The Ins and Outs of Legal Bill Review (LBR)
Should in-house counsel monitor line items and oversee your enterprise’s legal bill review — or should you be outsourcing?
Legal invoices: can’t live with them, can’t make money without them. When law firms bill for their time and expenses, it’s critical to stay on top of what’s being paid (and when) as you work to control your outside legal spend and ensure compliance. Incorrect line items, vague descriptions, guideline violations, or block billing must all be flagged and responded to accordingly — but should this all fall on busy in-house reviewers?
With today’s current demand for speed and efficiency, an in-house department’s time could be better used elsewhere, which is why many forward-thinking teams are exploring outsourced legal bill review. Let’s dive into the ins and outs of the invoice review process, including how to evaluate if outsourcing is the right move for your company.
A Quick Recap: What is Legal Bill Review, and Who Oversees it?
Reviewing legal invoices line-by-line and highlighting any guideline violations or non-compliant activity — aka legal bill review — traditionally sits with in-house legal teams or dedicated staff. Legal bill review demands transparency; with it, billing guidelines and engagement terms are followed, and invoice adjustments are implemented as needed.
Beyond capturing and helping to reduce legal spend, legal invoice review (when done correctly) can help drive more data-driven decisions, meet deadlines, and ensure that a law firm complies with policies, guidelines, and ethical standards. But it can also be a time-consuming process — and when done manually, legal invoice review becomes a budget and compliance nightmare.
Should You Outsource Your Legal Bill Review?
Legal bill review is often delegated to attorneys and legal support staff within the corporate legal department because they have an innate understanding of the company’s legal objectives, insights into each case, and a relationship with outside counsel that should be able to tell them whether they are being billed timely and accurately. But is that always the case? Here are five questions to ask when evaluating whether your team should make the business case for outsourcing legal bill review:
Is your in-house legal staff spread too thin or feeling burnt out?
According to a survey by Juro and Wilson Sonsini, 67% of lawyers feel buried in low-value work like manually digging through templates, answering basic inquiries, and reviewing legal invoices. Offloading the invoice review process not only drives faster approvals and payments, but also simultaneously allows more time for in-house staff to focus on important, high-value work. This also lays the groundwork for employees to feel more engaged and fulfilled, improving overall well-being while helping you reduce turnover.
Is there potential for a conflict of interest in your firm relationships?
Objectivity is essential in firm relationship management. If your in-house review team has a close partnership with your law firms — or even come from outside firms themselves — there could be hesitation to enforce billing guidelines or have the hard spend conversations, leading to additional incurred costs or even non-compliance. A trusted legal invoice partner, on the other hand, offers an objective management of billing guidelines, dedicated experts for timely responses to outside counsel inquiries, and a fast, effective appeals process to resolve concerns in a timely, consistent manner. This ensures that the relationship between corporate legal and outside counsel remains intact while all billing agreements are upheld.
Is headcount a challenge?
Many corporate legal departments solve the administrative burden on their in-house team by hiring additional staff members specifically for legal bill review. Unfortunately, it’s nearly impossible to stay ahead of the constant workload flux — how do you hire the “right” amount of people when one month is slow, and the next is overwhelming? Also, consider the significant amount of training involved for an internal associate, which could add up if turnover ever increases (and competent legal bill reviewers are in high demand nowadays!). To avoid absorbing overhead costs when you’re overstaffed or underperformance when the workload ramps up, an outsourced team offers a convenient and consistent way to ensure you’re using the right amount of resources — every time.
Are you gathering the right analytics?
Even if your in-house team is keeping up with your legal invoices, are they gathering insights that could drive better decision-making and consistency moving forward? For example, can you analyze and categorize your spend by geography, matter type, timekeeper, etc., to identify performance trends and allocate spend to your best-performing firms? Some of the best legal bill review platforms offer tech-driven data to back their team’s analysis of attorney fees and expenses, helping you optimize your spend and forecasting.
AI + Third-Party Human Expertise: The Key to Optimized Legal Invoice Review
If outsourcing legal bill review sounds like it might be the right move for your team, it’s worth finding an integrated platform that combines AI-powered invoice review with human third-party review. This not only decreases the burden of invoice review, but also offers more accurate, actionable, and reliable spend data for you to leverage. The approach is two-fold:
- Deep AI / ML analytics automatically identifies non-compliant items, errors, block billing, and more. Machine learning can help your team drive over 70% improved invoice data accuracy.
- Legal review experts come in with a hand-curated approach to capture even nuanced, non-compliant invoice line items, giving you the full picture of your legal spend with context.
It’s a win-win: You improve in-house team efficiency and increase payment predictability for outside counsel.
