During legal bill review, most of law firm invoices undergo a considerable amount of reductions at the initial stage. However, many of these reductions get reinstated after they are appealed by the law firms with proper clarifications. In fact these initial reductions can be avoided if some extra care is taken while preparing and submitting these invoices.
E-billing has become the New Normal and paper billing the Old School. Now E-billing and Legal Bill Review have become the standard practice.
During legal bill review, most of law firm invoices undergo a considerable amount of reductions at the initial stage. However, many of these reductions get reinstated after they are appealed by the law firms with proper clarifications. In fact these initial reductions can be avoided if some extra care is taken while preparing and submitting these invoices.
Many law firms react with anger and frustration when their invoice entries are flagged by the bill reviewer. One of the common reasons for this reaction is that these law firms always believe that their billing entries are correct and payable without any reductions. I have been addressing such issues over the past years and based on my experience I have listed some of the billing related issues and suggested solutions.

Understand Client’s billing guideline

Understanding the terms of the Service Level Agreement (SLA) with your client is the foremost step towards avoiding billing reductions. These SLAs are the primary source to understand the billability of your invoice entries. The billing format, prior approval requirements, hourly limitations, unit limitations, time and unit format etc., mentioned in the SLA plays a vital role in invoice validation. Therefore, it is important to ensure that you are familiar with your client’s billing guideline.

Pay Attention to UTBMS Code

UTBMS codes, especially activity and expense codes play a vital role in determining a good amount of invoice reductions during bill review. E-billing & Review software is designed and developed according to the client’s billing guidelines; and the billability of some of the invoice items are determined based on the UTBMS code utilized in the invoices.
To illustrate the foregoing, most of the SLAs provide that in-firm communications are non-billable but communications with clients are billable. Under this scenario, if the invoice entry reads as “call with John to discuss about deposition”, it would be difficult for a reviewer to understand whether the call is an in-firm communication or a communication with the client or others. This is when the UTBMS Code utilized in the invoice will help the reviewer for better understanding of the invoice entry because UTBMS has defined each activity with a specific Activity Code e.g., A105 – Communicate (in-firm); A106 – Communicate (with client); A107 – Communicate (other outside counsel); and A108 – Communicate (other external). If the illustrated billing entry is a communication with client and had the law firm wrongly utilized the code A105, pursuant to the SLA this entry would be reduced. However, had the code utilized is A106 this entry would have been not reduced. Therefore, in order to avoid such invoice reductions it is important to understand the UTBMS code and utilize the appropriate codes applicable each invoice line entry.

Avoid Block Billing

Block billing has been one of the most common billing irregularities found among law firms. According to studies block billing practice would hide accountability and inflates time between 10% and 30%. It is an industry standard and almost all SLAs specifically discourage law firms from invoicing with block billing entries.
Blocked billing happens under the following circumstances:
    • When more than one activity or expense item falling under different UTBMS codes are billed together e.g., research (A102) and drafting (A103).
    • When billable and non-billable activity or expense items are billed together e.g., drafting (A103) and sending (non-billable).
    • When attorney tasks and paralegal tasks are billed together e.g., Communication with Client regarding Discovery strategy (attorney task) and managing data files pertaining to Discovery (paralegal task).
  • When travel and attendance times are billed together (a/k/a Non-itemised Travel Time in Entry) e.g., Prepare for trial and travel to El Paso.
You can avoid reductions for Block Billings if you keep in mind the above mentioned points.

No Defense for Vague Entries

Almost all invoice entries reduced as vague entry by the reviewer will be disputed by the law firms. One of the most common responses received from law firms is that the Client already knew the details of the activity (vaguely) described in the invoice. Interestingly, sometimes clients would also support the same and would ask the reviewer to reinstate such reductions. Law firms would appeal such reductions stating “Approved by Client”. Here we need to understand the purpose of such billing guidelines which provides that the law firms will not be paid for vague invoice entries. This is an effort to encourage the law firms to bill their invoice entries with sufficient amount of details which can be read and understood by the client, bill reviewer and other similarly interested. Knowledge of the Client (client representative) of the task/item billed can never be a good defense for a vague entry because what is known for a particular client representative would still be vague for his/her successors, superiors or colleagues unless clearly described in the invoice entry.
On the other hand, sometimes when an invoice entry is reduced under the heading “vague entry” I receive lengthy email responses or a fulsome appeal comment from law firms which would almost give away the confidential information surrounding the billed action/item. A reviewer determines the sufficiency of the invoice description based on whether the narration provides adequate information to understand the task performed and whether the same is justifiable for the time billed. A reviewer need not know the law firms’ justification for performing a particular task which is often confidential information subject to Attorney-Client Privilege. To illustrate the same: i) billing entry stating “call to client” is considered as vague because it does not help understand about the nature of the call; though the client is aware of it, ii) “call to client to summarize the strategy for MSJ” – is considered as sufficient description because it explains the nature of the call and also it helps justify the time units billed for the task; and finally iii) a description for the same task which describes the gist of the strategy is considered as giving away too much of information. The foregoing is applicable while appealing invoice reductions as well.

Include Prior Approval Details

Generally, billing terms in SLAs provide that items such as motion practice, engagement of experts, out-of-state travel expenses etc., to be pre-approved by the Client; if not, they are not billable. This is one of the areas where law firms often receive reductions; not because they did not obtain prior approval but they failed to mention the same in the invoice. Almost 90% of these invoice reductions get reinstated during the resolution process. This is time consuming and the same could have been avoided by including the approval details in the invoice entry. These SLAs clearly states as to how to mention such approval detail in the invoice entry i.e., <description of the activity/expense><name and designation of the approver><date of approval>.
When an invoice entry is reduced due to the failure to state such prior approval, the resolution available for the law firm is to obtain and mention such approval while appealing the invoice reductions.