QUALITY VS QUANTITY: WHAT ACTUALLY CONSTITUTES PROFITABLE BILLABLE HOURS?
It is extremely common knowledge, and a practice still at large in most law firms across the world: the promotion of the quantity of billable hours. The equation seems rather obvious here: more billable hours should mean more profit to the firm, hence setting ever-increasing targets of billable hours and incentivizing the timekeepers who achieve this just seems like a great strategy.
Before we dwell further on this topic, let us set forth some facts and statistics that shall provide you a great deal of insight into the current state of the industry. This shall let you know exactly what you should be doing (or not be) to actually ensure that every minute you bill your client for, actually gets paid.
E-Billing Vendors, every single one of them seem determined just to do one thing: reduce as much of your firm profit as they can if they detect any slight non-compliance with your clients’ billing guidelines. This is some case can cause strain on what could have been an otherwise peaceful relationship between the firm and the client. Sadly, most if not every law firms’ clients are now having billing guidelines in place and are purely relying on these vendors to ensure that the invoices submitted to them are scrutinized for compliance before it ever reaches them for payment.
Just when you thought things could not get more complicated, ALA (Association of Legal Administrators) conducted a study recently that revealed that in a span of just one year (2018-2019), the number of clients who issued guidelines for billing increased by a whopping 40%! This study further explored the causes leading to declined cashflow in law firms and went on to reveal the most common inefficient billing practices in place. Topping this list was the fact that 76% of the law firms involved in the study reported that they relied entirely on their billing departments to ensure compliance with their clients’ billing guidelines.
Having been one of the owners of a global e-Billing company for over 15 years and reviewed several billions dollars’ worth of invoices from law firms in over 70 countries, and working for some of US’, UK’s and Canada’s largest insurance carriers, TPAs and self-insured corporations, the 76% was no surprise to me at all. In fact, I can assure you that relying on the billing department to deal with billing guidelines’ compliance is one of the major reasons why your firm is suffering severe reductions on most of your invoices. The consequences, sadly, do not stop with just the reductions. The amount of stress placed on the billing department, coupled with their frustrations at the timekeepers, the endless back and forth between them for clarifications, information, documentation, etc ultimately results in the poor performance of the firm collectively, further worsening the reductions and the subsequent decline in firm profit margin.
Recently, the marketing team at ALB conducted a survey to explore the nature of the relationship between law firms and eBilling vendors, and we are certain that this number will not surprise you at all. Exactly 98% of the firms admitted that they are thoroughly frustrated with eBilling vendors and stated following as the top five reasons why:
1. Somehow, with each passing month, the reductions seem to be increasing in number and severity.
2. An equally severe decline in the firm’s recovery rate.
3. Loss of billable hours owing to the fact that a huge amount of time goes into combating the reductions or providing several clarifications as a part of the appeals on reductions by e-billing companies.
4. Even more time wasted on stricter pre bills by the firms’ lead attorneys or billing partners on a monthly basis.
5. Increased ageing of the firms’ invoices as a consequence of the delayed review/dispute process.
Inarguably, onboarding a new client is an exciting process that every firm looks forward to. And at the time, the client’s billing and practice guidelines are happily received with the agreement that the law firm shall comply with every single directive mentioned. However, the billing guidelines lay forgotten henceforth, till the billing team need to start scratching their heads and wondering how to render each entry compliant. This leads to core points being missed out: including which level of attorneys are expected to perform which task, what documentation they need to gather, what finer details (page numbers, for example) they need to note down, etc.
Though we are all fully aware of the inefficient timekeeping and billing practices that are prevalent and the related loss of revenue to law firms, it is still rather shocking to see that no real steps are being taken by some law firms’ management to actually remedy the situation. Many law firms do not seem to be open to new and innovative technology even in the age of Covid-19. Innovative firms should be investing in smart and innovative technology that is equipped to handle all your billing guideline compliance needs.
In most firms, the non-legal team (billing team) is expected to be fully aware of every activity performed by the attorneys and paralegals (as they are tasked with capturing or checking on the time entries and preparation and submission of invoices). The lack of awareness as to the daily tasks being carried out by timekeepers is evident in the invoices submitted to e-billing vendors: the bill review process is hence a piece of cake for the e-Billing vendors who are happy to make the reductions due to non-compliance.
The reason why the billing team is left to deal with compliance requirements is because most firms do not want their attorneys to spend precious billable time going through the billing guidelines. This is quite understandable given that they are often required to work with multiple clients hence multiple billing guidelines in one go. That being said, compliance with the guidelines is best ensured when the attorneys abide by them when entering their time.
This brings me back to the innovative technology that I mentioned slightly earlier. By using an intelligent platform such as Accurate Legal Billing (ALB), the attorneys can be entrusted with maintaining compliance with billing guidelines, without having to waste a single minute referring to the guideline ever. The power of AI enables ALB platform to auto-populate most of the activity description for a particular task that a timekeeper is entering. The attorneys do not have to worry whatsoever about typing down lengthy descriptions in order to meet billing guideline compliance requirements. This alone helps the attorneys to bill efficiently and even more as they save time that otherwise would have been spent in writing lengthy activity descriptions, which are then reviewed and challenged by e-billing vendors.
ALB comes with the billing guidelines preloaded and its AI knows exactly what each task description should be in order to ensure that it is fully compliant with the requirements of each client’s billing guidelines.
ALB can be accessed both via the web application as well as the convenient mobile application: track time on the go! It is safe to say that numerous law firms across the US and Canada have already rid themselves of their old time and billing platforms or integrated those with ALB after witnessing the positive impact it has had on their bottom line. Tensions between the billing department and timekeepers have eased, no more loss of billable hours by attorneys, invoices which are fully compliant with firm’s client’s billing guidelines are processed and paid quickly and without reductions or challenged by e-billing vendors leading to an increase in profit margins: Through ALB peace has been restored, the law firms can now focus on preparing the best defence for their clients without worrying that their time will be reduced or challenged by e-billing vendors. The law firms’ clients are also getting the full benefits as positive minded and happy attorneys can only yield positive and cost effective results for its clients.
Andre Wouansi is Founder & CEO at Accurate Legal Billing Inc which is the World’s First AI Powered Time & Billing platform which ensures full compliance with law firms’ clients’ billing guidelines. Andre is considered a veteran and a well-respected expert in the legal billing industry with experience that includes over 15 years of successfully owning and running a global e-billing company and working with insurance carriers, TPAs and self-insured corporations in the US, UK and Canada. And reviewing invoices worth several billions of dollars submitted by law firms in over 70 countries.
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