If you don’t use billing guidelines with your outside counsel, start, and if you already do, update them annually, says Sandy MacDonnell, senior manager for legal operations at DocuSign. 

Having guidelines helps ensure outside counsel submit invoices on time, in the form you want them and only for items your company approves of. And it makes conversations easier when you receive invoices that raise questions, MacDonnell said in an Inside Voices webcast hosted by Logikcull. 

“Billing guidelines are about setting expectations,” said MacDonnell, a product marketing manager at NetApp before moving into legal ops. “That way you don’t get into those contentious situations where you have to have that conversation – ‘Should we pay for this or not?’ You can clearly point to your guidelines and say, ‘These are the types of things we pay for.’ It cuts down on some of that back and forth.”

Her legal team’s guidelines are five pages long and outline when firms should submit their invoices, what the company will and won’t pay for, whether it will accept block charges or line items and what form of fee arrangements it prefers.

“We don’t negotiate our guidelines,” she said. “This is one-size-fits-all.”

If a firm needs to work around one of the terms, the legal team will look at the request on a case-by-case basis, but the guidelines themselves don’t change.  

“We’ll always have that conversation and it’s always up to our internal attorneys to have that conversation and say, ‘Yes, we’ll make an exception,’” she said. “You develop these close relationships, so you always want to take that into consideration, but at the same time, we’re the client, so we’re going to have our requirements.”

If a firm has a pattern of not meeting the requirements, DocuSign will exercise its right to pay a discounted amount.  

“Sometimes there are certain circumstances that we acknowledge and are understanding of and other times we’re, like, ‘Hey, thanks. Please don’t do that again. Because you’ve submitted these invoices so late, we’re going to go ahead and discount them per our billing guidelines.’”

Firms have generally accepted the requirements without a problem. 

“We’ve received little pushback,” she said. “This is so common of a practice these days, especially with a lot of the larger firms.” 

Core terms

MacDonnell oversees a legal ops team that includes a person handling billing, one managing contracts and a generalist that works on projects. 

She modeled the guidelines on what other companies have done, with changes based on input from the legal team. 

“Don’t start from scratch,” she said. “There are a lot of core things you want to make sure you cover, and then just tweak for your business.”

At DocuSign, the legal team mainly pays on a traditional hourly basis but in some circumstances asks firms to work on a fixed-fee basis. 

“Fixed fees just don’t fit super well with a lot of the work we do, so while in our billing guidelines we make reference that a fixed-fee arrangement is doable, we don't mandate that in any sort of way,” she said.

When the company brings in a new firm for legal work, it includes the billing guidelines by reference in the engagement letter. 

“We just have a statement in there that says, ‘By submitting invoices to DocuSign, you’ve acknowledged that you’re going to abide by these guidelines,’” she said. “It’s the simplest way to do it.”

She gets together with the legal team once a year to review the guidelines, and then she lets the firms know of any updates they’ve made.  

“That allows us to iterate on the guidelines versus having to entirely go in and negotiate a new engagement letter,” she said. 

The updates also give the legal team a useful touchpoint for firms they haven’t contacted in a while. 

“Most I talk to more frequently than once a year,” she said. “It just says, ‘We enjoy this partnership. We like working with you. Here’s a reminder of what we expect. We just email them out.”

It’s good to pair your guidelines with an automated billing tool because having one enables you to quickly and efficiently reject invoices that come from unapproved timekeepers or flag line items that are outside the guidelines, like copy charges. And the tool can give you reporting insights that would be hard to get manually. But you don’t need a tool to get the benefits of guidelines.

“A lot of companies don’t actually have billing guidelines,” she said. “If you don't, just roll them out. You don’t have to have a billing tool to do it, and you don’t have to make them 50 pages long.”