). The vendor should be able to provide a history of releases, as well as plans for the future. You may also want to find out what advance notice and training are available for releases that involve significant changes. The bottom line is that those law firms that take a proactive role in helping their clients select an e-billing system can strengthen their relationships with their clients and end up with a system that is the best match for both parties. Rather than waiting for your clients to decide, it’s worth opening a dialogue about this new technology, which appears to be here to stay. Howard Janis is the billing and accounting systems manager at McKenna Long & Aldridge in Atlanta.

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