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If you are in-house counsel at a large corporation, burdened with mountains of invoices from your outside lawyers, e-billing must sound pretty darn good. You don’t need to be a propeller-head to realize that once you turn those pieces of paper into bits and bytes, a whole new world opens up to you for managing your legal service 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 at Sardi’s for “working lunches.” Cost management tools are among the benefits of the new breed of e-billing, along with the technical benefits you enjoy when you outsource the hassle it takes to get yourself wired up to receive invoices electronically. You can certainly “roll your own” system to gather your e-bills. But if you hand it off to a third party, you can reduce support staff time, and reduce your own bean-counting hours. E-billing services typically offer tools that take the “first cut” at screening your invoices: automatically flagging exceptions, and providing a nice summary report of your legal expenses. If it’s working well, it puts you in a great position to comparison-shop among outside counsel, and scrutinize places on your bill where costs are running up. TEAM SPORT But yes, e-billing does have a few catches. For one thing, it is a team sport. If you’re going to do e-billing, you must have the tech and finance members of your outside counsel’s firm all on the same page for setup. If you are using a third party go-between, all three parties must be in harmony. If not, you can just about bet things are not going to go smoothly. Before you bring in a third-party, be prepared to address some legitimate concerns from your outside counsel: � Does the third-party 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? Although effort is involved from both sides of the e-billing relationship, services offered by some third party vendors tend to bestow more benefits to you than your outside counsel. Yet they are expected to chip in and share the cost of the e-billing services. To be win-win, offer something to your outside counsel for the trouble they go through to set up the program. Typically, the allurement for law 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 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 held up pending review. As a result, you and your outside counsel spend time reconciling charges that were right in the first place. � Match game. There are two general standards to consider: task code standards and standards for data exchange. Everybody’s systems must match and support the same standards (yours, your vendor, your outside counsel’s.) If not, you’ll be forced to customize, which can take months — if not years. TASK CODES Task codes are agreed-on codes associated with work performed by your counsel that are recognized by your e-billing software. While some organizations issue task code nomenclature to be used by their outside counsel, UTBMS (“Uniform Task-Based Management System,” developed by the American Bar Association and PriceWaterhouseCoopers in a prior iteration) 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 being able to categorize, summarize and analyze 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 it will be a wonder to behold. DATA EXCHANGE STANDARDS Task codes exist to allow easy classification of the work done; data exchange standard formats exist so you (well, your computers actually) can 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 is coherent information. LEDES (Legal Electronic Data Exchange Standard) is the standard record format for legal invoices. Like UTBMS, this standard continues to evolve. Connoisseurs recognize it by vintage: e.g., LEDES 1998, LEDES 2000. If you decide to write your own data exchange protocol, you’ll surely impress your friends. It’s a big commitment. Be ready to spend some time setting it up — including time with each and every one of the firms who provide your outside counsel. E-billing is an up-and-coming trend, and many corporations now use it in some form. But effort is required to get the most out of it, and e-billing may or may not be to your taste. Not every e-billing effort has been successful. Some companies abandon e-billing after a trial period, finding the overhead outweighs the benefits. Before taking the plunge, ask yourself: � Is it secure enough? � Are the legal services we use fairly standard — or do they defy easy categorization? � Are we willing to invest some time getting e-billing set up? � Do we have a notion of what analysis and reporting would be useful if we received invoices electronically? � Do our outside counsel have the resources to support their end of e-billing? RECAP E-billing can provide quality control and help you manage your legal service costs. You can insure the accuracy of the bills you receive and their compliance with your terms of engagement; you can reduce the time you spend reviewing legal service invoices. E-billing also can provide a way to outsource part of your invoice screening process. But recognize that to derive these benefits, “some assembly will be required.” It will take some tinkering to get it built and whether you use a third party service or not, putting it together will be an effort shared with your outside counsel. Lindsay McCall is a senior project manager at San Francisco’s Morrison & Foerster. E-mail: [email protected]. Web: www.mofo.com.

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