Why E-Billing Programs Often Fail For Smaller Customers

Wow! My last post on E-billing “rules engines” sure generated a lot of feedback. And the feedback I received was mostly about the same things I had written about in my prior post about e-billing program rules engines not always working as had been promised.

Several respondents said that they had to ask the e-billing company to turn off the rules engine feature as it was truly causing more problems than it was worth. One even said that things had gotten so bad that they finally had to cancel their e-billing program although he did allow that service issues with the e-billing company also contributed to the company’s decision to cancel their e-billing program.

To be fair and balanced, one respondent from a very large insurance company did write to tell me that they have found that their e-billing company’s rules engine does work “most of the time” to catch subjective violations of their billing guidelines.  But in my prior post I did not state that e-billing rules engines do not at all work. What I stated was  that my experience has been that e-billing rules engines “often fail” to work properly.

In my judgment and experience, “most of the time” and “often fail” are actually two sides of the same coin when it comes to judging the performance of e-billing rules engines. Which side of the coin describes your company’s experience likely is due to whether or not  you are one of the e-billing company’s larger customers or are one of their smaller customers. And there is a good reason why I make this statement.

Would it shock you to know that most all companies tend to pay more attention to their larger customers and as a consequence put more resources into taking care of their larger customers’ needs than they do with their smaller customers? If you agree with this general statement, then why would you expect it to be any different with e-billing companies?

As a fact, I have found over the years that the smaller customer you are of an e-billing company, the more likely it is you are going to have service issues.  I know this as a fact from firsthand experience, both as a former user in-house of an e-billing program and as a consultant to smaller customers of e-billing companies. In fact, I have written about e-billing vendor service issues with their smaller customers in a previous post five years ago entitled “On Being A Very Small Fish in a Very Big Pond.”

To give you a specific example of what I am talking about here, a common problem I find when consulting with companies on why they are not saving as much as they were led to believe by the e-billing that they could save by the company’s e-billing program is that the e-billing company’s “business rules” that drive their rules engine were never customized as promised to fit a customer’s billing guidelines. That is, the customer’s business rules were not customized as they were promised. Instead, what the customer actually got were off the shelf business rules or poorly customized business rules. And if an e-billing rules engine’s business rules are not properly calibrated (customized), there are bound to be problems.

Related to the customization issue is the problem that many customer billing guidelines are outdated or are poorly stated. And compounding that problem is the fact that promises by the e-billing company to fix or update a customer’s billing guidelines were never carried out or were simply poorly carried out.

You may think that your $10 to $20 Million in legal fees and costs should command the e-billing company’s attention and you should be getting the best the company has to offer when it comes to service and carrying out their marketing promises. But I am here to tell you that your $20 Million in legal spend is small potatoes when it comes to the large e-billing companies. That amount of legal spend is literally a drop in their buckets.

In all honesty, though, I must admit that I cannot say that all e-billing companies and all rules engines are the same and have the same problems and issues. This is mainly because I have not had experience in working with all the e-billing programs that are on the market today. But I honestly can say that I have had experience in working with most that are on the market.  And I have yet to find one that would be exempt from the comments made in this post as well as my previous blog post.

The bottom line on e-billing programs is this. If your company has a legal spend of under $20 Million and you are relying solely upon or are thinking about relying upon an e-billing company’s “rules engine” to accurately review your company’s legal bills, you need to seriously rethink that decision. It would be much better to put the money into training your staff on how to properly review legal bills. You will not only save more money, but also avoid creating needless problems with your outside counsel.

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 Whether you have a very large legal spend or a very small legal spend, if you are in the market for an e-billing vendor, I have prepared an RFP for use to help select the right e-billing vendor for your company’s needs. It helps cut through all the marketing hype and helps a company select an e-billing vendor that will truly meet its need. To find out more, please contact me at jconlon@legalbillaudit.com.

 

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.

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