So after all these years, how many time and billing vendors can generate these formats accurately?  None.

How many e-billing vendors accept these formats?  Does it even matter if the law firms can’t even produce these file formats?

The cold, hard truth is that time and billing vendors are not interested in helping their clients (i.e., Law Firms) produce invoice files beyond the LEDES 1998B and BI formats.

• Philosophy of Time and Billing vendors:
  • Time and billing systems are vehicles for revenue generation
  • E-Billing decreases law firms’ revenue capture rate, countering law firm revenue goals
  • Therefore, they will not add features to their product that counter their value proposition.

In retrospect, doesn’t that make sense?

Okay, so here’s what we have to do to make global e-billing happen:

• E-Billing clients (i.e., corporate law departments) have to demand “Global E-Billing” of their E-Billing vendors and their outside counsel firms.
• E-Billing Vendors (i.e., Bridgeway, CT TyMetrix, Datacert, Mitratech, etc.) need to provide global e-billing solutions for their clients, as well as for their clients’ outside counsel firms.  Yes, they need to provide a comprehensive solution to make global e-billing happen.

 Go Global E-Billing!!

Okay, so I’m not going to go into details, but here’s the scoop: 

In developing these LEDESense products, we decided to put all the LEDES formats side-by-side to better understand the reasons why no time and billing or e-billing vendor has been able to achieve these LEDES XML formats that have been around for ~ 10 years!  When we completed our map, we realized that, though the LEDES formats continued to evolve, there was really no path for upwards compatibility.  In other words, the vendors would have to invest a tremendous amount of development time and treat each XML file format as having nothing to do with the other, rather than just developing for incremental changes.  Also, with no schemas, even if the vendors were to accommodate all these formats, it didn’t necessarily mean that the data could be exchanged between law firms and law departments (if you want a more detailed explanation, just contact me). 

From this realization, we developed LEDESense Web Service and LEDESense<Omni>.  LEDESense<Omni> is a web based tool that will read in LEDES files in any format (including XML 2.1, 2.0, and 2000).  It allows the user to add/modify any of the data in a BEAUTIFUL grid (a lot of money and time were invested to make it user friendly and aesthetically pleasing), and “Save As” a LEDES file of another format.  This tool also allows for the creation of “New” LEDES files.  So now with LEDESense<Omni>, law firms globally can generate LEDES compliant, VAT invoices in any currency! 

This is great, but which e-billing systems can accept all of these formats?  NONE!  So in parallel to LEDESense<Omni>, we developed the LEDESense Web Service.  By having e-billing systems interface with LEDESense Web Service, it can accept electronic invoice, pipe delimited files, as well as any XML files formatted through LEDESense<Omni>.  Systems can now exchange data in any LEDES format or LEDESense Invoice XML data object, relieving vendors of having to translate between all the LEDES formats.

Finally! A comprehensive, global e-billing solution that makes sense. 

 The “LEDES educational material” I refer to above is the LEDES mapping.  We created a poster titled “LEDES E-Billing File Formats at a Glance”.  It’s available in PDF format for download at http://www.roraclientsystems.com/ledes-ebilling-formats-at-a-glance.pdf.  I encourage you all to take a look at it (it’s actually very pretty with lots of colors – great for the office), but be forewarned, the printed version is 26”x50”.  We really tried to make it smaller, but it wasn’t possible.

I was going to describe our new business, but I’ll save that for my next blog entry.

Fast forward to 2005, the CIO (Chief Information Officer) asked me to join the Law Department and head up technology strategy for them. Needing a change in scenery, I went along with it. A week later, though I admit her plan was clever, I was cursing her for putting me there.

Regardless of the firm’s huge IT budget, the law department was stuck in early 90’s technology wise. How could a first world financial firm be supported by a third world law department?

Unfortunately, this is common amongst law departments and law firms. Lawyers don’t understand or appreciate technology so don’t spend the money on systems or IT professionals.

It all started out very smoothly.  My client is smart and easy going; everyone I met with in the legal department was competent, cooperative, and pleasant; and the e-billing vendor team was also a really strong and fun group.  Everyday was a pleasure!

 But then we started meeting with Finance and AP and the fun ended.  For the last several months, they had done everything they could to derail this project.  Regardless of the fact that the company already committed and signed a contract with the e-billing vendor; an e-billing system can really assist the company to better manage legal spend and realize efficiencies; and most importantly, the CLO, CFO, and CEO have been waiting for this e-billing system to be implemented; they just couldn’t seem to rise above the politics and work with the legal department.

 It is now August and my clients finally went live with e-billing.  No, Finance and AP didn’t come around.  Instead, the legal department prints out the invoices from the e-billing system; the attorneys review and approve the invoices on-line in the e-billing system as well as sign the paper printout of the invoice.  The paper invoice goes to AP and that’s what gets processed. 

 Now, the story doesn’t end there.  Throughout this nightmare, I prepared countless presentations for my client and coached him through the political obstacles.  We first had to get the attention of the senior members of the Office of the General Counsel.  With their support, we presented to the Chief Legal Officer.  He then opened the path for my client to meet and present to the CEO and CFO.  My client did great and he gained their full support.  So now Finance and AP are working with us, and for the last two weeks I have been busy preparing very detailed workflows to get them up to speed.  They are still not very nice to work with, but we are making progress.

 My client said to me last Friday, “we couldn’t have done it without you,” and I have to agree.  With regards to technology and operations, legal departments are usually isolated from the rest of the company.  Moreover, the legal department usually gets exempt from all sorts of company standards.  So when legal departments work with other departments, there can be resentment.  Hire the right consultant and he/she can be very instrumental in working through all of these difficulties.

 What should you look for when hiring a consultant?  The consultant should have:

• Experience working in a law department, because the corporate law department is very different from law firms and “other” departments.  He/she should have a strong understanding of law department operations.
• For technology projects, he/she should have some real applications experience (e.g., developer/programmer, business analyst, application architect, database design, etc.)
• Commitment ensuring a successful implementation.  When I saw the difficulties my client was experiencing, I made it my problem and helped lead him through the political maze.  I didn’t say “call me when you get this resolved” – which I could’ve easily done.
• Patience! (^-^)

But since our announcement of LEDESense Office Edition, we have been inundated with inquiries and requests.  Yes, we have simple, inexpensive solutions for a problem that’s been ignored for 10+ years.  We have a pulse on what this industry needs.

With this validation and encouragement, we signed a lease for office space and we just completed our move. 

This may not seem like a big deal, but it’s a huge sign of growth for this 42 year old, never married, commitment phobe. 

Besides LEDESense Office Edition, we actually have 2 other products.  Next week, we’ll be releasing LEDESView, a $99 product which allows a user to upload a LEDES 1998B, 1998B-I, or a 1998B-I V2 file, make edits, and save it without losing the formatting.  It will also allow the user to create new LEDES files.  This product does not do business rules validation, but it will have data format validation – Not bad for $99!  Of course, for this price, there is no user support or upgrades.  That will come with a slightly more expensive version to be released in the very near future.  The future product will also address the XML 2.0 format.

Our other product is LEDESValidation – a free service!  This is a webservice where the user can upload their LEDES file for instant trouble shooting.

You may ask: “why are your services so reasonable?”  That’s because our products and services evolved from a sincere desire to help our clients.  We believe that in doing good, we will do well.

So stay tuned!  RORA Client Systems, Inc. is here to stay and we are committed to enhancing your e-billing experience.

I had a very interesting conversation with a very senior manager at one of the largest time and billing, software company.

I’m paraphrasing, but he basically said:

Corporate clients do everything they can to reject invoices from their law firms.

 OH MY!  I was shocked!

Until March ’08, I headed up technology strategy for Morgan Stanley’s law department globally and managing the e-billing effort was one of my responsibilities.  During my tenure, I had never heard anyone say or imply anything of the sort.  Many complained how large the invoices were, and we’ve seen some interesting disbursements come through (e.g., $24,000 for weekend air-conditioning; $700/night hotel charges; $2.50/copy where the line item for copies totaled $8,000, etc.), but they were all okay with being fairly charged and paying for services rendered under their request .  Since I left Morgan Stanley, I’ve consulted to several corporate law departments, and the attitude has been similar across the board.

Yes, corporate law departments issue Outside Counsel Policies containing guidelines on attorney and disbursement rates, but the purpose is not to create an obstacle for the law firms to bill.  So let’s dispel this notion.

On the flip side, though most law firms are reasonable and fair with their billing practices, why would a law firm charge for air-conditioning which should be part of overhead; or charge $2.50/copy when it should be a pass-through cost?  When corporations are tightening T&E, is it smart for outside counsel to stay in a $700/night hotel?  Perhaps it’s those few law firms that have caused corporations to question their integrity; implement Outside Counsel Policies; and police invoices.

•  Despite the popular and well-recognized LEDES file formats, there remain >250 OTHER format “flavors.” Add to this particular disconnect the fact that some of the influential corporate clients impose their own proprietary electronic invoicing file format on their outside counsel firms.
• Law Firms and time and billing vendors are bamboozled—how do they possibly accommodate all the disparate electronic file formats currently in play?
• Corporations that issue Outside Counsel Policies frequently inject yet still more maverick billing factors into the toxic brew:  allowable attorney rates, various disbursement rates, and other traditional rules of engagement. For example, one company may allow $.15 per copy, while another allows only $.04.; some corporate clients may agree to pay for first year associates, while many others refuse; and so on. Tracking these “rules of engagement” is onerous and over the long haul, a costly time-suck—no time and billing system currently in use is able to track all these billing variables.
• Billing Clerks earn on average $40,000 annually, which in the Big Picture is but a drop in the bucket for most law firms. Hire more billing clerks and simply raise rates so clients can absorb the cost, right?

A tactic of RORA Client Systems’ R&D is yanking open the hood on some of the popular law firm time and billing systems to see what’s inside. As expected, we found that each comes bundled with different assortments of e-billing file formats from which a law firm may choose.  But more importantly, we realized that regardless of the corporate client, the underlying e-billing data requirements for all of them are basically the same!  Yes, it’s the same data in different order, using different delimiters. 

What’s needed to connect the dots?

Agreement on a few standard formats.

Sounds simple, right?  Though the law firms may still need to manually handle the Outside Counsel Policy requirements, this affirmative action alone could launch a powerful domino effect:

• Fewer human errors.
• Far less law firm overhead.
• Measurable financial savings passed onto clients.

I often hear corporate lawyers say something like this, “We spend so much money with our law firms. They’ll do whatever we say.” Perhaps this attitude has helped perpetuate the electronic billing mess we’re all left to mop up.

Stay tuned for Part 3 next week.

 Global corporations purchase or develop proprietary e-billing systems to better manage their legal spend “globally.” This action sets off a chain of events that exposes alarming weaknesses and inefficiencies in the current e-billing/invoicing systems:

• Company X buys a new e-billing system. Of course, the decision-makers are thinking: control costs, cut waste, and track time.  The company, not understanding the complexity of its request, informs its outside counsel firms that any invoices must be submitted electronically, so they can be handled more efficiently by this new system.

•  Outside counsel, Law Firm Y, scrambles to produce a solution that includes manually cobbling together what data is spit from their current time and billing software system to create an electronic file that kind of meets the new electronic invoice demands of its client.

 It’s the 21^st century, but would you know it from the condition of our electronic billing systems integrations?

 E-Billing Demands of 21^st Century Clients

 At the outset of 2009 RORA Client Systems sat down with one of the largest law firm time and billing application vendors. Here’s what we wondered about their current business:

“Your client law firms must be begging you for application feature enhancements so they can better produce electronic invoice files and answer their clients’ needs.”

Their answer:

“No, they’re not.”

 Wow.

 Spending chunks of man-hours manually editing data from various time and billing systems to try and meet the invoicing requirements of clients is hardly the clean, efficient technology one expects of 21^st century “global” law firms.

 The facts of the matter:

•  Global and domestic corporations are under constant and immense pressure to slash their legal spend

• Those without an e-billing system in place are scrambling to implement one and get it online

• Most of the law firm time and billing applications currently on the market cannot fully accommodate the countless, client specific, electronic invoice requirements to produce the actual electronic invoice files from the tracked time and billing data.  Law firms are responding thus:

a) manually entering invoices into their clients’ billing systems

b) manually editing inadequately constructed invoice files of their time and billing data so they match clients’ e-billing requirements

c) pushing back on clients’ requests claiming technical difficulties or VAT incompliance

d) a volatile combination of the above.

Stay tuned. In my next post I will begin peeling the layers to expose the roots on all this craziness.

What became instantly clear to me was no matter how sophisticated we love to believe our law firms, our infrastructures, and how dead-on our e-billing systems, the brass-tacks of the matter couldn’t be more scattered. But this wasn’t a new problem for the industry. It was already a 10-year old migraine with no pain-killer in sight.

10-Year Itch

Few attorneys really care what it takes to “make it work.” You want a product that gets your invoice from your desk to the desk of your client. No rehashing the document into some indecipherable cuneiform, no fiery re-entry, no crash landing. Just deliver-the-damn-thing-so-I-can-get-paid kind of system.

Somewhere between my Asia experience (a motherlode of real world obstacles) and my gold-dappled daydream of a seamless and powerful 21st century global e-billing system, I founded RORA Client Systems. Really, the vacuum of viable solutions was just too absurd. It was as if there were some Pandora’s Box of electronic loose ends that no one was interested in really digging into.

Until now these have been the two types of electronic solutions available to you:

•    Products and services that allow law firms to produce electronic invoice files
•    Products and services that make it possible for corporate clients to receive those electronic invoices.

The problem:

…fiery re-entries and unexpected crash landings.

Missing from this box marked “solutions” have been the essential component parts that “read” data directly from your time and billing systems and “translate” it to whatever invoicing format is in use by your clients.

This past week we demo-ed our new LEDESense Office Edition to one of the biggest and most respected legal technology companies and we’ve been overwhelmed with the response.

We know that law firms wrestle with invoice formatting issues, again and again. It’s that unsated migraine I mentioned earlier.

But finally a solution is available:

Now, our suite of electronic solutions:

•    An easy to use application that converts your Time and Billing data directly to any of the LEDES formats and whatever else format in use by clients
•    Web-based service that validates the various LEDES formats including LEDES XML2.0
•    Low-cost and built with solo practices in mind, but it can scale easily to accommodate the largest global law firms.

As a legal spend management consultant to Fortune 500 companies the very first tactic I insist of any client is development and deployment of an Outside Counsel Policy. In this document firms have the opportunity to set down guidelines that clearly define the firm-client relationship. This especially includes details about billing and disbursements (i.e., overtime meals are not allowed; no first class travel; will not pay for first year associates, etc.).

The “Wicked Problem”

When I read the engagement letter from my law firm I saw staring back at me a laundry list of policies not too unlike those I urge my clients to lay-out in their Outside Counsel Policies. To be utterly simplistic: Everyone’s saying the same thing to everyone else, but is anyone listening?

•    Policies
•    Rules
•    Billing specifications
•    Relationship spelling-out
•    You need this
•    We do this
•    We don’t do this
•    all packaged into a fairly rigid document format

….required lip-service that defines our business transactions.

Here’s the irony: Everyday I bear witness to the angry brew of electronic communication in its most dastardly form: billing, the bits and bytes that get you paid according to whatever AFA du jour you’ve architected into your rules of engagement.

• Corporate legal departments, in efforts to streamline and prune costs, implement electronic billing systems with rules based on–guess what (?)–the billing guidelines they’ve written into their Outside Counsel Policy.
• At the same time outside law firms are submitting invoices to these same corporate clients and–guess what (?)–many of their invoices are being rejected because they’ve failed to follow the guidelines. Result: wasted time, ineffective communication and collaboration, delayed money in pocket.

In rejection is opportunity.

Think about it—and I know the first human impulse is to reject the rejecter, gesture wildly and mutter epithets—but a rejection, particularly in the legal industry and in my niche, electronic billing, is a red flag that your system isn’t jiving with your client’s. This breakdown in communication (which, I might add started way back with the mutual exchange of policies and engagement letters) is not a rejection, but a sign that you need to make some changes—for the better.

The legal data pipes are not just percolating with invoicing and billing, which get you paid, but they are stuffed to the gills, as well, with the messy build-up of policy and rule exchange. If you can barely keep your nose above water to save yourself from drowning in your own email inbox, then how in the heck are you really taking in the information that you need to get business done and, at the end of the day, make money?

We are in up to our eyeballs in digital communication and when done right it’s a win-win for both sides. What are we doing right and is there a real solution to tracking our seemingly opposing rules of engagement?

Bottom line = time + money. Seems like an easy equation doesn’t it….