publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/395170
While the challenges are considerable, law firms can respond by taking advantage of innovative technology and business processes. By understanding recent history, current issues and others' successful billing improvements, law firms can structure their own new business processes and select tools to give them competitive advantages. A SHIFTING ENVIRONMENT Ripple effects from the recession and its aftermath continue to impact law firms. Significant layoffs of staff and attorneys took place between 2008 and 2010. Major firms closed. Firms merged and acquired other firms, while some picked up entire practice groups from their peers. Clients affected by the recession ramped up efforts to pressure law firms on spending, continuing efforts that began about 15 years ago in response to overwhelming legal fees. In fact, according to TyMetrix's permission-based contributory warehouse of legal performance data, clients have paid for over 398 million hours of legal services, covering 105 million tasks from at least 17,000 law firms and vendors. When the economy began faltering, many businesses began to rely on streamlined processes and increasingly robust analytics to demand more pricing predictability and transparency from their legal departments. Since clients spend billions of dollars on matters each year, many realized they hold all the cards in the relationship and could drive the e-billing agenda. What was once a process driven by paper, stamps and very little visibility began to evolve. Clients began to recognize a need for technology to replace staff-intensive processing and jumped on the spend management bandwagon, requiring electronic bills from their outside counsel and vendors. E-billing enabled clients to save money, since spend management systems afford a reduction in legal spend by two to 10 percent. Implementing the new systems simplified matters for clients. In part, it shifted the burden of managing extensive paper-driven processes to law firms, while providing clients with intelligence that they never had before. Outside counsel and vendors have increased visibility into compliance and spend management. Clients now possess information to understand and manage the allocation of legal dollars down to the task level. However, e-billing has proven far more complicated for law firms, particularly as many have begun to emerge from a period of retrenchment with more hired staff. Some may have overcompensated with hiring and now find themselves staff-heavy once again. They might also be struggling with outdated technology and inefficient processes. While many lessons were learned during the recession, firms still struggle to think like businesses. In general, smart firms have thought more strategically and based the type of work they accept on profitability. Firms are evaluating their existing talent pools to align with their most profitable practice areas and basing new hire decisions on expertise in these areas, coupled with the books of business these candidates can bring them. E-billing can help firms identify more profitable areas while assisting with automation, facilitating staff reductions. LAW FIRMS MUST RESPOND Since clients have led the drive to e-billing, law firms have struggled to catch up and maintain some control over e-billing technology. Most firms now deal with an average of 15 to 30 different client- driven spend management billing systems, which carry hundreds of requirements. A firm's established technology infrastructure might not support the diverse requirements of all its clients. This has resulted in vendors scrambling to add functionality to support newly required e-billing needs. "E-billing" has become a catchall term. Most clients typically require far more than billing from their firms, particularly as spend management systems continue to grow, mature and add new functionalities. For example, many clients not only want their outside counsel to send bills electronically, they want them to manage the related metadata. This means a law firm's billing staff must submit bills and be responsible for using these spend management systems for such activities as adding and updating matters, adding timekeepers, managing input of matter budgets, and approving and handling rates. That leaves many firms struggling to meet these added requirements ILTA WHITE PAPER: OCTOBER 2014 WWW.ILTANET.ORG 33 EFFICIENT BILLING AND FASTER PAYMENTS HELP FIRMS THRIVE