Time tracking and billing for law firms: Automating compliance with outside counsel guidelines for improved revenue, profitability, realization rates, and client satisfaction
Many law firms struggle to achieve compliant time and billing — and typically, this is a result of inadequate technology. Compliance requires continuous adherence to client-mandated time tracking and billing protocols, from matter inception through completion — and if a firm’s timekeeping solution doesn’t integrate with its billing systems, and if there’s no closed-loop compliance layer built into the cycle, a firm can make costly, preventable errors that lead to significant revenue erosion.
Even when noncompliance is unintentional, a firm’s failure to meet its contractual obligations can lead to significant consequences. If a legal team’s time tracking and billing activities don’t comply with a matter’s outside counsel guidelines, the client can and will reject the firm’s invoices — often leading to complaints to partners and lawyers, and even denial of payment.
These back-and-forth delays and awkward conversations can lead to extended work-to-cash cycles — and, in some cases, penalties, write-offs, write-downs, and discount negotiations that negatively impact revenue, realization rates, and profitability.
Keeping up with outside counsel guidelines
The matter cycle begins with an agreement on terms and outside counsel guidelines that list matter-specific requirements for time tracking and billing to which legal teams must adhere. In theory, following the rules should be simple; in reality, digesting complicated contracts, disseminating key OCG terms and conditions to involved firm lawyers and professionals, and ensuring continuous compliance across large matter teams places an enormous burden on partners.
Although compliance struggles create their own set of headaches, ultimately partners are most concerned about meeting client expectations. Clients don’t expect to be tasked with contacting their outside counsel about compliance issues and billing errors, nor do they want to spend their time negotiating write-offs. Likewise, partners don’t want to field unexpected complaints from frustrated clients.
When clients do call about business-of-law concerns — like budget management and compliance — partners must function as businesspeople. They need the data at their fingertips to answer the salient questions with confidence: How are we doing against budget? Are we staying within scope? Are we on track with client guidelines? Ultimately, clients expect their outside counsel to pay attention to what matters most to them — which is value received from their legal spend — and demonstrate that they have a process and mechanism in place to deliver on their side of the agreement.
Utilizing automation to uplevel client service
Although traditionally lawyers haven’t been on the front lines of the commercial side of the legal business, clients now consider the delineation between a legal services provider and a businessperson a distinction without a difference. When they have questions or concerns about their bills or their matter status, they’re not interfacing with the firm’s finance department — they’re calling their lawyer, with whom they have a personal relationship.
Without visibility into the entire time tracking and billing cycle, lawyers are ill-equipped to negotiate or otherwise deal with financial questions that might arise. For example, if a client were to contact their lawyer about a billing dispute, that lawyer would have to unravel the invoice in question piece by piece, because it’s likely gone through untracked manual adjustments related to negotiated discounts.
By contrast, a modern, fully integrated, compliance-based time entry solution that dovetails into the billing solution makes it much easier for lawyers to respond to their clients’ inquiries quickly and decisively. Because they can independently access the information they need when they need it, they’re able to offer the level of service clients expect without investing administrative time.
Establishing accountability for write-offs and write-downs
To maintain and build the client base, partners prioritize client satisfaction. Because compliance matters to clients, law firm partners have no choice but to agree to the compliance components that clients demand, even though they can be exceedingly hard to administer. Because outside counsel guidelines are matter-specific and complicated, legal teams that aren’t using a solution that automatically notifies them when there’s a problem often fall out of compliance without knowing it — creating hassles for clients that culminate in billing concessions.
Without proper controls in place, partners can also make their own independent — and sometimes below-the-radar — decisions to discount legal services. These discounts can result in the firm losing money on a matter. To prevent such outcomes, the finance team needs visibility in order to monitor write-offs and write-downs and protect matter profitability. Solutions that build in threshold controls, including an audit trail, for billing adjustments ensure that the situation is automatically escalated to a senior decisionmaker for authorization.
If you’re a CFO, arbitrary write-offs and write-downs not only erode revenue and profit, but also obfuscate how long it actually takes to get things done. From a legal operations perspective, that means that you don’t have reliable data to support matter budgeting. For example, if a lawyer spends 10 hours on a task and the client is only billed for 6, the firm may end up underestimating budgets going forward.
Supporting a culture of operational excellence
Committing to investments in operational excellence helps firms gain competitive advantage through streamlined operations, accelerated work-to-collect cycles, reduced revenue leakage, and reliable intelligence for better budgeting and resource allocations. Building the processes and investing in the technologies required to roll out these improvements gives lawyers and partners the tools they need to succeed. For example, enforced billing terms that flag noncompliant entries reduce the rejections and write-offs that decrease realization rates. Visibility into matter activity and key performance indicators help lawyers and partners manage and communicate status to clients. And well-designed workflows — including access to a mobile app — provide a friendly, familiar interface that makes compliant time and billing easy to execute.
As next-generation, digitally savvy lawyers flow into law firms, the demand for best-in-class technologies to support their work efforts will steadily increase. Accustomed to frictionless, consumer-grade technology in their personal lives, manual workflows and disconnected systems at work will slow them down and negatively impact their employee experience — particularly because the problem is so readily solvable. Firms that don’t invest in technology that makes lawyers’ jobs easier and more pleasant will find themselves at a disadvantage for recruiting and retention.
Leveraging technology to modernize capabilities and the client experience
OnePlace Operations & Finance time tracking and billing software helps your firm automatically capture all effort, recapture missed and underreported time, accelerate billing cycles, reduce bill rejections, and improve realization rates. Because the solution leverages AI-assisted technology to unburden lawyers from manual time tracking and billing activities, they’re able to devote more time to providing better service and building stronger relationships with clients.
Features include ongoing visibility into matter activity and automated compliance to ensure invoices are issued in accordance with outside counsel guidelines, which enable firms to achieve profitable matter management, efficient work-to-cash cycles, and improved client satisfaction.
Dynamic workflows span the prebilling lifecycle, from timekeeping to proforma invoice creation, while approval rules streamline write-offs and discounts. Workload and performance metrics help increase efficiencies and accelerate billing and collection cycle velocities, while audit trails maintain visibility and control.
End-to-end coverage that spans the prebilling cycle from timekeeping to proforma invoice creation keeps compliant time and billing on track. To learn more, schedule a demo.
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