Many law firms read with at least some dread the letter from an important client informing them that future billings will not be paid unless submitted electronically. Questions about the new technology are usually not far behind: "How much effort will it take to get this up and running?" "Will it take more time for us to submit bills and get paid?" "Is this going to lead to problems with our client?"

In walking hundreds of different law firms through implementing electronic billing, we have found that these initial fears are common, but unfounded. Implementation usually occurs over the phone or with currently available time and billing upgrades, less time is taken to submit bills electronically and they are often paid faster, and the client relationship is strengthened due to increased client use of data regarding the services that the firm is providing.

A Leap Forward
For those law firms that have not yet begun electronic billing, it is important to understand that it is not just the equivalent of a paper bill sent via e-mail. Electronic billing vendors, many of whom are application service providers, take the electronic output from law firm time and billing software, and provide that data electronically to the client, along with software that makes the data come alive for bill review and management analysis.

The impact upon client bill review is striking. Instead of receiving a large pile of paper bills each month, usually in many inconsistent formats, the client can choose how to look at its bills (e.g., by date, by timekeeper, by activity, etc.). The client can also have the software flag potential departures from billing guidelines, or highlight specific activities that the client wants to review regularly. If problems are found, electronic comments can be made, and modified bills generated to accompany payment to the firm. Later, the historic billing data can help to predict costs for other cases, create more realistic budgets, and compare legal team performance across different cases. As a result, it is likely that electronic billing will be a part of the future of most law firms who represent sophisticated business clients.

Grounding Concerns in Reality
A healthy dose of reality goes a long way to dealing with concerns, such as those voiced above, when a law firm is asked to implement electronic billing. Technology standards for legal electronic billing have eased much of the implementation burden. Of the more than 1,000 law firms we have worked with, more than 95 percent have time and billing packages from vendors which can provide output in the Legal Electronic Data Exchange Standard ("LEDES") format, which is the format required by most electronic billing vendors. Sometimes this requires a software upgrade available from the time and billing vendor, which is generally a good investment as more clients require electronic billing. If you are looking at time and billing packages, be sure to ask whether they generate LEDES output, so that your firm can provide electronic billing to clients in the future.

Once you're set up, electronic bills can be submitted with just a few mouse clicks. This generally takes less time than generating and processing a paper bill for mailing, and eliminates the additional expense of postage, envelopes, etc.

Most electronic billing clients require the use of Uniform Task-Based Management System ("UTBMS") coding associated with time entries. Many corporate clients had previously developed their own coding systems, which led to confusion for law firms representing clients with different systems. As a result, in 1995 the ABA and ACCA adopted UTBMS, which defines uniform codes for litigation, business projects, counseling, and bankruptcy. If your firm is not using this system when creating time entries, some education of timekeepers may be necessary so that narratives correspond to the UTBMS categories. UTBMS coding is normally as easy as clicking on a dropdown menu in your time and billing software. Appropriate coding is important to creating accurate management reports for electronic billing clients.

The streamlined electronic bill review process often leads to faster payments by clients to their law firms. Instead of hiring third party auditing services, which engage in lengthy bill review and questioning of the law firm, clients can use electronic billing to quickly review bills themselves. Some clients have agreed to guarantee fast payment, in exchange for a percentage discount. In addition, electronic billing does not involve the serious ethical concerns which may arise when third party auditors review privileged billing entries, leading to a potential waiver or unethical breach of client confidences. With electronic billing, only the client reviews the data, making the client better informed and better able to manage its legal work.

Ensuring a Smooth Transition
What steps can you take to ease the transition to electronic billing? While different electronic billing vendors may have unique requirements, the following general tips will help make the process easier with most vendors:

• Select a point person who will be responsible for seeing that the required steps for implementation are accomplished, and all questions answered.
  
• Carefully review and comply with the basic hardware and software specifications of the vendor.
  
• Contact your time and billing vendor for advice on what, if any, upgrade may be necessary to generate the required electronic output.
  
• If your time and billing vendor does not generate the required output, find out what software tools the electronic billing vendor has to assist you in generating such output from your existing software. Such tools may also be used instead of an upgrade to your time and billing system, but generally involve more processing time.
  
• Confirm whether the client requires UTBMS or other coding of time entries.
  
• Run at least two types of tests to make sure that the system is working: (1) a test of the connection, generally done with a vendor-provided dummy bill sent to the electronic billing vendor; and (2) a test of the output, generally by generating a sample electronic bill, and sending a copy by e-mail, to the electronic billing vendor who will make sure that the electronic output is accurate.

The electronic billing vendor should have experienced support staff who can walk you through each of the above steps over the phone. Since vendors are often paid according to the volume of invoices transmitted, their incentive is to get you up and running as quickly as possible. If the electronic billing vendor does not have these capabilities, you and your client should consider other vendors which are able to implement law firm connections efficiently.

Making the Most of It
Once you're submitting electronic invoices, you might as well take full advantage of this new technology. Here are some suggestions of ways to get the most out of it:

• Learn from the audit flags and bill modifications. If you analyze which billing entries have been flagged for client review, or have been reduced by the client, you can minimize similar problems in future bills.
  
• Use the new system to communicate with the client. Electronic billing software often includes functionality to exchange case-related information in addition to billing data, such as budgets, comments on bills, status reports, case outcomes, etc. Use of these capabilities will save time, and keep the client current on case developments.
  
• Ensure fast payment by offering a percentage discount to the client, based upon the streamlined bill review process.
  
• Find out what electronic reports may be available regarding legal team performance, including fees, costs, and outcomes for certain types of cases, to identify potential strengths and weaknesses in your legal teams.
  
• Use the billing data to design alternative fee structures that reward efficiency, e.g. a sharing of any discovery savings compared with discovery costs in similar prior cases.
  
• Create marketing opportunities by showing the firm's ability to implement this useful technology for its clients. Be proactive in suggesting electronic billing to business clients who may not yet have considered it.

About our author...

Until joining ELF Technologies, Inc. last year, Rob Thomas was a practicing attorney for more than twenty years, managing national legal teams involved in complex litigation and business transactions. He is currently Vice President, Strategic Development and Associate General Counsel for ELF, whose Internet-based services, including electronic billing, are offered at www.serengetiUS.com. Comments or questions regarding this article may be addressed to the author at: rob.thomas@elftech.com.