Former CLOC President Mary O'Carroll recently came out swinging against what many view as a foundational concept in the legal operations industry. E-billing.
In a forum posted to the CLOC community, she boldly (considering how much the e-billing industry contributes financially to CLOC) laments the very existence of such tools. She asks why legal is the only department in the enterprise to need its own special billing systems and she longs for a time when e-billing is no longer needed.
It's a refreshing take and her assertion is that the need for e-billing tools and invoice forensics, is due to the existence of the billable hour.
From a technical perspective, that is undeniably true. If the desire to analyse individual time entries didn’t exist, there's no reason why law firms couldn’t submit their invoices into the same billing systems that the rest of the business use. And herein lies the real story. E-billing has become a proxy for a bigger problem. Namely, the systemic lack of trust between the supply-and-demand sides of the legal market.
Legal departments trust external law firms to help manage various forms of corporate risk, to go to war together in “bet the company litigation” and to keep their directors out of jail, but they don't trust them to invoice them accurately at the end of the month. It’s a sad indictment on the state of the foundation of relationship between these “trusted partners…”
The way forward?
I don’t believe that fixing this lack of trust is via AFA’s alone as Mary suggests. Fixing fees or billing based on “value” might make whoever's in charge of outside counsel budgets sleep better at night, but they’re just as open to manipulation as hourly bills. In fact, potentially more so as the alchemy that goes into crafting billing strategies is now obfuscated. Many firms will only commit once they’re certain that the move to AFA’s will result in a net gain. e.g. more profit. Is that winning for in-house teams? I’m not sure but I’m fairly certain it's only a matter of time before boards and c-suites start asking questions again.
In my humble opinion, the long term solution to reducing the in-house legal markets reliance on e-billing tools, at least in their current form, will come from improving transparency and collaboration. By removing the opportunity for outside counsel to retreat into the black box. By eliminating uncertainty and making the process of approving an invoice a simple, seamless, relationship strengthening act at the end of each month. “No more surprises” has been the catch cry of a generation of lawyers, but it hasn’t stuck.
But there is hope. There is a realistic opportunity on the horizon to truly “disrupt” the current model, and it comes in the form of the king of all legal tech buzzwords, “Knowledge management”.
There is now a whole new class of rapidly maturing knowledge management products like LawVu that are designed to capture effort and work product as structured IP. These products are paving the way for the industry to truly embrace the use of concepts such as project management, project templates, automation, contract analysis, machine learning and A.I., and most of the impactful gains in this space are being driven by modern legal operators in modern corporate legal departments.
It’s this framework that will ultimately eliminate justification for the once sentence that creates all the problems; “I can’t really tell you how much it’ll cost”. Once we can remove the mystery, and matter types of all shapes and sizes can be broken down into modular, predictable, repeatable pieces of work, the industry will have a scalable model for transforming the status quo, and the entire legal ecosystem can finally move forward on a footing of transparency, collaboration and trust.
Tim Boyne is the Co-Founder of LawVu, the first truly connected software platform for in-house legal teams. Matter, contract, and spend management in one secure, cloud-based platform. Visit www.lawvu.com for more information.