Based on a True Story: A Candid Conversation about Law Firm Billing Between a Tech-Savvy Millennial Lawyer and a Managing Partneraderantuser
New lawyers are hard-pressed to remember a time before touch screens. Tomorrow, it’ll be the same thing for voice interaction. Those experiences shape expectations for what future generations of employees will expect from legal technology. It’s a reminder that the pressure to change and innovate doesn’t just come from clients, but also internal sources like employees.
We’ve observed this phenomenon many times over. It’s the inspiration for the following dialogue, which while fictional, has been largely compiled based on a true story.
A Candid Conversation about Law Firm Billing
“A new billing system?” Stephen asked, peering over the top of his glasses. “Do you know how much that costs?
His questions weren’t really intended to seek answers – these were objections. Amy knew this by his tone and the history of their conversations. It’s not a proposal most lawyers of her age and rank in the firm would feel comfortable making to a managing partner, but Amy was different.
The former summer associate had attended the same law school as Stephen before being hired full time by the firm. Once at the firm, she quickly proved her mettle, and partners and senior attorneys in her practice group were always angling to have her added to their matters.
And Amy has always done more than that along the way as well. For example, her membership in the regional technology association was widely attributed within the firm with having helped win new business for the corporate practice.
Today, sitting in front of Stephen’s desk, she was a senior associate who was clearly on track to make partner and the co-chair of the firm’s innovation committee. And she was using her one-on-one with a managing partner – a monthly meeting intended for professional development – to advocate for one of the innovation committee’s priorities.
“Look, you’ve got to come up with something more persuasive than going paperless,” he added. “Sure, everyone wants to save trees and do well by the environment, but the amount of money we’d have to put in simply isn’t comparable. We’re not a charity; we’re a law firm.”
Amy could have left it at that and walked away from the meeting no worse for the wear. She pressed on.
“Obviously, I’m not privy to all the subtotals, but I’ve seen enough to make some estimations. I’d posit that we’d see the investment in that system back in a short time in write-downs alone,” she said nodding to the stack of paper in manila folders on Stephen’s desk.
The only thing the firm used manila folders for these days was prebills.
“Twice in the last year, it’s taken us 92 days to get invoices out to Waltha Technologies,” said Amy, alluding to a client she was credited with helping to win. “We ended up writing down $200k in 2018 because we pass those folders back and forth to markup prebills.”
Her statement was loaded with meaning, and she knew Stephen knew it.
The client, Waltha Technologies, was one of those software-as-a-service (SaaS) companies, which meant its revenue came through subscription. As such, the company lived and died by its monthly number. The GC had insisted on billing guidelines that protected that monthly revenue stream: law firm invoices over 90 days old would be rejected.
It didn’t seem that risky when the firm agreed to those terms, but when the team missed the deadline twice in 12 months, it sent shockwaves through the practice group. While they did end up getting those invoices paid – after a hefty write-down – the appeals process was time consuming and exhausting.
The GC made it clear that would not happen a third time.
“Why don’t we just fix the process? We are capable of getting invoices out the door on time most of the time, so this appears to be an anomaly,” Stephen countered.
“That’s part of the problem,” answered Amy. “We can’t see where in the process a paper bill is being held up. However, if the process were electronic, we’d know exactly where it is at any given point and then we can make process improvements.”
Stephen shifted in his chair, pushed his glasses up higher on his nose, and leaned forward.
“That brings up another point. We also don’t know the financial impact of write-downs that are done on paper. If partners in different practice area are all writing down invoices on paper, we don’t see the effects until it’s tallied up days, or even weeks later. However, if that process was electronic, if prebills were being reviewed on an iPad, or computer, or whatever, the firm would see the financial impact firm-wide right away.”
“Hmm,” Stephen murmured.
“Do you remember that appeals process we went through with Waltha?” Amy asked. “We’re doing more of that and for other reasons besides the delay in publishing invoices. In our practice group, these are coming back for things like the wrong codes, unapproved lawyers billing on a matter, and time-entry narratives with terms like ‘legal research’ that the billing guidelines restrict.”
Some of the technology solutions the committee was exploring developed a library of common guidelines which they used to develop automated time entry rules. If an attorney made a time entry that violated these rules, the system would trip a warning, which would avoid an entry submitted today that resulted in an invoice rejection later.
His brow furrowed.
“That was the one part of the committee’s last pitch that several of the partners found compelling,” he responded. “The idea of getting ahead of it, rather than dealing with a handful of appeals every time we publish invoices is appealing.”
The numbers were telling too. The firm had been raising rates every year for the last several, and yet writing off more and more work. Clients had become exceedingly bold in some of their requirements and more willing to switch firms if the one they retained was unable to meet those requirements.
Amy sensed she was getting a fair hearing. She was trying to decide whether she should add to the list of points making her case, or if what has been covered so far was enough to seal the deal. She couldn’t tell.
Stephen was one of the sharpest lawyers in the firm. He’d been in the business of law for the better part of 30 years. He had clerked for a Supreme Court justice. He had contributed significantly to an instrumental and high profile IP litigation case that’s still routinely cited by the courts. And he had made partner at a fairly young age.
He also championed the formal mentoring program – the same program that put Amy in his office once a month. It was Stephen that had nominated Amy for the innovation committee after observing her affinity for technology was good for the firm. If the firm was going to seriously entertain modernizing is billing system, he was the attorney whose support may well tip the tide.
“Swapping out a billing system is a pretty big change. It’s a project that would affect both our clients and virtually every client-facing lawyer,” said Stephen. “The senior attorneys are going to remember the last project some 15 years ago, and do you know what they are going to say? They are going be vocal about how painful that process was.”
“What we’re using today is painful!” Amy said with faux incredulity for effect. “Anyone under the age of 35 in this firm will tell you the system we have today is clunky and a waste of time. It takes six clicks to do anything after you’ve written your time entry.”
This was an opening, she thought. The billing guidelines and write-downs had created an opportunity. She had a jury of one, in what was sure to be a case that faced appeal. Still, this was the first step, and she felt she was winning him over.
“It’s no wonder the firm prefers to review prebills on paper because nobody wants to be in the system longer than they have to,” she said. “The attorneys we are hiring today have grown up with technology and the variety that’s easy to use with touch screens and wireless everything.”
“And yet they’ve come to work for this prestigious law firm and are fielded with technology that was designed when they were a teenager. All while the capability exists today to bring up a client’s budget on an iPad in the back of a ride-share on the way to a client meeting.”
Amy moved to her closing argument.
“It’s pretty clear the cost of the system will pay for itself in fewer write-downs by helping us publish more accurate invoices, on deadline, and without the monthly chaos of shuffling paper,” she summarized. “So, if we put this in place, your younger attorneys will be grateful. They could actually take the firm up on its telecommuting policy, and your older ones will wonder how they ever lived without it.”
“And you’ve got Bentley on board?” Stephen asked, referring to the firm’s CFO.
“Bentley is our biggest advocate,” Amy replied. “He’d be the first one to tell you his business analysts are constantly pulling reports for partners running into client meetings in the last minute when they could have what the need on an iPad with a swipe or two.”
Stephen nodded. The finance department was stuck in a perpetual firefight.
“Okay. Tell you what, I generally agree with you. It’s something that’s come up on the executive committee on occasion, so it’s not like we haven’t noticed. There have just been bigger priorities,” he said, thinking about the law firm’s recent acquisition. “However, the issues with client invoices are coming up in other practice groups too, so I think there’s a real appetite developing for finding a way to solve this on a more strategic level. We’ll need to put together a working group, examine all the options from every side, and build support for it.”
“Did I mention this is also environmentally friendly?”
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