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The Basics of Billing Guidelines

This post was updated on May 17, 2018

Corporate legal departments are shifting their thinking. No longer are law firms “just vendors”, but strategic partners who provide their expertise to help legal departments meet budgetary needs and organizational goals, while helping them achieve greater efficiency. With this in mind, we wanted to revisit one of our previous posts on billing guidelines.

Legal billing guidelines, also referred to as outside counsel guidelines, are not only one of the most effective ways to control legal spend, they’re the underlying foundation for creating a positive and meaningful partnership between legal departments and law firms.

Setting Clear Expectations Based on Current Goals

The foundation of any great relationship with your outside counsel is clear expectations. Without an understanding of your goals and expectations, your law firms will likely miss the mark when they begin billing. Clear, actionable, and easy-to-understand billing guidelines are the key to getting your law firms up and running at maximum efficiency.

When creating billing guidelines to better onboard outside counsel, legal teams can be intimidated by the detail needed in these documents. Contrary to popular belief, billing guidelines don’t need to be long, complex, and riddled with legal terms. Many times, you can start with your main billing requirements, adding and improving detail as your needs change, your team grows, and your expectations become more specific.

To help you get started with the basics, we've put together a comprehensive guide on legal billing guidelines best practices that is great for legal departments tackling billing guidelines for the first time, or those looking to evaluate theirs to make sure they cover the key areas required for success.

Building the Foundation

You want to convey to your law firms why billing guidelines are important. Your guidelines are not a means to set unachievable standards for your law firms, but to create a baseline for expectations that helps ensure everyone is on the same page.

In working with our clients and legal departments of all sizes, we’ve found 5 key elements common in billing guidelines:

  1. Introduction - Purpose of the document and expectations of the relationship
  2. Staffing - Who hires vendors and the appropriate level of staffing for certain projects
  3. Billing - How invoices must be submitted by your law firms
  4. Timing - How you will pay law firms for work completed
  5. Signature Page - Insurance that your law firms have read your billing guidelines

Leveraging e-Billing Solutions

When leveraging an e-Billing or legal spend and matter management solution, it's essential that you highlight the way in which you want your firms to submit invoices for work. Law firms are used to billing into various systems, so don't hold back when detailing the specificity that you desire.

If you use a system like SimpleLegal, you'd highlight the process for submitting invoices via CounselGO and the value that offers the law firms. Outline the process for getting started with a new billing system, the timeline for submitting invoices, and provide any key contacts for billing related inquiries.

In addition to the general billing practices, you may want to highlight some specific expenses or fees and how they must be billed. Include a section on prohibited fees to outline what you aren't willing to pay for. The more detail you provide here, the easier the billing process will be later.

Some things you may like to highlight here:

  • Travel expenses - do you pay for first class travel?
  • Line item detail and block billing
  • Matter specific billing guidelines - do you want your immigration matters collected into one invoice?

Aligning with Finance & Accounting

Legal teams must align closely with their finance and accounting teams. When all parties are on the same page and have visibility into legal spend there is reduced risk for billing errors and time is often saved due to streamlined and efficient operational processes.

Specifically, if you’re collecting monthly unbilled estimates from your law firms, it's important that you highlight the process for which you need these estimates submitted. If you're using SimpleLegal, we'll email and collect these from your law firms automatically (learn more about our Automated Accruals).

Use your billing guidelines as a way to outline this process so that the billing team at your law firms can coordinate internally to ensure you get the numbers you need on time. Some things you may like to highlight here:

  • Accruals - How should they be calculated and when should they be submitted?
  • Budgeting - Do you want your law firms submitting budgets and forecasts?

Ultimate Goal of Billing Guidelines

The goal isn't to overwhelm your law firms with terms that paralyze their ability to do good work. The key here is to set clear expectations. Billing guidelines don't need to be complex. View your guidelines as a living document that you are constantly building and reiterating as your legal team grows and changes.

If you're looking for a more detailed breakdown of billing guidelines and just what detail you should be including, download our white paper Legal Billing Guideline Best Practices which covers the key segments of billing guidelines and provides strategies for effectively communicating and enforcing them.