5 things you can do with Apperio that you can’t do with e-billing
Legal spend management provides advantages corporate counsel cannot obtain with e-billing – such as visibility into WIP and accruals – along with current and historical legal spend data.
Legal spend is a material line item for many businesses, yet few have the capability to understand what they have spent, are spending and will spend on legal services.
This lack of visibility frequently results in higher-than-expected legal costs. Such spikes surprise business and finance leaders who rely on forecasts to plan how best to invest finite resources for maximum benefit, across the business.
For a long time, legal departments have only had one primary technology available to help them process legal fees: e-billing. Whilst e-billing has helped standardize data and brought some structure to the invoice review process, it also has obvious shortcomings.
Principal among these is that e-billing is reactionary. As the root word – bill – suggests, e-billing requires an invoice to elicit an action. That action starts once the invoice is received, after the work has been carried out which, if questions arise, can only lead to an acrimonious discussion.
This is the problem that legal spend management aims to solve – enabling proactive behaviour. Unfortunately, the term is mistakenly used interchangeably with e-billing. These technologies do have some similarities, however, the differences are noteworthy for legal departments striving to get a handle on legal fees and control spend.
Below are five things corporates can do with legal spend management that can’t be done with e-billing.
1. See your law firm’s work-in-progress and accruals
Legal spend management obtains data directly from your law firm's practice management systems. In this way, you can see work-in-progress (WIP) and accruals in near real-time. This means you can track your budget and matter status in a dashboard as the work is being done rather than wait for an invoice.
Most corporate legal departments aren’t glued to the screen. Instead, they set thresholds – such as when a matter budget hits 50% of its allocation and then manage any emerging issues by exception. In other words, legal spend management is a proactive way to manage the budget, rather than a reactive approach provided by invoices and e-billing.
Will law firms really do this?
Why would they?
Because legal spend management benefits law firms too. Where e-billing tools tend to pit clients against law firms – putting a computer between a law firm and client – legal spend management is collaborative.
Further, study after study demonstrates clients prefer timely, transparent and predictable law firm invoices to lower fees. In other words, clients are more than willing to pay for good counsel, but they don’t want to be taken by surprise over higher-than-expected invoices. Legal spend management helps clients and law firms both get what they want.
2. Gain a complete picture of real-time and historical spend
By virtue of its reliance on invoices, e-billing can only look at the invoices it processes. That’s pretty limiting. By contrast, legal spend management displays both current spend in near-real time and historical spend in one place.
This is a game changer for corporate legal departments because it improves their ability to report on spending – and forecast future legal costs accurately. And it does this in a way that doesn’t disenfranchise their law firms, who they rely on for good counsel.
This even works in decentralized legal departments. For example, some businesses in finance and public infrastructure have requirements for the business to work directly with law firms. This can put legal in a difficult position because they aren’t even aware that new matters have even been opened – so an invoice is a complete surprise.
However, because Apperio is connected to their law firms, the in-house legal team is notified when new matters are opened. This allows them to make enquiries as needed, or simply monitor the matter as it progresses.
3. Have confidence in your legal spend data
GCs will often tell us they don’t trust data that’s solely obtained from e-billing.
They question the accuracy – invoice data doesn’t provide a complete picture. They need better granularity – matter and project levels. Consequently, they lack the confidence to use the data with internal stakeholders.
Legal spend management assuages these concerns because it pulls data directly from the source of truth – law firm time and billing systems. It also does this automatically, which means the data is standardized, normalized and formatted so legal departments can start doing this immediately.
Any legal operations professional that has spent lots of time copying-and-pasting legal spend data in spreadsheets will appreciate this simplicity.
4. Better law firm relationships
E-billing tools are focused on cost-cutting. This causes friction with law firms, which places both sides of the table at odds and damages relationships.
For example, a dashboard that’s available 24/7 eliminates the back-and-forth that used to occur when clients asked for a status update.
Similarly, the client is kept informed the entire time, which means they aren’t surprised by an invoice. So, clients tend to approve invoices faster and without requesting write-downs or write-offs. This improves cash flow for law firms and improves recovery (or realization) rates.
Third, since neither side is haggling over fees, the lawyers can focus their attention on the important task of legal work.
Legal is a relationship business, but legal spend management software proves that data and relationships are not mutually exclusive. In fact, data, used properly, can improve relationships by fostering a shared understanding and guiding otherwise difficult conversations.
5. Elevating the legal department's reputation with stakeholders
We’ve worked with legal departments that have completely transformed their reputation internally – among peers and other business departments. They went from being one of the few departments that couldn’t report on what they had spent – or forecast what they would spend – to being a role model for other departments to follow.
We’ve even begun to see use cases where clients are taking legal spend management – and applying the system to other parts of the business. For example, after seeing what legal could achieve with the software, we have customers using it for tax, consulting and other advisory services. That’s not something typically seen with e-billing.
Getting more value out of your legal spend
Many e-billing providers pitch their software as a way to cut legal costs. Yet the way these tools do it is harmful in the long run.
Acrimony aside, regulatory and compliance work has ballooned. This means there is more legal work to do every year, not less, so cutting budget may expose the business to heighten risk. Even worse, it’s sets up expectations the legal department should cut costs and reinforces the narrative that in-house lawyers can do ‘more with less.’
A better approach, and the one we espouse at Apperio, is to control spend: control means getting more value for the money spent on legal. As D. Casey Flaherty put it in this Legally Vocal podcast discussion with our CEO, legal needs “a higher yield from every dollar we spend.
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