Insights from DCS
Knowledge for the information generation
How to use RPA for Billing & Lock-up Prevention in Law Firms
Lock up is a very real threat, depriving law firms of much needed funds. But the client-fee earner relationship starts much earlier. Robotic Process Automation (RPA) gives a way to improve legal billing and pre-empt friction if the client believes the service isn’t satisfactory. This is made possible with automation-assisted best practice focusing on accuracy, transparency and communication during the billing cycle.
Consider these points: It takes a client on average 119 days to pay, leaving most law firms with lock-up capital by the end of the year. The 2016 Bellwether Report by LexisNexis found that only 30% of lawyers felt they were offering “excellent value for money” and an even fewer 8% of clients agreed.
It’s fair to think that these represent a souring of relations or at least clients disengaging with their legal representative.
Prevention against lock-up and alleviating bill disputes relies on transparency, expedience and accountability. Robotic process automation (rpa) create stronger procedural links between these three values. By following these steps keep clients happy and save the time of your legal staff – from your fee earner to your bookkeeper.
- Step 1. Write up your fee agreement. Ask a robot to help calculate the fee structure
- Step 2. Use robotic process automation to actively cross-reference ongoing time sheets.
- Step 3. Create and trigger your regular billing cycles with automation.
- Step 4. Keep tabs on additional billers, a.k.a version control!
- Step 5. Get tough on your clients and their accounting team. Say no to lock-up.
You can take all these steps end-to-end, or you can take robotic solutions piece by piece.
Step 1. Write up and communicate your fee agreement with care. Ask a robot to help calculate the fee structure.
Robotic process automation’s added-value starts with the fee portions of the engagement letter. There are still parts that need a human touch. The fee earner should still think carefully with the engagement letter when writing down: the scope of the agreement, the list of activities that would generate a cost, and remedies for non-payment.
In the case of fee agreements, low-tech but high intelligence actions like creating scoring rubrics or deciding which type of agreement (conditional fee? Fixed fee?) is still needed for an effective robotic process.
Programmable triggers can be setup to put the robot to work if an “event” takes place. Robotic process automation can calculate estimated total costs of activities the fee-earner identifies via a database trigger.
When you think about the myriad of factors going into a fee estimate (hourly rate x estimated time needed for the work x overhead costs x expertise or specialist cost x turnover bands), you can imagine how scattered this information is! You show a robot once how to open and close all of those programs, find what information you’re looking for, and where you want it to go. This is often done using a Graphical User Interface, or even something as simple as recording your movements on the screen.
The resulting costs can later be compared and matched up in an excel sheet to the guideline hourly rates provided by the HMCTS cost committees. Think of it like a virtual person with the power to move between programs and applications, clicking, logging in and logging out just like you would! If you wish, the robot can also produce a template form for the client to review.
Step 2. Use robotic process automation to cross-reference Works in Progress (WIP), timeslips and expense slips
It can still be distracting and stressful for a timekeeper click in and out of every small task if you use a timekeeping app. Stressful still to then have to forward and place it into billing systems.
Robotic process automation would be able to gather timestamps from legaltech applications and transfer it all to a billing form (with no human intervention) ready for review. It looks similar to how a robot would handle a fee structure. But in this case it’s with applications in a law firm’s tech echosystem, not just databases or spreadsheets.
Or the reality is that there is no time-keeping software! The fee earner is so busy doing the actual work that they leave the time-keeping as the last task of the day. In that case they must rely on memory to recreate this bill. Not the best strategy. You want to avoid as much block billing as possible. This ties in with promoting transparency to avoid later billing disputes.
RPA can solve challenges such as highlighting conflicting information or limit “exception-handling”. This can happen either pre-emptively when inputting or moving data into forms triggers (rpa is 100% accurate). Conflicting information can also be handled after-the-fact.
When conflicting information is discovered by a human, a fee earner’s time would still be used up in reviewing the data and sending it over to an administrative assistant to rectify the data and the bill. This can cause even further delays in creating and sending an invoice after the matter. To help streamline the process, triggers exist for collaborative software such as a SharePoint trigger to find and send files to colleagues automatically when files are added or amended.
Step 3. Create and trigger your regular billing cycles with automation
You can insure against lock-up with regular billing while the matter is at play instead of billing at the end. Prompt bills often yield prompt payments, Hummarabi’ s code still applies! Software robots can set up billing activity to run over the course of a month or year.
One example would be to keep track of timekeeping as per normal, and have the robot scan through the application periodically and alters the fee earner when it hits a certain value. A schedule trigger can prompt the robot to start the billing process for the accountants. A file system trigger can then be connected to events where either (A) any activity is completed and logged into a file or software app by the fee earner or (B) completion of interim billing cycles.
If the administrative time to send out invoices drags out, the client becomes aggravated -- especially if their own account balancing depends on receiving these invoices when promised. RPA does not need to replace the law firm’s existing payroll software or bookkeeping software. It’s more about enhancing the technical and human investments you already have.
Step 4. Keep tabs on additional billers and costs aka. Version control!
The military calls it “mission creep”, companies call it “project bloat” but you might recognise this from staring at what looks like a no-limits bill! When things get tough, outsourced law labour becomes a reality. The client might not agree, especially if it comes unexpectedly. Version control goes hand-in-hand with continuous billing.
As Step. 3 suggested, you would ideally have itemised bills that go out after every month or completed activity. At the very least it’s best to have the updated and detailed bills ready if the client requests it. This comes especially handy with conditional fee arrangements. Careful record keeping is also essential for compliance review by the SRA.
If the time comes where there are billing disputes with a client, robots can check any ad hoc work included in the billing against the original agreement. For an agreeable process, first obtain consent from your client before you start charging them for additional items. e-mail triggers can be created to send to the client with consent forms attached. Don’t forget to check whether the form is sent back with a signature confirming that the amendments are acceptable.
Of course, this can also go the other way if a corporate client wants to amend their terms of business. But at least you won’t have to constantly check your inbox if you use a schedule trigger for this task. This can be combined with scanning the contents of your inbox using e-mail triggers to automatically sort out subject, name, e-mail address, etc.
Step 5. Make your robot your payment enforcer. Say no to lock-up!
Transparency and expedience in billing convinces the client that the case is being taken seriously and fees are fair. But this doesn’t remove the risk that the client goes AWOL with the payment! An account receivable can soon turn into the dreaded “lock-up” capital.Smith & Williamson estimates that improving lock-up by just one week can add an additional £1M in cash resources to a £50M income firm.
Robots re-use e-mail triggers to reminders to make sure both sides follow through on their agreements. Once the necessary action is completed, robotic process automation can also be used to tick off when the fee has been paid It gives the fee earner or human resources a break from chasing delinquent clients.
Worst case scenario, the robot can create a flag to alert the fee-earner to cease any WIPs until the last bill is paid. If the legal accountant is having difficulty in keeping track of the WIPs and Accounts Receivable (AR), they should be written off ASAP so that they don’t make their way into the firm’s cash projections.
Finding where rpa can fit into your billing client challenges requires thoughtful analysis of your current procedures are and how they can be improved. It’s not all about financial capital at the end of the day. You also have to take care of your human capital. Taking the steps above gives your fee earners time to craft their arguments and allows your support staff to keep up with the growth of business. At the end of the day, robotic process automation aims to create greater accuracy in billing, swifter timekeeping processes and more effective communication between the fee-earner, client and administrative staff.