THOMSON REUTERS ELITE

Q4 2015 EDITION

Forefront
 

Full Legal Billing Transparency: Avoiding the "Frasier Effect" in Firm-client Relations

You recall Frasier – the TV sitcom about a Seattle-based radio psychiatrist searching for love over 11 seasons. Did you ever see the episode about the lawyer? She’s a stunning blond who takes on Frasier’s case when he gets sued. Frasier is initially thrilled with her. Then she wins his case. Now he’s ecstatic. She next sends Frasier her sizable bill, and immediately he’s stunned in a whole new way...

Finally, they go out to dinner, where he witnesses her lax approach to client timekeeping. When Frasier asks her about it, she shrugs it off. He’s now thoroughly annoyed, indignant, offended. He feels cheated. And so it goes. The client started out happy; the lawyer did a great job; but somewhere it all turned sour and the client ended up vowing to find a new lawyer. Of course, that couldn’t happen in real life, could it? Well, unfortunately there’s evidence that increasingly it does.

Say Hello to Sticker Shock

Unfortunately, for a lot of law firms, a version of this scenario is playing out all the time. A key component is bills that are much larger than the client expects creating ”sticker shock.“ This bad feeling is compounded by a lack of transparency as to how these bills are put together and a significant time lapse between activity and the bill. So clients get frustrated and uneasy because they have no way to tell what size the next bill is going to be. They also feel they have no effective way to challenge the law firm when the bill seems padded. It makes them uncomfortable, unhappy, and untrusting of their lawyers. The relationship between firm and client begins to erode.

What’s more, and this has arguably always existed, the sense is that it’s a growing pressure point. This stems from recent history. In the violent aftershocks of 2008, two things happened: the economy became drastically tougher and people lost their faith in institutions and professionals. Their trust was shattered at precisely the same moment as their capacity to pay the bills was significantly diminished.

The net result is that we’re now in an era where corporate sensitivity to legal costs has never been greater. Corporations are hiring individuals whose sole job is to control (and for control read “reduce”) their organization’s spend with legal firms. We’re at a place where law firm clients are using third party software to view their bills as they’re compiled within the law firm’s walls.

Increasingly, law firms are being challenged to be transparent and accountable. Clients now want lawyers to justify their bills. They want granularity, and they want absolute accuracy. They want fixed fees if possible, predictability, access to the bill, and no surprises. And, they want the bill sooner, rather than later. Firms need to be able to throw the house open to visitors and not be embarrassed by anything their visitors might see. Law firms need to wake up to the increasingly tough climate they’re in and act now.

Not So High Velocity

Of course the stumbling block with throwing your house open is heaven knows what visitors might find. For example, they might see a little thing called ”slow velocity.“ In the area of timekeeping, velocity is defined as the period (in days) between an activity occurring (a phone call, an email, a meeting) and when the lawyer records the activity into his or her timesheet.

Now who’s going to argue that recalling what you did a week ago last Thursday is harder than remembering what you just did. We have seen that velocity metrics in excess of five days are not unusual. Often, at least five days elapse before timesheets are filled in. Surely this length of time cannot be good. It leads to inaccuracies poor-quality time inventories, and a loss of credibility with clients. A classic, perhaps apocryphal tale, is of the client who sees he’s been billed for work done on a day when he knows his lawyer was on vacation. Trust flies out the window; cynicism scuttles in the door.

But what’s so uncomfortable about this is not how bad it is for clients, but how bad it is for lawyers. Far from billing clients, lawyers tend to under-bill if in doubt. Moreover, they tend to forget the ”crumbs” – the brief, less-consequential activities. While the lawyer will remember the two-hour client dinner meeting, what about the five minute phone call taken while waiting for the cab, the emails he sent on the way to the restaurant, and so forth? The result, perversely, is billing that the client would be unhappy with if they actually knew how inaccurate it was. And the firm would be unhappy if they actually knew how much work was being missed. Thankfully, there is a better way.

Quantum Leap

Some law firms are already taking a lead in this area. They make full transparency of billing a part of their service delivery promise. It provides comfort to clients, and it leads to competitive advantage. In the past, this may have been a daunting task, but not so today. The advantages to the firms who take this course are conspicuous. The answer lies in getting the right systems on board.

What are the right systems? Well, they’re the ones that take advantage of the smart consumer technologies which, critically, have already been adopted by a very large swathe of lawyers: namely smart phones, tablets, and minis. And that’s absolutely the point. Even though firms already have some capture mechanisms in place, they don’t work well, intuitively, and easily. Hence the high velocity metrics.

What seems to be crucial is moving to the new, light, and nimble ”smart systems” that are available. These don’t just give firms something that is a bit better. They enable a quantum leap forward in the quality and accuracy of timekeeping.

Intuitive and Simple

How does the next iteration of smart systems work? The key is that they’re easy to use because they embrace technologies that the lawyers already know, love, and are never without.

These systems are typically pre-programmed with all the matters in hand, including for example, all the client’s relevant email addresses and phone numbers. A display can then hover over the lawyer’s screens (any of them, or all of them) at all times. The lawyer taps the relevant icon, and the system will record the time spent on a matter straight into the firm’s time log and billing systems. Too busy to tap a screen? Not a problem since voice recognition software converts your words into text and makes the appropriate entry.

The use of these smart systems leads to accurate billing and revenue increases, because everything is captured, including the crumbs. More importantly, credibility and client confidence rise. You can throw open the doors of your house and boast about what’s inside: contemporaneous capture that is entirely correct. And, clients don’t feel the need to look for a better service elsewhere.

So maybe there’s an alternative episode of Frasier somewhere in the universe. In it he hires a stunning blond lawyer. She employs immaculate timekeeping, wins Frasier’s case, and submits an accurate, well-itemized bill in a timely manner. They go out to dinner, fall in love, and live happily ever after. It could happen.
 

Tikit

Tikit is one of the largest suppliers of technology solutions & services to legal & accountancy firms, and is part of BT Group. Tikit's client list totals more than 1,450 firms globally, including 90 of the UK's top 100 law firms, 250 US law firms, 12 of the top 20 European law firms and 18 of the UK's top 50 accountancy firms. Click here for more information.

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