How to optimize your approach to e-billing and legal spend management

When it comes to managing outsourced legal work and the associated spend and invoices, in-house legal teams take varying approaches. Inevitably, some are more efficient and deliver better outcomes than others.

We’re here to unpack some of the traditional methods of managing e-billing and spend and compare them with an arguably more efficient approach. Read on to discover ways to optimize your approach to e-billing and legal spend management.

Traditional approaches to e-billing and legal spend management

To date, most legal teams have managed their outsourced work, e-billing and spend in one of two ways.

The first being more manual, relying largely on spreadsheets and emails to manage to and fro with law firms – whether that’s keeping on top of request for proposals (RFPs), a matter as it progresses, or invoices as they come through one by one.

The second relies on a dedicated e-billing system. These dedicated systems are commonly referred to as ‘point solutions’ as they only address a single need or solution. Many of these point solutions have been available since the 1990s; others launched more recently. Regardless, they all share a common characteristic: features and functionality built expressly and almost exclusively to handle e-billing and review invoices from outside firms.

Until now there has been little middle ground, so before we address a new way of managing legal spend and e-billing, we’ll address the pros and cons of the traditional approaches.

Pros and cons of traditional approaches

Emails and spreadsheets

Emails and spreadsheets have benefits, of course! The whole business uses them, they’re cheaper than a dedicated system, and you don’t have to implement a new solution.

However, there are hidden costs to the noble email and spreadsheet.

For starters, only 48 percent of those not using a dedicated and purpose-built legal technology platform say their software meets their needs (2023 In-house Legal Technology Report) – proving they leave more to be desired. So, there’s every likelihood you’ll need additional software anyway.

Then there’s the time wasted manually inputting invoice data into a spreadsheet or scrolling through your inbox to find that email from the firm. The 2023 In-house Legal Technology Report found that 28 percent of all respondents spend three hours or more per day searching through emails and/or other systems to determine contract, matter history or advice from outside counsel. That’s a lot of legal waste.

Not only does this increase the time spent by legal teams on low-value tasks, but it also greatly increases the potential for risk as invoices and advice can get scattered or misplaced. Additionally, if someone leaves or goes on vacation it can be very hard to pick up their outsourced work.

One final note on email and spreadsheet – although they might seem like the more cost-effective option, when you consider things like repeat advice being sought from outside counsel because there’s no record of historical advice, or even the dollar value of time wasted, they have the potential to be quite costly in their own right. To put this into perspective: considering the average global annual salary of an in-house legal professional ranges from USD$176,500 to $554,901 (2022 In-House Counsel Compensation Survey, Major, Lindsey & Africa), three hours per day of wasted time translates into at least $66,000 worth of time per year per team member. If each member of a five-person team wastes the same three hours per day on these activities, that costs over $385,000 per year.

Dedicated e-billing systems

Moving on to dedicated e-billing systems, these can be attractive as they contain a large number of features, especially those suited to large teams, such as line item invoice review and billing guideline management. Or they’re suited to teams with advanced configuration needs. For some, these ‘bells and whistles’ can have high value.

However, it is important to note that with many of these systems, there is a risk that not all of these features are required, or they introduce cost and overhead that can decrease return on investment and even slow down adoption. According to the 2023 In-house Legal Technology Report, only 18 percent of in-house legal professionals say they use the full functionality of their e-billing system. They also communicated concerns about lack of integration, lack of adoption, and an overall greater cost to the business. This indicates that either it’s too difficult to get the value they thought they would get out of their e-billing system, or they didn’t need all the bells and whistles of a narrow and deep piece of technology in the first place.

Additionally, dedicated e-billing systems have been isolated from wider in-house legal workflows such as matter and contract management. According to the 2023 ACC Law Department Management Benchmarking Report, more than half a legal team’s work is staying in-house, and many teams have imperatives to bring more work in-house, emphasizing the need for an approach to e-billing and legal spend management that seamlessly connects with the bulk of a team’s day-to-day work – that is contract and internal matter and project management in conjunction with e-billing and spend management.

The 2022 Gartner Hype Cycle Report also identifies the issue:

“… many legal teams have well-established methods for managing external work (i.e., tasks handled by law firms or ALSPs); however, those methods rarely extend to internal work (i.e., work handled by in-house lawyers and nonlawyer professionals), with most legal departments lacking systematic intake and triage.”

It goes on to state that “current legal workloads are unmanageable, and lawyers are exhausted,” and suggests technology that supports internal workflow will address these problems by allowing legal teams to control what work they do, and how they do it. Ideally, this foundational solution to managing internal work is deeply connected to the solutions your team uses for e-billing.

However, if you start using different solutions to manage various parts of the in-house legal workflow, you can create huge inefficiencies. For instance, 61 percent of legal teams spend over one hour per day jumping between systems to gain a complete view of work and determine priorities (2023 In-house Legal Technology Report). As such, consolidating software and workflows starts to look like a more efficient and compelling option.

By unpacking these traditional approaches, it becomes clear they have shortfalls that cost legal functions time and money, as well as adversely impacting their ability to deliver a strategic service to the business.

Optimizing your approach to e-billing and legal spend management

Having exposed the traditional methods to e-billing and legal spend management as offering an all-or-nothing approach, it becomes clear that there’s a need for some middle ground.

A solution that provides more efficiency and risk control than emails and spreadsheet, but that isn’t too expensive or niche so as not to deliver enough value given the investment.

It’s also clear that there’s a need for a more consolidated approach where all in-house legal workflows are taken into account, where e-billing and law firms can be managed alongside internal work like intake and triage, matters and contracts.

A modern in-house legal team needs a streamlined e-billing and spend management solution. It needs technology that is simple, and efficient, and provides them with everything at their fingertips in one easy-to-use system, enabling the legal function to get to value quickly.

LawVu’s legal workspace provides just that.

Its legal spend management capabilities provide an e-billing and spend management solution designed specifically for in-house legal teams with features such as:

• electronic invoice submissions, reviews, and approvals to avoid losing valuable time handling and paying invoices
• spend management reporting and insights to understand outside counsel performance, manage budget and forecast spend, report to the business and inform your decision making about inside and external work
• RFP and scope of work management for more efficient selection of the right firm and the ability to set expectations and avoid spend surprises from the outset
• a suite of collaborative tools such as document sharing, in-app messaging, task management, and status tracking so you can effectively collaborate with both external and internal resources
• flexible ways to work with your outside counsel so you can easily centralize data in your shared source of truth without introducing huge workflow changes and admin overhead

On top of this, the LawVu legal workspace also provides robust matter and contract management capabilities, intake and consolidated data and reporting all inside the same easy-to-use system. Everything you need, when you need it – without bouncing between systems.

With the necessary features to manage external work as well as internal work, a legal workspace gives you more control and visibility, as well as ultimate time and cost savings.

Have we piqued your interest?

If you wish to learn more about how to optimize your engagement with outside counsel, take control of unruly legal spend, or consolidate your tech stack, LawVu’s legal workspace might be the tonic you need. You can learn more about LawVu’s spend management capabilities here, or learn more about working with firms, invoicing and spend as part of our dedicated course within the Legal Tech Fundamentals Certification. It’s free and takes only takes a few minutes to complete!