Billing Transparency: What Legal Procurement Really Wants from its Law Firms, Part 1

Topics: Billing & Pricing, Client Relations, Corporate Legal, Data Analytics, Law Firm Profitability, Law Firms, Midsize Law Firms Blog Posts

UK Survey

Recently, when I told a legal procurement professional that my next blog was going to be on Billing Transparency he said: “Whoa! You really don’t hold anything back do you?”

I don’t mean to go for the jugular, but I find that in my consulting business many law firms underestimate the importance of submitting invoices that are clearly understood by their clients and that represent “value billing”.

In its recently released Annual Law Department Survey (available for purchase), HBR Consulting President Nick Quil said:

“Leading law firms are holistically looking at the entire lifecycle of a client relationship — from the outside counsel selection process all the way through the billing process — and are leveraging client perspectives to drive change within their organizations. Areas that may have traditionally been viewed as ‘back-office’ support functions, such as IT and procurement and billing, are becoming strategic points of differentiation for many law firms.”

I have noticed that more corporations are asking for models that reflect transparency of the law firm’s billing process as part of their Request for Proposal (RFP) selection criteria.


I wrote previously that it’s important for law firms to “make sure your invoices add up to value for the fees requested. The bills must be easy to understand. Needless to say, accuracy is critical.”


And in a blog post earlier this year by Thomson Reuters’ Bill Josten, he highlights five of BTI Consulting Group’s communication practices that can help a law firm shift from being one whose bills are always questioned, to one whose invoices represent true value to the client:

  1.       Share a detailed strategy for the matter prior to commencing work and then provide regular progress updates;
  2.       Provide a budget before the work begins — and before the client asks — and stick to it or update the client of the need for possible changes;
  3.       Outline potential problems and how they could impact the scope, budget and timing of the matter, and notify the clients if and when these events occur; and
  4.       Explain unusual or unexpected items in the invoice.

In a previous blog post, I wrote that it’s important for law firms to “make sure your invoices add up to value for the fees requested. The bills must be easy to understand. Needless to say, accuracy is critical.”

Richard Brzakala, Director of External Legal Services at CIBC, commented at a recent panel forum of legal procurement experts, that “sophisticated buyers of legal services are swimming in a plethora of billing data and have increasingly utilized analytical tools to manage their legal costs. The old legal paradigm under which law firms have operated in terms of pricing has experienced tectonic changes and shifted pricing power to the client who is better informed and has tremendous influence in the legal marketplace. Law firms should keep this in mind every time a bill leaves their office. They should ask themselves, is this a fair bill and will the client question whether they received value for our legal services.”

Moreover, invoices must be easy to understand. Does your client have to pay administrators to unravel your invoices and frequently seek clarification at their cost? You should monitor the number of times you get a call about your invoice because that may indicate that you need to make changes on how you invoice your clients.


In other words, don’t wait until you are in trouble to speak to procurement professional and your GC — speak up before you start racking up charges.


Earlier this year, the GC of a leading financial institution told the attendees of a Legal Marketing Association event that they check all invoices in great detail and the firm that double-bills or makes them spend a lot of time double-checking their invoices is not invited back. And at another seminar, Vincent J. Cordo, Global Sourcing Officer at Shell Global, commented that “delayed recording of work lowers the accuracy and the details of the entries. There is evidence to suggest that the longer a timekeeper waits to bill, the more they inflate. Firms that track their activities in real time and penalize late record-keeping are the law firms we work with.”

Finally, in a previous blog post, I noted that a panel of global procurement professionals had a good recommendation:

If the matter (for example, litigation) goes beyond your expectations and estimates, work with your pricing person in advance and explain why you will be over-budget and by how much. That is much easier to deal with and less trouble for the client versus working extra time beyond the budget, billing your client after the fact, and then having uncomfortable billing or write-off discussions months later.

In other words, don’t wait until you are in trouble to speak to procurement professional and your GC — speak up before you start racking up charges.

In my next blog post, I will provide details about what entries should not show up on invoices and how they need to be explained.