With the significant amount of administrative lift involved for billing teams to make pricing teams’ plans a reality, it is extremely telling that only 16% of survey respondents indicated their pricing and billing teams are integrated.
It’s no wonder that two of the top three challenges currently facing the management of the pricing function speak to this separation of responsibilities: “client pushback on rates and/or increasing complexity of outside counsel guidelines” and “mistakes caused by lack of collaboration and integration across pricing, LPM and billing functions.”
HOW THEN DOES A FIRM GO ABOUT CLOSING THE GAP?
Legal project management and pricing professionals are the architects for a firm’s strategic approach to business oversight and matter management: They design the blueprints for legal work to deliver value for the client and profit for the firm. Their blueprints must then be built by the billing team.
For billing teams, this translates to a massive laundry list of administrative setups and checks: determining the client and matter setups in the financial system, inputting rate exceptions, flagging the correct invoice template features, creating alerts for any outside counsel guideline parameters and, for the 45-55% of business that’s conducted through e-billing sites, a repeat of all of the above in the client’s electronic vendor site.
So closing the gap between legal project management, pricing and billing starts with identifying and employing a shared set of metrics between the workstreams.
For billing teams, the primary metrics that speak to their success revolve around billing and collections values, realization, and average days to bill and collect. With only 8% of pricing operations currently looking to their impact on revenue, there’s ample opportunity to further incorporate the ground-level metrics that drive a cash conversion workstream.
As hourly work remains the predominant matter arrangement even with the ongoing push for AFAs, average days to bill and average days to collect in particular can help pricing understand the potential difficulty involved for their billing teams to translate their designs into collectible values.
The gap narrows further once education and awareness are considered: for pricing, their downstream impact includes both of the client contacts: the billing partner and the billing partner’s billing team. Both need to
be able to speak to the intent and value of the pricing model in order to deliver on its success.
The billing partner is the primary relationship holder with the client, and where the client is confused by the details of any invoices or how the rate structure is to its benefit, the partner can only be successful knowing those answers. As the billing team works to ensure correct invoice delivery, they too must be well versed in the pricing model’s intent and value, so that their administrative solutions lead to the same end. Recall that laundry list of deal-driven tasks—each task represents a potential point of pricing failure.
With 98.4% of respondents agreeing that clients will exert more pressure on pricing over the next 12 months and only 10% considering their billing processes as mature, pricing must invest in elevating their delivery agents to be thought partners.
This means creating a shared data language that can measure success and offer continuous feedback on pricing’s and billing’s efficacy as partners in the revenue generation process. Furthermore, firms must engage in raising their billing teams beyond perfunctory input-output support staff; having a billing team fully versed in the firm’s profitability goals empowers them to deliver on day-to-day solutions that support pricing’s strategies.
Authors: Amanda Mui, Product Advisor, Litera
Jolita Rukaityte, Product Manager, Litera
Celia Traum, Sr. Sales Director, Litera
This article is an excerpt from the 3rd Annual Legal Pricing & Project Management Survey Report. Find your free copy >> It's the only resource that compares and contrasts the perspectives of law firm pricing and project management professionals and law department legal operations professionals on the topics of common priority and focus.