E-billing “Rules Engines:” They Work All of the Time Some of the Time

I’m going to write about something that many attorneys whose clients require them to submit their legal bills through e-billing programs already know. E-billing rules engines supposedly programmed to automatically spot and take deductions in legal invoices for violations of a company’s billing guidelines often do not work as advertised.

And when I say e-billing rules engines do not often work “as advertised,” I am talking about how e-billing companies promote the use of their rules engines.  As one e-billing company puts it on their website, “[Name of rules engine] automatically reviews, validates, flags, and adjusts line-item invoice charges to comply with billing guidelines.”

Wow! No human involvement needed. Just push a few buttons and sit back and reap the savings. Sounds incredible doesn’t it?

Well, it is incredible alright. But unfortunately rules engines do not always work as advertised. I make this statement as someone who has worked with some large national companies (including insurance companies) who have experienced problems with their e-billing programs and as someone who spent two years consulting with one large e-billing company. Thus, I’ve seen close-up both sides of the e-billing coin.

And what I have seen and experienced boils down to this. The rules engines that I have had experience with are good at catching “objective” violations of a company’s billing guidelines such as whether hourly billing rates are correct or if there are any math errors. However, where e-billing rules engines often fail to perform as advertised is in catching violations of billing guidelines that involve “subjective” determination such as whether or not certain tasks are appropriate for an attorney to do.

To illustrate, consider this actual billing entry:

“Review/analyze Division of Administrative Hearing pleadings (.20); review           litigation docket (.20); review request for demand if any, last demand request, any reply (.20); t/call to opposing counsel to try to resolve before year end (.20); t/calls from/to opposing counsel regarding issues pending still (.20).”

To me, these are all activities one would expect an attorney to do. However, the entire entry was automatically reduced to “0” by the e-billing rules engine for the following reason:

“Time appears to reflect tasks associated with the maintenance of the firm’s calendar (i.e., receipts of dates, calculating dates, file review regarding dates, communicating advising/confirming dates, etc.) that are suitable for litigation support personnel and, therefore, are considered as non-billable overhead. – 1 Hour”

Of course, this “system generated” reason for the reduction doesn’t make any sense. And when attorneys see their bills marked down for things like this it drives them up a wall. And they have to spend time – that they cannot get paid for – to file their appeals. On the other end, the company has to take time to process the appeals.

I recently talked with an attorney whose law firm has offices in different parts of the U.S.  She told me that in the firm’s 17 person billing department, 3 persons do nothing but handle appeals for reductions in the legal bills mostly generated by e-billing programs. And she gave me several examples of ridiculous reductions taken that they had to spend time dealing with. The attorney was inquiring whether I would be available as a consultant to look over their legal bills before they were submitted to help eliminate issues that would be susceptible to reductions by their clients’ e-billing rules engines.

The attorney I spoke to is not the only attorney who is eagerly searching for something to do to counter the costly and seemingly irrational reductions generated by e-billing rules engines. Because of this need, a whole new cottage industry of “pre-bill consultants” has sprung up to help law firms.  What pre-bill consultants mainly do is scrub law firm bills of certain words or phrases in descriptions of tasks that will trigger flagging by an e-billing system.

But in doing their work to help avoid triggering inappropriate system generated reductions, pre-bill consultants will also help law firms avoid system detection of billing entries that should trigger reductions. I wrote about this in a piece entitled “Are ‘Pre-Bill Consultants’ Helping Attorneys to ‘Fly Under the Radar’ of Legal Bill Review Programs?”

There are other problematic issues involved with relying solely upon an e-billing program for automated review of legal bills. I’ll try to comment on some of these other issues in a future post. For now, I will simply close with the thought that when attorneys see irrational reductions being taken by e-billing programs, it tends to confirm their suspicion that computers and not real people are reviewing their legal bills.

Reviewing legal bills is already a very sensitive issue with attorneys and a company  should avoid creating needless riffs. This is why many companies – even those who use an e-billing program – will turn to me to review legal bills in sensitive matters. They know for one thing that I review legal bills the old fashioned way, i.e., I read every word in every entry and do not rely upon a computer to tell me when I should take reductions. Attorneys may still not like it that I take reductions.  But at least they know a human and not a computer is reviewing their legal bills.

The Lowdown on How To Discuss Fee Bill Issues With Your Lawyer

While most all of my blog posts have been directed to the corporate world and to lawyers, I thought it about time to write something for those individuals who have incurred large legal bills. For, in addition to doing fee bill reviews for corporations and governmental entities, I also do fee bill reviews for individuals.

Legal fees that individuals incur are usually much more modest than those incurred by large corporations. Nevertheless, I have reviewed legal bills for individuals who have incurred in excess of $1 Million in legal fees for probate and estate matters, real property disputes, business deals gone bad and yes, even for divorces. Continue reading

Sharing Comparative Data on Law Firm Compliance With Company Billing Guidelines

Once upon a time (or about 25 years ago), insurers began to use electronic bill review software to audit their attorneys’ compliance with their billing guidelines. In addition, many insurers established dedicated legal bill review units or used outside legal bill review vendors to audit legal bills.

As audited legal bills started coming back with deductions for numerous violation of insurer litigation and billing guidelines, a positive thing occurred. Attorneys actually began to read their clients’ billing guidelines. And what they found was numerous variations of essentially the same billing rules as well as many vaguely defined guidelines and rules. Continue reading

Lack of “Strategic Focus” A Top Concern in CLM Litigation Management Study

The CLM recently released its third in a series of litigation managements surveys the organization has done over the years. In the 2019 survey, some 80 litigation management executives were surveyed on a variety of litigation related topics. The comments to various questions in the survey revealed a number of interesting findings and concerns.

One of the top concerns expressed by survey participants was a “lack of strategic focus” on the part of outside counsel. Unfortunately, the CLM survey did not define what was meant by it use of the term “strategic focus.” To me, the term means simply an upfront focus on what needs to be done to achieve a favorable result sooner rather than later. Continue reading

Research, Research and Even More Research – Part II

In my previous post, I noted that overbilling for research is regarded as one of the most “egregious” forms of overbilling by law firms. And while I tend to see it more often in larger firms who often view research as training projects for newer associates, I noted that overbilling for research can occur in any size law firm. As to what type of research should be billed to a client, I had noted that case law as well as the ethics of the legal profession provide that “general” or “background” research should not be billed.

In this post, I will cover what research can be billed to a client as well as who should do the research. Finally, I will provide a list of things that should be included in a company’s billing guidelines or a negotiated fee agreement on the subject of research. Continue reading

Research, Research, and More Research – Part I

“One of the most egregious forms of overbilling in many law firms is the almost infinite amount of time that is expended upon research into even the most minute legal issues.”  William G. Ross, The Honest Hour, (Carolina Academic Press) at p. 113.

Have you ever assigned a matter to a lawyer based upon the lawyer’s claimed expertise in the law involved in the matter and then gotten a big bill for research into the same law in which the lawyer had claimed an expertise? If you have, you are not alone.

Overbilling for research is one of the most common issues I come across in legal bill audits. And it seems to be the larger the law firm,  the greater the likelihood there is for overbilling for research. But overbilling for research can occur in any size law firm. Continue reading