Curing compliance chaos caused by billing and outside counsel guidelines with Aderant
Josiah Chaves, vice president of cloud products at Aderant, outlines how a range of measures could help law firms lose less time and money managing client billing mistakes.
The word ‘chaos’ is not one that any law firm wants associated with its compliance or billing practices. But unfortunately, many firms suffer from chaos due to non-compliance with their client-defined or outside counsel guidelines (OCGs), which has highly detrimental effects. Studies have shown that law firms face substantial lost revenue, or even termination by clients, if they don’t comply with designated OCGs – so the chaos must be cured. The antidote is to automate and manage billing and OCG compliance sufficiently to mitigate these formidable risks.
The most significant challenges in complying with client guidelines fall into four categories of chaos, also known as the 4Cs: compliance, costs, coordination, and compensation. Each of these 4C problems can be solved with optimised use of people, processes, and technology.
Compliance chaos
Law firms are engaged in an ongoing struggle to maintain OCG compliance in all areas. OCG documents are typically long and incredibly detailed, requiring staff hours to read and assimilate their contents. Billing professionals must also read and apply the compliance directives. If they don’t, non-compliant bills get sent to the client – and those bills are subsequently rejected or reduced.
The cure: Technology solutions can automatically reveal risks and provide real-time guidance during timekeeping and billing processes. Potential compliance violations can be red-flagged for review, before bills are generated and sent to clients. This reduces risk of rejected bills and eliminates the need for write-downs and write-offs later. From an e-billing standpoint, technology solutions can convey intelligence from e-bill vendor sites regarding adherence to compliance rules, surfacing hidden rules, and noting guideline changes. Equally important is integrating timekeepers and billing professionals into the technology-driven workflows.
Crushing costs
In a chaotic environment, law firms’ costs can spiral out of control, creating a crisis that serves nobody’s best interests. If OCG and billing compliance are being handled manually, the firm is undoubtedly spending massive amounts of time and human resources there, instead of applying them elsewhere. Consider a scenario where law firm employees read just one or two OCG documents each month, each requiring one to two hours per document. They are likely to be re-reading the entire documents, or certain sections, to extract relevant terms for compliance purposes. This adds up to a significant amount of time per person per month already. Then multiply that for each person across 12 months of the year, and the costs are astronomical. With manual methods, considerable time is also spent training the workforce, monitoring compliance and correcting mistakes.
The cure: New advances in artificial intelligence (AI) technology allows firms to extract key terms from lengthy OCG documents and categorise them for easy reference with minimal human effort. The AI can ingest OCG documents and create and validate compliance rules at each phase of the billing process. This improves efficiency and profitability while reducing the OCG-related burden on fee earners and billing staff.
Chaotic coordination
Managing OCGs is a multi-departmental effort, but the people responsible for enforcing compliance don’t always receive the necessary information. OCGs come from various sources at the firm, including partners, billing staff, and risk and compliance staff. Important details can be lost when information is forwarded by email. When firms try to enforce OCG terms, they create compliance rules applied across time and billing, but these rules are often generated ad hoc, with different rules for each time and billing system, office location or practice area. Chaotic coordination practices can lead to important information slipping through the cracks, resulting in non-compliance and major headaches on the billing front.
The cure: Centralising all OCG client documents, terms, and rules into a repository, categorised by client, matter, and business area, creates a solid foundation for strong coordination practices. When stored together, compliance documents are easier to search and access, to track by revisions, and to notify relevant parties of updates. As a result, timekeepers and billing professionals can easily find information and remain current as to the latest rules without sifting through scores of documents.
Chaos threatens compensation
Law firms that don’t comply fully with client OCGs risk their compensation. Firms can lose tens of thousands of dollars each day due to write-offs, reductions, and rejected invoices caused by non-compliance. In addition to harming revenue flow into the firm, non-compliant bills also damage the overall client relationship, eroding trust, and can even lead to a client’s termination of the firm. None of these outcomes benefit the firm’s bottom line – on the contrary, they’re severely detrimental to its financial wellbeing.
The cure: Each billing mistake owing to non-compliance can lead to significant reductions and delays in payment, and jeopardise the client’s goodwill towards the firm. Adopting new technology solutions that ensure compliance increases accuracy and eliminates mistakes that negatively impact the firm’s compensation. Seamless compliance with OCGs goes a long way towards building lasting bonds with clients, allowing them to benefit from the firm’s legal expertise, without being troubled by administrative problems.
Compliance chaos no more
The rise of OCGs has posed significant compliance challenges for law firms, bringing chaos and many negative repercussions. However, the chaos resulting from these compliance issues, costs, coordination and compensation can be cured by applying state-of-the-art technology and more optimally leveraging human resources. Law firms can benefit from new developments that ensure compliance across the entire timekeeping, billing, and e-billing journey. Stop the madness and cure compliance chaos now!
