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A Message from Thomson Reuters Legal Solutions

Rolling The Dice: Why Traditional A/P Software Is A Dangerous Game For Your Legal Department

Posted Sep 9, 2013 5:48 PM CDT
By Patrick Johnson, J.D.

Effectively tracking vendor legal matters and spending are of the utmost importance to efficiently managing even a small legal department. Accounts payable (A/P) software can report on some basic spending categories, but is unable to track vital data that is necessary for the legal department to project and report on the true value it provides. This is because: 1) What A/P software can do (tracking spending and reports), it does poorly because it misses essential data that is critical to the effective management of a legal department; and 2) Legal e-billing and matter management systems provide additional functionality and capabilities beyond what A/P software can do that saves time and money.

For the legal department’s purposes, reports from A/P software are incomplete and not granular enough. Modern software as a service (SaaS) legal solutions allow legal bills to be entered using the industry-wide standardized electronic format for legal invoices. By requiring law firms and vendors to submit their invoices in this format, an e-billing system will automatically capture all of the useful data in a legal invoice, such as what work was done, who did it, what it cost, staffing levels and categories of expenses. This data simply cannot be captured by A/P software. Furthermore, A/P software suffers from a problem of miscategorization of fees and expenses (copier vendors are indistinguishable from outside counsel – they’re all “legal spend”) and cannot account for invoices in the mail, currently in the approval process, or sitting in a stack waiting to be entered, making the spend that A/P software can report incomplete.

A/P software is also incapable of providing the detailed legal spend management data that legal departments require. Dissecting legal spend is essential for a legal department to be able to comprehensively review, understand and report on spend and their legal matters. SaaS solutions allow in-house counsel to review and make specific changes to attorney hours, fees and expenses directly in the invoice. These invoices also can be scanned and automatically flagged if expense guidelines are violated or budgets are exceeded. Invoice profiles show how the matter is staffed, and how much each attorney has billed can be monitored. In-house counsel can also categorize and report on spend by matter, business unit, law firm, matter type or in-house attorney to effectively manage the legal department’s workload and its decision-making process.

A/P software also lacks essential legal department management functionality that legal e-billing and matter management software can provide. A legal SaaS solution provides the ability to receive, approve and manage outside counsel billing rates, matter budgets and accruals. In-house counsel can also get detailed custom reporting, rate benchmarking and analytics, receive event alerts and manage documents and law firm status reports. All of this data can then be consolidated, tracked and reported on in one place – no more reports cobbled together from spreadsheets, data-bases and A/P software over the course of weeks or months (after which it’s probably no longer accurate anyway). This software can also streamline and automate invoice approval, reporting, accrual collection, amongst other functions. In short, this software increases visibility into the legal work being done, and saves both time and money for your legal department. In fact, Bob Engel, Legal Department Manager at Nielsen Business Media, Inc., reports that by monitoring their fees, expenses and matter spending through a SaaS solution, his legal department was able to save over a million dollars in fees a year. What’s not to love?

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