We continue to learn from our clients, indeed, they are driving the development of new expert management solutions to mirror their products and processes.
Technology solutions do not stand still – they must evolve and keep up with the changing needs of business, and we enjoy this challenge. There are always lessons to be learned!
Clients require a solution that both tracks and reports on legal spending (meaning law firm fees, disbursements and indemnity) and "other experts" spending – for example, an independent third party loss adjuster or marine surveyor based in Singapore. This enables them to obtain reports on total allocated loss adjustment expense.
At the same time, we have also seen demand increase for more sophisticated reporting tools so that claims management can obtain high level and detailed reports (and everything in between) on claims across all business lines.
Configurable reports containing tables, charts and graphs can be produced at the click of a button and give detail on, for example, fees, expenses, budget erosion and adjuster and supplier performance trending. These reports can be "sliced and diced" according to selected search criteria.
At this point, I would like to set the scene by outlining the foundations of experts management – without which uniform and consistent data could not be provided.
The work started in the mid- 1990s, when major US law departments and insurers wanted to better understand the services provided by outside counsel. A joint group including The American Bar Association, the Association of Corporate Counsel and professional services firm PricewaterhouseCoopers was formed to create a unified electronic billing standard.
As part of this effort, it was decided that electronic invoice time entries should be taskbased and aggregated by type of work performed, making it possible that multiple time entries would result from the services performed in a single day on a matter. The project to create a coding system ran simultaneously with the effort to create a standard billing format and resulted in the Uniform Task Based Management System code sets.
The e-billing project group morphed into what is now known as the Legal Electronic Data Exchange Standard (Ledes®) Oversight Committee or LOC (of which LSG is a member), which is charged with maintaining the standards for the exchange of billing and other information related to the delivery of legal services. It is an international voluntary not-for-profit organisation comprised of legal industry representatives.
The LOC is dedicated to using open standards that cater to no single organisation or group of organisations, to uniformly satisfy the complex needs of the legal industry based on five basic principles. These are: keep it simple; make it unambiguous; diverge from existing formats as little as absolutely necessary; only ask for information the law firm is typically able to provide from their financial system; and meet the needs of corporations, law firms and legal industry software vendors to the maximum extent possible while being consistent with the first four criteria. So, with the foundations in place, what does this mean for the buyer of legal and related services?
The vast majority of legal services buyers use paper-based invoice submission, review, approval and payment processing systems. However, the final step in accounts payable is typically electronic.
This creates a large disconnect between service providers aiming to generate fast payment and their client's ability to process invoices quickly via internal business processes and management authorisation.
The Ledes billing formats bridge this gap as they enable law firms (and, increasingly, non-legal vendors) to submit electronic invoices that can be validated (by the technology) and approved by the claims handler, adjuster or in-house lawyer (in other words, the named person responsible for the matter or claim).
Invoices can be submitted in any currency from anywhere in the world with internet access. Once the invoice is approved, it can be automatically sent to accounts payable or a third party payment processing company via a secure interface.
Budget tracking is another important tool for enhancing the performance of the claims team and/or third party administrator. An adjuster will typically request a life-of-case or phased-level budget from the lead lawyer so that its erosion can be tracked as the bills are submitted and approved.
Different rules can be incorporated so that, for example, an invoice cannot be submitted unless there is sufficient headroom in the budget. These rules can be switched on at any time through the life of the programme, enabling behavioural change to occur in managed stages.
Our clients generally prefer a phased approach rather than the "big-bang" method. Budgets can be re-submitted at any time to reflect the changed circumstances of the case. In doing so, there is transparency and an audit trail to manage costs.
LSG's bill review or guideline compliance service is an optional business process outsourcing service that gives a more granular review of the invoice against a client's service level agreement (SLA) or litigation/ billing guidelines.
The resolution desktop ensures that the bill submitter can clearly understand the reason for any non-compliance reduction and challenge it.
The service is nonconfrontational with the clients' outside counsel or non-legal vendors and treats them equally as customers within the process. The objective is to ensure clients' SLA/billing guidelines are complied with. No subjectivity is used to undertake the SLA compliance analysis and finalisation.
Once any potential reduction issue is resolved, the bill passes to the client approver (for example, the claims adjuster) for a qualitative review and to press the "approve" button, before the invoice is batched and queued for payment processing in the usual way.
What are the barriers to moving from paper to an electronic expert management solution? The general answer is that there aren't any. It is now possible to set up a local, national and/or global expert management solution for the client and all its divisions anywhere that internet access is available. This is due to the ubiquity of webbased solutions and a dramatic fall in the cost of setting up and maintaining these systems over the years.
The cost is typically based on the users, or the billing volumes involved, plus the local or global nature of the implementation. Staff who are currently processing paper invoices should be happy about removing paper from their in-tray.
In the electronic expert management world, professional service providers are responsible for loading their invoices into the system. The claims handler/ adjuster (or their manager, if required) simply needs to approve and process these for payment, all of which can be dealt with electronically from within the same application.
The removal of paper from the billing process is also helping organisations to meet their corporate social responsibility policy commitments because invoices are sent and approved electronically. Organisations should be thinking not only about how their processes can be improved by using fast and efficient electronic solutions with compliance benefits, but also how these solutions can be used to drive their decisionmaking for panel management, performance and settlement trending.