Ilta09 Globalization Presentation Loc J Bennitt
•
0 likes•463 views
This document discusses how globalization has impacted law firms working for global legal departments through electronic billing (e-billing). It traces the evolution of e-billing from its origins in the US in the 1990s as a way for insurance companies to audit law firm invoices, to its expansion globally in the 2000s as more legal departments and law firms adopted e-billing. Key developments included the creation of standard e-billing formats, the expansion of e-billing systems' capabilities to support additional clients and use cases, and the growing pains faced as formats and systems evolved to meet increasingly complex global needs.
More Related Content
Similar to Ilta09 Globalization Presentation Loc J Bennitt
Similar to Ilta09 Globalization Presentation Loc J Bennitt (20)
More from Baker Robbins & Company
More from Baker Robbins & Company (6)
Recently uploaded
Recently uploaded (20)
Ilta09 Globalization Presentation Loc J Bennitt
- 1. How Globalization Impacts Law Firms Working for Global Legal Departments August 27, 2009 Jane Bennitt, Baker Robbins & Company, jbennitt@brco.com President of the LEDES Oversight Committee
- 2. Globalization? • The mandate to e‐bill for clients located outside of the law firm’s home country • Law firms having operations beyond their home country • Law departments having operations in multiple countries • The impact of the world’s economy
- 4. Early 1990’s – In the US Auditing Ruled • Insurance Companies early adopters • Invoice sent to third parties for review • Concentrated review of – Time spent on services provided – Cost – Appropriateness of charges Result • Heavy Adjustment of Invoices • Delay in Invoice Payment
- 5. Late 1990’s – The Beef “You Charged How Much?” by Debra Baker, ABA Journal, February 1999, p. 20 “Insurance defense attorneys contend that auditors – eager to prove their worth to the companies that hire them – randomly slash bills, generally by a standard 10 percent, and make arbitrary judgments about the services lawyers provide impeding their independent judgment. … Typically auditors scrutinize law firms that charge for more than one lawyer doing the same task, bill lawyer time for work a non‐lawyer could do, or increase the number of hours billed by changing lawyers midway through a case. While the questions raised during auditing may be appropriate in some situations, lawyers say the guidelines lack flexibility and fail to take into account each case’s idiosyncrasies. We seem to be in this immovable position, and we’re not finding any solutions. Whatever side this comes down on, we as a profession have got to come up with some innovative solutions. “
- 6. Late 1990’s – Law Firms Fight Back! “Firm Quits Client Over Outside Auditor” by Anna Snider, lawnewnetwork.com, 2/25/99 “After … cut more than $100,000 from invoices totaling $400,000, the firm decided it was no longer worth handling cases for the client … and made arrangements to send back 400 open matters.”
- 7. Late 1990’s – Law Firms Fight Back! “Advisory Opinions Say “NO” to Outside Bill Auditing”, by Joseph W. Ryan Jr., Litigation News, September 1998, Vol. 23, No. 6 “State bar associations in KY, FL, LA, UT, SC and PA have already [issued opinions] … Other states are also expected to issue opinions in the near future. To date, only MA ethics committee has held such disclosure to be permissible.” The NC and SC opinions enacted were the most restrictive.
- 9. The Evolution of E‐Billing Idea: Provide data that underlies invoice • Receive invoices electronically • Standardized format • Flat file structure, very few data elements • Leverage emerging technologies Invoice file not intended to represent the financial transaction Challenge: Devise platform in accordance with confidentiality requirements
- 10. E‐Billing is Born • Original UTBMS Codes set forth in 1995 • First e‐billing format, LEDES 1998 in 1998, quickly revised in 1999 and named 1998B • Early systems allow for review of invoices by law department staff, restrict access to data by vendor staff – Confidentiality concerns no longer an issue
- 11. Mid‐1990’s E‐Billing started as US Law Departments US Law Firms
- 12. Global Considerations None
- 13. E‐Billing Growing Pains Issue Solution ‐ Format did not support ‐ Jerry‐rigged UTBMS codes taxes on legal fees or LEDES 2000 ‐ Format did not support ‐ ??? instances where the client paid less than 100% of the bill ‐ If adjusted line items were ‐ ??? taxes, …? ‐ AFAs came into vogue ‐ ???
- 14. And at the Law Firm… • First requests to e‐bill • System features and procedures were very confusing • Submitting first invoice was huge hurdle • E‐Billing responsibilities were handled by the Relationship Partner’s Admin • Only 1 or 2 people at firm knew how to use system to submit invoices • Client and System documentation distributed only to users • No documented firm‐wide e‐billing procedures
- 15. E‐Billing Expands Beyond the US Circa 2001
- 16. The Evolution of E‐Billing LDs and CLOs finally had control of their legal spend • They knew what they were spending, who they were spending it on and could understand the services provided by OC • Automated processes allowed for readjustment of workflows • No more lost invoices; firms getting paid • Savings from replacing checks with ACH payments • Recognized need to run as close to 100% of legal expenses through system to take advantage of the controls and advantages provided by the system
- 17. The Evolution of E‐Billing New System Features • Minimal matter management to run EB increased to support reporting • Canned reports provided • Timekeeper and Rate Checking introduced
- 18. E‐Billing Expand Law Departments Law Firms
- 19. Global Considerations Not really an issue yet
- 20. E‐Billing Growing Pains Issue Solution ‐ Multiple taxes on line items ‐ Combine all taxes into one ‐ LEDES 2000 invoices tax amount rejected because taxes on ‐ Allow for tolerance in line items did not equal to electronic rule tax on invoice ‐ Different TINs depending on ‐ Multiple instances of the province where service same law firm with different provided TINs; separate invoice submissions for each TIN ‐ Currency issues ‐ Invoices submitted and paid in USD ‐ If adjusted line items were ‐ ??? taxed, … ?
- 21. And at the Law Firm… • E‐Billing not new to (US) firms • Using multiple systems • Need to figure out how EB is different for each new client • E‐billing responsibilities were handled by the Relationship Partner’s Admin • Pockets of people at firm know how to e‐bill, but knowledge is specific to a client’s system • Client and System documentation not centrally saved • No documented firm‐wide e‐billing procedures • Generally, Law Firm system features poorly executed • Timekeeper and Rate Checking increased firm overhead necessary to support system • Difficulties tracking invoice status and payment
- 22. Clients Request • Matter management capabilities • Multiple levels of invoice review • Timekeeper and rate checking • Ability to enforce approval authorities • Budgeting and case assessment • Elaborate electronic rules checking of invoice submissions • Ability for law department to initiate payments to law firms • Time tracking and submission for in‐house counsel • Ad hoc reporting capabilities • Appeal functionality
- 23. The Expansion Continues Circa 2002/2003
- 24. The Evolution of E‐Billing More Law Departments begin to e‐bill – Many previously did not have any means to track matters • More system integrations established • More matter management tasks for all users • More need for electronic invoice file to represent the financial transaction • Steeper learning curve; training very important • Systems accepting only LEDES 98B • Payments largely originate from a single central location and A/P system • Emergence of law firm e‐billing administration tools
- 25. E‐Billing Expands Law Departments Law Firms
- 26. Global Considerations Slow understanding that things are different (particularly in the UK)
- 27. E‐Billing Growing Pains Issue Solution ‐ VAT requirements ‐ Also submit paper invoice ‐ Invoice adjustment ‐ Not allowed on invoices with VAT ‐ Requirements to recoup ‐ Don’t recoup VAT VAT (if allowed) ‐ Currency Issues ‐ All invoices submitted in USD ‐ Invoice submission format ‐ LITIG group works with LOC to develop LEDES 98BI Beta ‐ Global firms ‐ Multiple instances of law firm for each country/TIN ‐ Help Desk staffing challenge ‐ Reliance on email, expanded hours
- 28. And at the Law Firm… (In the UK) • UK firms very slow to come on‐board for e‐billing • Lots of discussion and study on what they were being requested to do • LITIG group at the forefront of organizing a collective response (In the US and Canada) • Using multiple systems • Recognition that EB represents a big effort by and expense to the firm • One‐off instructions driving them crazy! • Lots of manual editing of invoice files required • Tracking invoice status and payment becoming an issue • Only a few firms beginning to establish e‐billing as an organized discipline
- 29. Sidebar: Organizing E‐Billing at the Firm • Identify a lead person for EB at the firm • Identify the systems currently used by the firm • Create teams for each system to assist with training, troubleshooting and backup • Establish a shared network workspace for all e‐billing‐related client and system documents, manuals, etc. • Create an e‐billing manual for the firm • Identify one‐off requests and situations being handled manually; enlist IT to automate solutions where possible • Determine whether a new business intake process is required to support requests for e‐billing
- 30. Sidebar: Handling New Requests to E‐Bill • Read the material provided by the client • If there are questions, meet with the client to confirm the firm’s responsibilities, expected timelines, and to identify who to contact if problems arise • Determine what this request will cost the firm and investigate associated annual billing. If an issue, follow‐up with the client • Identify “gotchas” • Set up team and identify who will: – Handle setup in the EBS – Check initial system information for accuracy – Handle on‐going tasks • Update time and billing system: – Identify the client as an e‐billing client – Ensure system is set up to properly format entries and apply the client‐required codes – Modify bill templates as necessary – Update unbilled time to comply with the new e‐billing requirements • Require all LF system users to attend training offered by the client or vendor
- 31. Global Law Firms More Prevalent “The Global Expansion of Law Firms: An Update” by W. Scarborough and L. Budlong, Thomson West Practice Innovations, Volume 4, Number 2, July, 2003 “Since the early 1990s, the legal and business press has chronicled the diminished relevance of national borders, the rise of megafirms based in the United States and the United Kingdom, the decline of regional firms, and the overall consolidation and internationalization of the legal industry.”
- 32. And at about the same time… Circa 2003/2004
- 33. The Evolution of E‐Billing • Mandate to e‐bill issued to global IP Associates • Integration with IP management systems
- 34. E‐Billing Expands – IP Added Law Departments Law Firms
- 35. Global Considerations • Law Departments understand that e‐billing is just not possible for some IP associates • Some currency conversion – Largely requesting submission of invoices in USD – May be paying in other than USD
- 36. E‐Billing Growing Pains Issue Solution ‐ Non‐law firms involved; no ‐ Other invoice submission time and billing software, options never heard of LEDES ‐ Technology limitations ‐ Provide alternative to electronic bill submission if no web ‐ Need for 24/7 availability of ‐ Expand system architecture, system and Help Desk hosting and support ‐ Language issues ‐ Offer multi‐lingual interface ‐ Currency issues ‐ Allow for submission and payment in other than USD ‐ UTBMS Codes ‐ In 2007 LOC ratifies Patent and Trademark Code Sets
- 37. And the IP Associates… • Did as requested Law Departments very pleased by success of IP rollout
- 38. Clients Request • Features to support global e‐billing including – Better tax support – Multi‐currency functionality – Multi‐lingual support – Ability to “proof” taxes charged • Enhanced matter management functionality • AFA support • Better reports • Ability to track savings associated with “preferred” relationships
- 39. Truly Global E‐Billing Circa 2005+
- 40. The Evolution of E‐Billing • LDs and CLOs in US with largest legal spend already implemented e‐billing – Products reconfigured to include configurable menu of features (little/no customization) – Less expensive, so available to LDs with smaller legal spend • Final version of LEDES 98BI ratified in 2005 • LEDES XML E‐Billing 2.0 ratified in 2005 • Vendors establish presence in UK and Europe
- 41. Seven Key Areas for Focus as LDs Globalize 1. Centralization of legal department organization 2. Visibility into global legal spend 3. Visibility into global legal risk 4. Visibility into global matter/case portfolios 5. Global compliance coordination and standardization at the operations level 6. Coordinated and transparent lines of communication 7. Standardized processes and procedures Courtesy of DataCert
- 42. E‐Billing Expands Law Departments Law Firms
- 43. Global Considerations • Initially not the same economic pressure to control costs as exists in the US • Concept of “implementation” expands – First implementers are those with biggest legal spend – Often rolling out EB as a centralized corporate initiative – Matrix organizations/ PAs, BUs, Corp Entities, Geographic locations – Mostly transactional matters – System configurations more complicated – Involves LD users in multiple countries – Multiple AP systems (20+ not unusual)
- 44. Global Considerations • Local, national and regional laws and regulations must be understood and followed – Invoice composition • Format and content of data transmitted • Tax and accounting laws and regulations – Invoice file needs to represent nature of financial transaction – Whose law applies? – Behavior of receiving system • Data recorded and displayed to system users • Authenticity and integrity of transmission • Data storage and archival • Data privacy
- 45. E‐Billing Growing Pains Issue Solution ‐ UTBMS Codes ‐ LOC’s Revised Project Code Set ratified in 2007 ‐ Better invoice submission ‐ LEDES XML 2.1 ratified in formats designed to 2007 leading to redesigned accommodate global systems which support requirements ‐ Multiple TINS per law firm ‐ Global taxes ‐ Multiple currencies ‐ Programmable output of AFA invoices ‐ Better tools for LFs to track ‐ Closer alignment between invoice submissions and vendors and LFs payment ‐ What are the laws and ‐ Education regulations that apply? ‐ Differentiate between LF and LD obligations
- 46. And at the Law Firm… Global Firms • Organize to set e‐billing parameters • Don’t want to submit separate paper invoice in addition to LEDES invoice file • Larger firms coding their own invoice file output In the US • Overwhelmed by requests to e‐bill • Recognize need to organize administration of e‐billing • Matter management tasks considered burdensome • Increased use of law firm e‐billing administration tools
- 47. Some LD Numbers In Altman Weil’s 2003 LD Benchmarking Survey • 7.7% of respondents indicated they use EB and 21.1% said they were evaluating EB systems In Altman Weil’s 2004 LD Benchmarking Survey • 11.8% of respondents use EB and 3.8% said they were currently implementing EB In Altman Weil’s 2006 LD Benchmarking Survey • 13% of respondents reported using or requiring EB In ACC’s 2004 Docket Survey • 18% of LD respondents reported using or requiring EB In the 2005 ACC Docket Survey • More than 25% of respondents reported using or requiring EB 4/2004 : An industry expert predicted, “Within 10 years e‐billing will be used in 50% of corporate law departments”
- 48. Some LF Numbers In LawNet’s 2002 Law Firm E‐Billing Survey, 140 of 151 respondents e‐billed. Of these: • 50% e‐billed for 1‐5 clients • 34% e‐bill for 6‐10 clients • 16% e‐bill for 11‐ 25 clients In LawNet’s 2004 Law Firm E‐Billing Survey, 67 of 68 respondents e‐billed. Of these: • 36% e‐billed for 1‐5 clients • 44% e‐bill for 6‐15 clients • 20% e‐bill for 16+ clients In ILTA’s 2008 E‐Billing Survey, • 47.40% use 1‐5 systems • 27.54% use 6‐10 systems • 23.93% use more than 10 systems – 10 respondents use 25 or more different systems for their clients
- 50. The Economic Slide Begins • Hildebrandt’s Peer Monitor Economic Index pinpoints the current decline as beginning in the 4th Q 2007 – Impact not fully felt until 3rd Q 2008 • 2008 articles about first year associates earning $160k raised concerns among GCs
- 61. Response to Economic Situation Businesses are fighting to stay alive Law Firms • Cut expenses to the bone • According to lawshucks.com’s Layoff Tracker – As of July 26, 2009, over 13,311 people have been laid off by major law firms (5,190 lawyers / 8,121 staff) since January 1, 2008. – 11,319 (4,260 / 7,059) people have been laid off from law firms in calendar 2009 – 569 (229 / 340 ) have been laid off in July • Deferral of new hires Law Departments • Mandates to reduce legal costs – Implement or retune e‐billing – AFAs (beyond discounted hourly rate or flat fee) – Revisit agreed upon rates – Handle matters in‐house?
- 62. The Debate Continues “Two Veteran Lawyers Say Now is the Time for Fixed Fees” by B. Heineman and W. Lee, law.com Aug 24, 2009 “For law firms facing reduced demand and cash flow problems (if not crises), the fixed fee addresses the issues of increasing overhead devoted to the billing process, clients flyspecking bills and demanding after‐the‐fact discounts, and delays in payments and falling realization rates.”
- 63. Panel Discussion
- 64. Panelists Patrick Collins, Finance Manager, Allen & Overy, LLP As Finance Manager within the London office of Allen & Overy LLP, Patrick coordinates e‐billing for Allen & Overy LLP globally and is currently the International Chair for the LOC Board of Directors. Patrick recently led the UK / EU and Governance Sub Committees of the LOC and before that was closely involved in the London‐ based E‐billing Law Firm Forum (eLFF) for several years, and recently led the sub group that produced the revised UTBMS Project Code Set. Cathi Collins, Bridgeway, Vice President, Bridgeway Research Ms. Collins has been a legal industry consultant for more than 20 years, and has a strong financial and legal background. She has helped hundreds of legal departments improve productivity by leveraging their technology investments. Ms. Collins co‐chairs the College for Litigation Management for CLM and serves on the Board as Secretary of the LEDES Oversight Committee. Cyndie Cox, Director of New Products, DataCert, Inc. Cyndie joined DataCert in 2006. Prior to joining DataCert, she spent 10 years as the business manager for the UPS legal department which included responsibility for electronic invoicing and outside counsel management. Since joining DataCert, she has worked with corporations and law firms to better understand the challenges of legal operations management in a global community. Roger Jarman, Director of EMEA Client Services, CT TyMetrix Roger has more than 23 years of experience in professional services, supporting the needs of many global organizations in the manufacturing, distribution, finance and legal industries. Based in the UK, Roger works closely with international corporations and law firms through the implementation and support of Matter Management, eBilling and eDisclosure solutions.