In-house legal departments that spend $500,000 a year on outside counsel can expect to see an annual ROI as high as 15% by implementing an e-billing tool, Jon Bryant, a solutions consultant with Thomson Reuters, said in a Corporate Counsel Business Journal webcast.
“That’s documented and supported,” said Bryant, referring to Legal Tracker, Thomson Reuters’ e-billing software. “When you’re controlling legal spending, controlling budgets, the solution ends up paying for itself.”
Departments that spend between $250,000 and $500,000 are also good candidates for moving to an automated system if they want to have a solution to manage costs before they rise, said Adam Wolfe, a sales representative with the company.
“For some, the time might not be right [if they’re] trying to be proactive and don’t yet have executive support,” he said.
The ROI of between 5% and 15% stems mainly from the systematic enforcement of departments’ billing guidelines, Bryant said.
Departments can configure the system to return invoices to law firms if they include charges that are outside the guidelines, or to accept the invoices but pay only up to the amounts in the guidelines, or to send back a marked-up invoice showing where costs go outside the guidelines, he said.
Or the system can be configured to require status updates before any invoice can be approved. That means the invoice would be automatically rejected if it doesn’t include an update on the matter that’s involved, whether it's litigation or something else, like transaction work, or an update on how much of the budget has been spent.
“Firms can’t post to the system until they’ve done the things you’ve required of them,” Bryant said.
Once a corrected invoice is submitted, it automatically routes to the people who need to approve it and then it routes to the organization’s accounts payable system, whether that’s NetSuite, Oracle, SAP, Great Plains or whatever other system is used.
The billing system acts as a data repository, enabling the legal department to generate reports for the general counsel or CEO or executive team to show the amount of work the department is doing, how much it’s saving by keeping invoices within its guidelines, how its spending compares to other legal departments using the system and other results like that.
“These are reports any CEO can embrace,” Wolfe said.
Getting the CEO or other leader on board as an executive sponsor is crucial for implementing the system successfully. “That provides a consistent and motivating voice from the top,” Bryant said.
It’s also crucial to get buy-in from the legal department and to have a point person who works with the legal team on one side and the implementation team on the other to make sure everything gets done.
“That’s generally going to be someone with knowledge of the legal department and its processes who can function as a liaison … and get the executive sponsor’s help rallying the troops,” said Bryant.
Law firms should be happy to use the system. “When they have corporate clients, it’s not unexpected for them to post their invoices to an e-billing tool,” he said. “One of the early things you do in implementation is notify your firms that, in x number of days, you’re going to need to post your invoices. It’s not hard. It’s free for them. It’s not a big lift at all.”
