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Billing errors are common in businesses of all types and lead to revenue loss as well as bad customer experience. Legal billing involves a number of factors such as hours worked, lawyer fees, travel expenses, and variable fee slabs based on the client type. This makes it tough to ensure that bills are accurately calculated. In addition, you could get into trouble if any billing discrepancies are found during audits.
To minimize such risks, you need a legal billing solution that accurately records case expenses, hourly charges, as well as the number of hours to prepare client bills. This guide discusses the software in detail—the common features, the vital software integrations, deployment options, as well as the top technology trends that are changing the market.
Here’s what we’ll cover:
Legal billing software is software used to record any billing or expense information related to the litigations pursued by a firm. This type of software ensures accuracy and speeds up the processing time taken to generate bills for clients.
The key functions carried out through a legal billing solution include:
Tracking the time spent on a case
Recording travel-related expenses
Managing case-related workflows
Registering payments for legal forms and processes
Storing case-related documents and files
Creating billing reports during audits
The first step to selecting a legal billing solution is to understand the types of software available on the market. Here are the details about the two types of legal billing software:
Stand-alone legal billing management solution: This type of solution tracks the time and resources spent on a case to calculate the final billing amount. If you are a solo practitioner or use a different solution for managing clients, such as CRM or project management software, this type of tool might be right for you.
Integrated case management suite: These solutions let you store case files, record client information, manage case workflows (such as hearing dates and document filings), and bill clients based on the agreed hourly rate. If your firm manages a high volume of cases and clients, you should consider this type of system.
Key question to ask your vendor before you buy: Based on the size of my business and the number of cases I handle per month, which type of legal billing solution do you recommend?
After you’ve decided on the type of legal billing solution to purchase, the next step is to select the deployment option. Here are the options for legal billing software:
Cloud-based deployment: These solutions are hosted on the vendor’s servers, and users access the software on a web browser or mobile app. The pricing is usually on a per user per month or year basis. Cloud-based systems are useful for small and midsize operations because the vendor is responsible for managing data storage and servers. Therefore, you don't have to purchase hardware or hire extra staff to manage additional equipment.
On-premise deployment: Unlike cloud-based systems, these solutions are hosted on your servers. There’s usually a one-time license cost per user in addition to the annual upgrade charges. You would also need to invest in network equipment and infrastructure.
GetApp.com focuses primarily on cloud-based solutions as, unlike on-premise systems, these incur monthly costs and don’t require you to purchase any hardware. Cloud systems also let you scale up as and when needed.
Key question to ask your vendor before you buy: Apart from the subscription and license costs, do you charge extra for things such as training, implementation, and data migration?
The next step is to understand the features of legal billing software. This knowledge will help you ensure that the product you choose includes the capabilities that meet the needs of your law firm.
Based on our research, here are the common features of a legal billing management solution:
Expense tracking: Records project-related expenses, such as travel costs, and incorporates those into the final billing amount.
Expense management in TimeSolv
Time tracking: Tracks the hours spent on a case and calculates invoices based on the agreed upon hourly rate.
Time tracking in Zola Suite
Account tracking: Allows you to track the revenue earned from each client and case. Users can also generate financial reports such as for revenue as well as profit and loss.
Account tracking in Zola Suite
Case tracking: Stores case details and tracks the cases at different stages such as hearing and closure.
Case tracking in Clio
Document management: Manages document storage and access to case-related documents such as filings.
Document management in HoudiniEsq
Key question to ask your vendor before you buy: Which features in your product are most relevant to my needs?
The next step in the buyer cycle is to understand the key integrations. Integrations allow you to extend the functionality of the legal billing software beyond the core functionality. Integrations also eliminate the manual work required to move data from one system to another.
Given below are key software integrations that you should consider:
Payment processing software: Allows you to receive client payments via different payment modes such as credit cards and online payments.
Accounting software: Allows for billing clients and tracking expenses, so you can prepare accounting reports.
Calendar software: Syncs employee calendars to case-related events such as hearings and verdict dates.
Key question to ask your vendor before you buy: Does your legal billing software integrate with the solutions that my company uses?
To ensure the successful implementation of any software, you should be aware of the current trends and shortlist vendors that are incorporating these trends into their products.
In this section, we discuss the top trends that are shaping the legal billing software space.
Artificial intelligence to replace the hourly billing model: With the needs of clients and legal professionals always changing, some find the hourly billing model restrictive for business growth. Small and midsize legal practices are exploring new ways of making the client billing reflective of all the various factors involved, not just the hours worked.
Artificial intelligence (AI) can help you in this regard. For instance, AI-based legal billing systems are able to factor in lawyer experience, lawyer ratings, and the type of cases in the final billing amount. With the growing adoption of AI in small businesses, we can expect AI-based billing to replace the hourly billing model by 2023.
Digital billing is the future of legal billing: In 2017, nearly 56% of bills in the U.S. were paid online. This trend also applies to the legal profession—clients and businesses are moving to paperless billing as it helps them be more efficient in tracking bills and payments. For this reason, we expect paper bills to become obsolete by 2022.
Key questions to ask your vendor before you buy: What is your timeline for introducing AI-based billing model? Does your product include paperless billing?
We referenced the following documents while creating this guide:
GetApp legal billing software catalog (Date accessed: 04/11/2019)
How AI and analytics made the billable hour redundant (Date accessed: 04/11/2019)
Top 5 Tech Trends for Small Business (Date accessed: 04/11/2019)
56% of All Bills Now Paid Online, Study Finds (Date accessed: 04/11/2019)
*Note: The applications selected in this article are examples to show a feature in context, and are not intended as endorsements or recommendations, obtained from sources believed to be reliable at the time of publication.