Budget tracking has become a core part of many in-housers’ roles, and delegates at our recent Portugal summit considered the hi-tech approach
With price pressures hitting in-house counsel as much as private practitioners, many are looking for ways to control their budgets. The topic was one of several debated at The Lawyer’s recent General Counsel Strategy Summit, held at the end of April at the Penha Longa Hotel in Portugal.
At tables hosted by LSG global senior business analyst Bary Dedge and client relations manager Charlie Morgan general counsel delegates discussed how they were using technology as a tool for budget control.
Opinions were divided over whether there was any need for an electronic tool to automate areas such as invoice reviews. One in-houser said they were very interested in the idea of a “transparent e-billing management tool” for their Asia Pacific and Middle East firms, while others said they did not see a need for a tool that would replace what their in-house lawyers are doing, such as invoice validations and budgets.
“We manage all budgeting and relationships with external lawyers through a spreadsheet,” said one delegate. “Our volume [of work] isn’t enough for a system.”
Of course, the argument is that technology can the save time spent on areas such as invoice review by automating the process so lawyers can focus on higher value work. But can smaller companies justify pumping money into new software for their lawyers?
While delegates from companies with larger annual legal spends show interest in new technology, for others the idea of a software system that validates fee-earner rates or automates areas such as expenses is not an option, given the backdrop of cost-cutting. This is why LSG presents its flexible ‘pay as you go’ model as a possible solution.
“It would be interesting to me on a one-off big project basis, but we have to keep an eye on external legal costs so this is maybe not feasible, given most people’s budgets,” commented a delegate who manages a small legal team.
Their view echoed those of other delegates who run small legal teams.
“We’re just not the size that can justify big-ticket investment in a product we don’t need,” said one in-houser, noting that small teams are less likely than those from bigger companies to be able to afford or need this type of software.
Benefits for larger players
Nevertheless, the benefits of new technology systems are there for those with a high volume of external work.
A number of delegates supported the need for an e-billing platform as a way to better understand how money is being spent on outside counsel. General counsel from large companies such as Ladbrokes, for example, have famously turned to e-billing as a way to improve their efficiency.
“It’s almost worth paying someone just to police external legal spend,” said one delegate, supporting the idea of LSG’s Legal Bill Review (LBR) service, which aims to provide more clarity and accuracy with regard to invoices. “Then you can expose firms trying to pad out time.”
A ‘vital’ role
According to LSG, the LBR plays a “vital role in litigation spend management” through reviewing and analysing legal vendor invoices. The service may be used to review submitted invoices for ongoing litigation or for a closed case or matter”.
Morgan said: “Our bill review services not only help reduce the burden of meticulously reviewing ‘line items’ of the legal invoice, but also help the client to take informed business decisions concerning litigation spend and their suppliers.”
Meanwhile, other in-housers were primarily interested in a solution to track spend outside the UK, which is where around 85 per cent of external legal spend resides for at least one of the delegates.
Unsurprisingly, technology is crucial to such delegates as they need to communicate daily with firms and clients in regions where they are not on the ground.
While GCs with smaller legal teams take the attitude that ‘if it ain’t broke, don’t fix it’, business process outsourcing is clearly an increasingly important solution for global companies with big budgets and a high volume of low-value work.
The GC’s role in a changing world
The key themes to emerge across the two days of The Lawyer’s General Counsel Strategy Summit were the effect of the economic crisis on businesses and, by extension their legal teams, and how to manage a variety of risks in this environment.
The economic picture was painted by keynote speakers, business consultant Stephen Archer and KPMG economics and regulation chairman Bill Robinson. Archer covered emerging markets on day one, positing that while investors need to show caution due to inherent risks in these markets, such as corruption, the fact that the eurozone is “structurally damaged” makes opportunities elsewhere more appealing.
Robinson picked up this theme on day two, looking at the reasons for the eurozone crisis, such as the discrepancy between interest rates and inflation. He concluded that the EU and the eurozone are set for perhaps 10 more years of slow growth.
Other plenary and streamed sessions looked at the ways in-housers can manage their businesses, with topics such as data protection, litigation and competition law all on the agenda.
Brick Court Chambers’ Daniel Jowell QC spoke about the advantages – and disadvantages – of litigation and arbitration, while Monckton Chambers’ Tim Ward QC suggested competition law can be used as a tool by businesses as well as a threat by regulators.
Delegates also broke out into eight sessions for more intimate discussions on key topics. As well as LSG’s budget control session, topics included managing efficiency, hosted by Thomson Reuters Serengeti, the Bribery Act, managing joint ventures, and crisis and reputation management.
Sponsor’s comment: technology in the spotlight
LSG would like to thank all the delegates that attended and contributed to our round table sessions. The sessions generated a lively discussion on the merits of LSG’s technology and supporting services to assist general counsel, heads of legal and CFOs.
Typical questions were: Why change the ‘status quo’ of paper billing? What are the benefits of Advocator System®? Are suppliers & law firms familiar with electronic billing systems? How will Advocator System® impact my team? How does budget tracking help me? Can I receive reports automatically every month to fit in with my schedule? What is LSG’s philosophy on bill review and compliance? Can we use LSG’s Legal Bill Review service for one-off cases/matters?
We do not have sufficient space to answer all these questions, but we can address the following in brief.
Disconnect between paper billing and electronic payment processing
LSG’s view is that the vast majority of buyers of legal and other services use paper based invoice submission, review, approval and payment processing systems, but the final step in accounts payable is typically electronic.
This leaves a large disconnect between service providers (SPs) who are aiming to generate fast payment and their client’s ability to process invoices quickly via internal business processes and management authorisation.
The LEDES billing formats, used by LSG’s Advocator System®, bridge this gap as they enable law firms to submit electronic invoices which are validated by the technology, and approved by the in-house lawyer or executive. Depending on the particular LEDES format used, invoices can be submitted in any currency from anywhere in the world and once approved, they are sent onto accounts payable or a third party for payment processing.
What is the cost, impact on staff and are suppliers familiar with electronic billing?
LSG has implemented a competitive cost structure which can be customised based on each unique type of customer relationship and/or implementation model. As to the impact on staff, our experience is that in-house executives soon value the ease by which they can review, approve or reject electronic invoices.
Removal of paper from the billing process is also helping organisations to meet their corporate social responsibility (CSR) policy commitments.
Most law firms will use time management and billing system that produce LEDES formatted invoices and so this is not a hurdle. For smaller suppliers, LSG’s Advocator System® provides its own invoice format and/or a ‘Manual Invoice Creation’ tool for easy invoice ‘upload’.
What should organisations be doing?
Organisations should be thinking not only how their processes can be improved by using fast and efficient electronic solutions, but also how these solutions can be used to (i) ensure compliance against the Service Level Agreement(s) and billing guideline(s); (ii) drive decision making for panel management; and (iii) enhance internal and external performance.
Consider the power of a single platform to manage external legal and non-legal suppliers and a more ‘project management’ oriented approach towards procurement and case/matter management. Optimal performance is the real goal here.
If you would like to find out more, please contact Charlie Morgan, client relations manager of LSG, based in London at firstname.lastname@example.org or 020 7488 3500. Please also see www.lsg.com for further information