For a profession whose business model is still primarily the billable hour, the work process to feed the model could not be any more clunky. Or prone to produce errors, miscommunications, and write-offs. And it is ripe for effective AI disruption.
Think about the process. It depends at the outset on a professional stopping what they are doing and entering the time spent and (hopefully) a comprehensible description of what was done. When you are recording time on a 6-minute increment, the recording of the time spent could take more time than doing the work that’s being recorded.
So what happens: timekeepers procrastinate to the end of the day or the end of the week or in some cases even the end of the month (!) to try to reconstruct and record time. Or they hurry through it and write the barest minimum description. It’s no wonder the amount spent and the what and why of the work done are all too often absent, vague, or just wrong.
Add to this that the billing partner, the one responsible for getting the bills out, has to review and approve often vague and estimated time entries of other timekeepers they often know little about, potentially compounding the errors.
But there’s more: most corporate and insurance clients have billing guidelines and requirements that have to be met in order to be paid. What can and cannot be charged. How things must be characterized and described. These guidelines differ and sometimes differ significantly from one another. They are devilish to keep straight.
And once the bills are sent, many clients, especially insurance carriers, use third-party vendors to review the bills and look for entries that are inconsistent with what the guidelines require. When they find them, they write off that time.
It’s a mess. But it’s just the kind of work process that AI tools ought to be able to fix. And several vendors are indeed trying, as I have discussed before. One vendor, Elite, has recently focused on using AI to improve compliance with the multiple billing guidelines firms must satisfy.
Elite’s Validate Tool
Elite is a law firm financial management and business operations solutions provider. At its recent user conference, it announced a new tool that may go a long way in making sure billing guidelines are met and, indirectly, fewer write-offs by the third-party reviewers occur.
The tool reviews the various billing guidelines and then flags entries that appear to be noncompliant or in the risk zone of the relevant and applicable guidelines. In and of itself this will save hours for both the timekeepers and, perhaps more importantly, the billing partner. It will also reduce the risk of miscommunication and write-offs.
But more than this, the tool will also flag entries that suggest that what was done was what Elite labels as “doubtful necessity” and will surface subjective risks associated with the entries. Moreover, it learns as it goes, further improving future entries.
These are important benefits. I know from experience. In the heat of trying to meet a deadline or in the midst of intense work, it’s easy to quickly record time and offer a description that says very little or next to nothing about why the work was done. It would certainly be comforting to have a tool that would tap you on the shoulder and say you need to say this better.
Of course, as with most vendor tools, I can’t vouch for how well this tool will do these things. But if it does these things well, it will do three critical things to improve the billing process.
The most obvious benefit is improved compliance with billing guidelines and reduced write-offs. But it will do two other things that, while more subtle, could nevertheless be substantial.
Improved Client Communications
Lawyers and legal professionals often forget that bills are client communications. Clients look at bills not only to assess how much time is being spent but why the work was done and its importance. If an entry only reads 4.0 hours for legal research, that tells the client nothing about what the research was for and, more importantly why it’s being done.
Certainly, bills are no substitute for ongoing discussions with clients about strategy and work that’s needed. But vague and ambiguous entries sow seeds of doubt about what the lawyer is doing. It breeds distrust. It’s not only a write down issue, it’s much more.
So having a tool like Validate that can help flag entries that don’t meet billing guidelines because they are vague or where the necessity is not clear could help improve the overall relationship.
Combatting Third Party Write-Offs
Validate may also provide firms with ammunition to better contest inappropriate write downs. Third-party reviewers are hired to find discrepancies with guidelines and make cuts to legal bills. That’s their job and, as a result, they can be quite aggressive. So often there are questionable calls made.
Yet, it’s hard to question and appeal some of these because it takes more time than it’s worth. You tender a $5,000 bill and the provider writes off $500. Your time would be better spent on billable matters that advance the client’s interest than spending the non-billable time fighting the decision.
In addition, all too often the actual client doesn’t want to hear any objection to the write-off since proving the reviewer wrong is difficult. The issue often falls in a gray area and the law firm has little evidence to support its arguments. Add to this the fact that historically the reviewer has, more often than not, been right when it concluded that an entry did not meet the guidelines. So there is a presumption of accuracy.
But with a validation tool like Validate, the matrix changes. Law firms have something tangible to support their claim that an entry meets the guidelines. And that the write-off is wrong. Data and analysis versus whining about the injustice of it all. It’s akin to reviewing the reviewer and keeping them honest.
Having that kind of evidence at your fingertips reduces the time needed for an appeal, making it worthwhile. And by improving the entries and guideline compliance, it gives the law firm greater credibility when it does question a write-off. It flips the switch.
Improved client confidence and fewer write-offs. A win-win.
The Reality
But even with these improvements, there are still realities and risks. As with any AI tool, the possibility for overreliance is present. Blind reliance on what a tool like Validate does without human review can lead to entries that don’t match what was done, not because there is anything wrong with the tool but because it can’t know all a human does about the client and the relationship. Bills and billing entries often require value judgment and client understanding that an AI tool does not have.
And let’s face facts, when a client continually complains about a bill and writes off substantial time, there are really only a few options. You can fire the client and withdraw, assuming, if it’s a litigation matter, the court grants permission. You can conclude the matter and decide never to represent the client again, losing money in the process. Or you can sue the client which could lead to counterclaims, unwanted disruption, and publicity. The options aren’t pretty. That’s what gives the client and reviewer leverage.
But used correctly, and assuming Validate does what it says it does, it will reduce risk and make for a smoother billing process. It provides you with more leverage in the relationship. By doing so, hopefully you never get to the point of having to make the choice of withdrawing from the matter (assuming you can) or filing an ugly lawsuit.
And it will make that dreaded daily ritual of recording your time a little less painful.
Stephen Embry is a lawyer, speaker, blogger, and writer. He publishes TechLaw Crossroads, a blog devoted to the examination of the tension between technology, the law, and the practice of law.
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