Saving Money Through Smarter Legal Invoice Processes
Effective invoice management not only ensures that organizations pay for the services they need but also enables them to reinvest savings into initiatives that drive further growth.
IP Watchdog recently hosted legal leaders from Cardinal Health, UBS, and UnitedLex for an in-depth discussion on the value of implementing a disciplined workflow around legal invoice review. The discussion kicked off with a success story from Cardinal Health, followed by lessons learned, challenges, and benefits of a smarter approach to legal invoice processes.
Challenge: The Fortune 500 healthcare services company, was a defendant in multi-district, nationwide individual and class action litigation. In-house counsel had neither the time nor the appetite to thoroughly review outside counsel’s monthly invoices.
Solution: Their legal operations team implemented better invoice review practices to update its outside counsel billing guidelines. The revised guidelines were distributed to all outside law firms as part of their continued engagement.
Legal Invoice Review
Legal departments can no longer fly under the radar without managing budget or spend, citing the capricious and unpredictable nature of legal work. Whether litigation, outside counsel spend or other investments, they must—like other business units---track, show, and communicate return on their investments.
Anything legal departments can do to squeeze extra money from programs instead of reducing headcount is a win for everyone. A well-crafted invoice review program can save money, while addressing some the biggest budgetary and spend reporting challenges.
A disciplined and programmatic approach to legal invoice review helps legal teams:
Why are we talking about invoice review?
This conversation is about much more than billing hygiene and compliance. It's about holistic spend management strategy; it's about improving partnerships with law firms and vendors; it’s about telling your story to leadership and gaining general counsel buy-in. It's about how to build a closer relationship with law firms, because at the end of the day, they should act as an extension of your legal department. Putting a strategic process in place delivers a level of transparency that ensures you pay for what you ask of your law firms.
Identifying opportunities by establishing a baseline
The first step in developing a program is to run a baseline analysis that uncovers gaps and opportunities for improvement. Investigate as much relevant data to build a roadmap and understand and identify the issues you’re looking to address through an invoice review program. This gives greater purpose, direction, guidance, and guardrails to the program as you move forward.
Resource allocation
While the program can generate significant savings, it’s not always about the bottom dollar, but how internal teams can reallocate time from invoice review to doing higher value work for the business.
Efficiency through specialization and partnership
There are some issues that only the in-house team can identify, such as evaluating whether the substance of the work was delivered. That’s where specialization helps – the invoice review experts can take the bulk of the work from the in-house team’s plate, flagging those instances that need internal review so lawyers can focus on the substantive legal issues.
Establishing guidelines
Sit down as a team and think about what matters to the in-house legal team, because there could be disagreements about what triggers the review team to flag an invoice. Hammer out the details, get them in writing, and move forward.
Some questions to consider when putting pen to paper for billing guidelines:
Furthering strategic relationships
There will be savings to the bottom line. After establishing its invoice review program, UBS has already seen two to three percent savings. But in addition to just the savings on the invoices, the change of behavior from strategic law firm partners has been just as significant, including cost avoidance.
To learn more about streamlining your invoice management processes, read the source material HERE.