To really move the dial on how services are delivered, we should take a deeper look at how corporate legal departments manage their spending with law firms. Traditionally, outside counsel spending has been focused on tracking the billable hour, the firm’s timekeeper, who is working on a particular matter, and how many hours are spent on a particular matter. Other considerations: what level is that person, what’s their billable hour, is there a discount on that billable hour?
And with this approach, there is also a known delay between when the work is done and when the bill is received (and then further delay until the bill is actually paid). It’s called work in progress,
which is time allocated to certain work at a firm to a client (or already accounted for) and maybe the internal law firm’s systems, but that hasn’t been transferred to the in-house team to review the bill and make payment.
What I’ve just noted are steps in a process that often is antiquated: the time that it takes just to transfer the bill and the information about time spent on which matter, plus the time to transfer it so that the in-house team can assess it and actually issue payment. That adds up to a significant amount of time, especially for the medium-size or smaller firms that are more tightly watching their revenue flow or for the in-house teams that are watching their budgets. That delay of work in progress can really get in the way of having accurate information and control over the situation.
Ping Pong Engagement
Ping pong engagement is not a technical term, but it is how I perceive the billing and invoicing relationship between a law firm and an in-house team. The relationship is like a ping pong match. It starts with the client initiating a request for help or initiating a call or an email to the law firm, needing something. Review this, research this, and answer that question. A law firm then does the work and responds. Then it goes back and forth on the inputs and the outputs, and then there’s a final product or final deliverable handed to the client.
At that point, the law firm is ready to issue their invoice and the work in progress is reduced to a final bill. Then another ping pong match begins— the bill review is done by the in-house team (or I hope it is being done!). Part of that process is to review write-offs, write-downs and discounts, and all the other variations of ways in which bills are adjusted.
Law Firm Lawyers, Pay Attention!
For even the best leaders of the most innovative in-house teams, while they want the legal operations function to be impactful and legal operations professionals to enable and assist the attorneys to make the decision on which law firms to spend, it is still the practicing lawyer who’s going to make that judgment call. They’re going to decide which law firm to engage. They’re going to decide which attorney they want to spend money on.
Once that happens, there is yet another process that begins, and again it is the ping pong engagement. The bill was too high, or what does this item mean or why was this rate applied, or what happens at that point in the conversation; so, there is more back and forth that likely will result in some sort of an adjustment. Sometimes those adjustments are made by the firm in advance of the bill being sent. The core issue is the client is not happy with the bill they received.
Sometimes the firm reviews it. They may realize that possibly too much time was allocated to a project. For example, a junior attorney didn’t quite know how to approach something with a bit of a discount, and so an adjustment is made. It is more back and forth and a very manual process to adjust the bill to a final bill that is actually agreed upon by both sides.
With every back and forth, time keeps ticking. That ping pong kind of experience creates a lot of opportunities for things to fall through the cracks. It can add up to a lot of time and a lot of frustration on both sides. There are opportunities to improve that process, perhaps through automation and technology, or even something as simple as a more routine evaluation.
