2012 Reg 2 Conference and Expo -FM03: Electronic Billing -Missing the Train? Get on Board!
FM03: Electronic BillingMissing the Train?Get on Board!Presented by:Frederick J. Esposito, Jr., CLMDirector of Administration/CFOMeyer, Suozzi, English & Klein, P.C.2012 Region 2 Conference & ExpoAtlanta, GASeptember 29, 2012
Let’s Start with a Quote“What the world really needs is morelove and less paper work.”-Miss Pearl Bailey
Let’s Chat About E-Billing•How Many Firms Are Using E-Billing?•How Many Firms Are Happy With E-Billing?•How Many Firms Are NOT Happy With E-Billing?•How Many Firms Are NOT Using E-Billing?WHY NOT?
Evolution of Electronic Billing•There was Paper –a Lot of Paper!•For many Law Firms/Legal Departments, the papersystem remains
Evolution of Electronic BillingLaw Firms/Legal Departments•Single Goal• Translating Paper Bills on to the Screen• “Aiming Low”Today’s E-Billing Systems•Matter Management•Easier Budgeting•Improved Bill Review & Data Culling•Foundation for Improved Outside Spending Control andEfficiency•More “business-like” Practices
Electronic BillingLaw Firm PerspectiveWhy is Your Law Firm Doing E-Billing?Because Clients Require It!
Electronic BillingLegal Department/Client PerspectiveBenefits•Manage Cases More Efficiently•Audit Law Firms•Compare Partner/Lawyer Time•Analyze Reporting and Benchmarking Data•Paper-shuffling Declines•Invoices Get Paid Faster! (That’s the Goal)
Electronic BillingLaw Firm/Legal Department/ClientProcess•Clients Require Firms to Send Their Invoices inElectronic Form Directly to the Legal Department’sWebsite or Through the Website of a Third-Party E-BillingVendor•Electronic Billings Prepared in LEDES Format DevelopedBy PricewaterHouse Coopers in 1998 as an E-BillingStandard•LEDES –Legal Electronic Data Exchange Standard
Evolution of Electronic BillingLegal Department BenefitsWhat is Driving the Rapid Adoption of E-Billing inthe Legal Profession?• Savings• Efficiency• Low Cost• Ease of Use• Reporting• Broad Acceptance by Law FirmsGreater Reliance on Metrics and Business Intelligence toManage Legal Departments
Legal DepartmentE-Billing: Cut Out The PaperRecent Association of Corporate Counsel (ACC) and SerengetiSurvey of In-House Counsel found that only 19% ofrespondents were using some sort of e-billing system.• Automation is a Daunting Prospect• E-Billing Companies - Industry unto Themselves• Many E-Billing Options!• Options Vary Based on Needs of Law Firmsand Legal Departments• Corporate Structure• International/Domestic Reach• Preferred Budgeting Processes
Legal DepartmentE-Billing: Cut Out The PaperSelecting an E-Billing System•Expensive Proposition• New E-Billing Systems• Replacing E-Billing Systems –Cost-effective?•Take the Time to Thoroughly Research•Find an E-Billing System that is the Right Fit
Legal DepartmentE-Billing: Accelerate ApprovalsBilling Review Process• Paper Billing Review• Comparing (Inches Thick) Legal Bills to PreviouslySet Budgets and Billing Guidelines of VaryingComplexity.• E-Billing Review• Many E-Billing Systems Track Compliancewith Billing Guidelines and Budgets• Greater Oversight with Little Effort
Legal DepartmentE-Billing: Accelerate ApprovalsBilling Review ProcessE-Billing AdvancesE-Billing Software: Serengeti Tracker• Feature that Automatically Rejects Invoices that Don’tComply with Billing Guidelines• No Longer Necessary to Draft a Memo to Dispute an Itemon a Bill• Future Advances include Firms being able to Test theirBill against Billing Guidelines BEFORE ElectronicSubmission –Avoid the “back and forth.”
Legal DepartmentE-Billing: Work The DataLegal Industry Focus•Evolving Client-Law Firm Relationships•Alternative Fee Arrangements (AFAs)•“Death of the Billable Hour”Legal Departments endorse a “partial paradigm shift”•Focus remains on the legal work•Billable Hour is the Byproduct, NOT the Focus•E-Billing Systems –Critical tool in structuring AFAs• Legal Department Perspective• Where is the money going?• Getting Biggest Bang for the Buck?
Legal DepartmentE-Billing: Work The DataLegal Department Competitive Edge?E-Billing provides information and a wealth ofstatistical and cost data information to LegalDepartments which includes types of cases andtracking of tasks“Powerful Advantage OverLaw Firms?”Legal Departments “share” information with LawFirms to create “fair” relationships.
Law Firm E-BillingWhat Do Client Legal Departments Want?Legal Department –Policies and ProceduresRequirements & Expectations of Law Firms• Schedule of Approved Billing Rates• Rate Increases MUST be Approved• No Automatic Future Conflict-of Interest Waivers• Identify ALL Attorneys/Timekeepers• Acknowledgement/Compliance Sarbanes-Oxley• Communication!
Law Firm E-BillingWhat Do Client Legal Departments Want?Management• Legal Contact• Relationship Partner• Lead Attorney• Engagement Letter• Scope of Representation• Tasks to Be Performed• Proposed Staffing• Professional Level/Billing Rates• Discount Structure• Description of any AFAs• Alternative to Staffing/Utilization of OutsideVendors
Law Firm E-BillingWhat Do Client Legal Departments Want?Staffing and Work Product• Matter Staffing Approvals• Timekeeper Billing of Clerical Functions• Retention of Experts and Outside Counsel• Educating Timekeepers/Basic Principles of Law• Legal Research
Law Firm E-BillingWhat Do Client Legal Departments Want?Document Retention/Data PrivacyCode of Professional ConductDiversity
Law Firm E-BillingWhat Do Client Legal Departments Want?Conduct of Litigation• General Policies• Budgeting*• Motion Practice• Prior Review of Pleadings and Memoranda• Affidavits and Declarations• Discovery Practice• Appeals• Settlement Authority/Affirmative LitigationSee Exhibit A
Law Firm E-BillingWhat Do Client Legal Departments Want?Billing Policies and Procedures• Fees• Negotiated Fee Arrangements(fixed fee, blended, hourly, full or partial contingency fee)• Timekeeper Rates MUST be Approved!• What Legal Departments Will/Won’t Pay!
Law Firm E-BillingWhat Do Client Legal Departments Want?Billing Policies and Procedures• Legal Departments will NOT pay for Timekeeperbillings in reference to:• Organizing a file• Copying and/or filing documents• Duplicative time spent on research• Reviewing/Analyzing Conflicts of Interest• Preparing/Processing• Third Party Invoices• Billing and/or reportsSee Exhibit D
Law Firm E-BillingWhat Do Client Legal Departments Want?Billing Policies and Procedures• Disbursements and Other Charges• Legal Departments will NOT pay the following:• Secretarial/Word Processing• Facsimile Charges• Photocopy Expense of more than $.___/page• Unreasonable use of Messengers/Couriers• Timekeeper Travel (Unless Prior Approved)See Exhibit D
Law Firm E-BillingWhat Do Client Legal Departments Want?Billing Policies and Procedures• Invoice Submission• Billing Thresholds/Frequency• Matter Billing Only• Disbursement Itemization with Detail(where appropriate)• Research Charges (may require detailed explanation)• Timely Billing• Third Party Service Providers• Approved Vendors and Providers
Law Firm E-BillingWhat Do Client Legal Departments Want?Billing Policies and Procedures• Auditing of Invoices• Legal Department Matter ID Numbers• Electronic Billing• Uniform Task Based Management System (UTBMS)Codes• Invoice Presentment• Payment
Law Firm E-BillingWhat Do Client Legal Departments Want?Electronic Billing Submission Protocols• Uniform Task Based Management Codes (UTBMS)• Series of codes used to classify the legal servicesperformed by a law firm in an electronic invoicesubmission. (Exhibit C)• Electronic Invoicing Implementation Requirements• LEDES 1998B & 2000 Format Fields (Handout #1)• Timekeeper Data Formats (Handout #2)
Law Firm E-BillingWhat Do Client Legal Departments Want?LEDES 1998B SpecificationDesign Criteria:• Keep It Simple Stupid (KISS)• Make it unambiguous• Diverge from existing formats as little aspossible• Law Firms provide only information that isneeded• Meet the needs of law firm software vendors tomeet the above criteria
Law Firm E-BillingWhat Do Client Legal Departments Want?LEDES 2000 Specification• Poorly designed• Many inconsistencies and shortcomings• Virtually impossible to deploy consistently fromcorporate law department to corporate lawdepartment, law firm to law firm, client to client.What Did We Learn From This?...............
Law Firm E-BillingWhat Do Client Legal Departments Want?“The More They Complicate the Plumbing,the Easier it is to Stop Up the Drain!”-Commander Montgomery Scott, USS Enterprise
Law Firm E-BillingWhat Do Client Legal Departments Want?Uniform Task Based Management Codes (UTBMS)UTBMS coding for time entries is broken into Three Time Entrycomponents:Phase Codes describe the phase of the work performed.Phase Codes begin with a letter to distinguish the code set usedand are always numbers in multiples of 100.•L100 indicates the Assessment, Development and Administrationphase of handling a litigation matter; L200 indicates the Pre-TrialPleadings and Motions phase, etc. (See Exhibit C)
Law Firm E-BillingWhat Do Client Legal Departments Want?Uniform Task Based Management Codes (UTBMS)Task Codes describe the task performed.Phase of work performed is inferred from the first 2 charactersof the Task Code and are followed by numbers that are (at leastas originally set forth) multiples of 10.•L110 indicates Fact Investigation/Development tasks; L120indicates Analysis/Strategy tasks, etc. (See Exhibit C)Both of the codes in this example associate to Assessment, Developmentand Administration phase of the Litigation Code Set because both beginwith L1.
Law Firm E-BillingWhat Do Client Legal Departments Want?Uniform Task Based Management Codes (UTBMS)Activity Codes describe the actual work performed by thetimekeeper.Activity codes always begin with A1 and there are eleven codesin total. The Activity Codes are exactly the same across all of theoriginal ABA UTBMS sets.•A101 is used to indicate that the timekeeper performed workassociated with Plan and Prepare for; A102 indicates that Researchwas performed; A103 indicates Draft/Revise; etc. (See Exhibit C)In e-billing, Law departments decide whether Activity coding is required atall on time entries.
Law Firm E-BillingWhat Do Client Legal Departments Want?Uniform Task Based Management Codes (UTBMS)Expense Codes were created to classify the expenses submittedby law firms on their invoices.Expense codes begin with an E and are numbered consecutivelyfrom 101 to 124. The Expense Codes are exactly the sameacross all of the original ABA UTBMS sets.•E101 is used for Copying; E102 for Outside Printing; E103 forWord Processing; E104 for Facsimile; etc.It is not unusual for law departments to mandate maximum charges per expenseitem (like $.07 per page for internal copies) or to exclude usage of certainexpense codes (like disallowing use of E124 Other)
Law Firm E-BillingWhat Do Client Legal Departments Want?• Electronic Billing Submission Protocols• LEDES 2000 Format Fields (Handout)• LEDES 1998 Format Fields (Handout)• Timekeeper Data Formats (Handout)
Law Firm E-BillingWhat Do Client Legal Departments Want?Sample Legal Department ExhibitsExhibit A: Budget FormatExhibit B: Billing RequirementsExhibit C: Uniform Task Based Management SystemExhibit D: Non-Compensable Items/DisbursementLimitations & Restrictions
Law Firm E-BillingElectronic Billing SoftwareMost PopularLaw Firm Time and Billing Systems• Most E-Billing Programs Built-In
Law Firm E-BillingElectronic Billing SoftwareSampling of Vendors Supporting LEDES(Southeast)• Acuity Management Solutions• Aderant• Bridgeway Software, Inc.• Datacert, Inc.• Mitratech Holdings, Inc.
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Contact InformationFrederick J. Esposito, Jr., CLMDirector of Administration/CFOMeyer, Suozzi, English & Klein, P.C.990 Stewart Avenue, Suite 300Garden City, NY 11530Email Address: FJE@msek.comPhone Number: 516-741-6565www.msek.comLinkedIn: www.linkedin.com/in/fjespositoTwitter: Lawmgtguru