Platt’s Perspective: Shifting The Power Of Billing To Clients In Real Time

“Disruptive innovations.” It’s a phrase we continue to hear more and more often, as new approaches to old ways of doing things continue to be developed. One interesting innovation recently entered the legal profession, and is sure to have an impact in the near future on accounting firms as well.

For as long as the profession has been around, the billing process has been managed and controlled by the service providers themselves. Law firms (and accounting firms) enter hours worked in the time and billing system, review reports, write off time as they feel appropriate, issue discounts (or premiums) as they feel appropriate, and send the invoice out the door. Occasionally, especially in the legal world, clients are surprised by the size of the bill, object to the cost, and the firm adjusts the bill based on the client’s pushback. Sound familiar?

Mike Platt

Mike Platt

Enter a new generation of apps designed to shift the control to the client, removing some of the secrecy inherent in the traditional billing process. In the last 18 months, new disruptive products such as ViewABill, LeGuard and Apperio have  appeared, allowing law firm clients not only transparent access to the billing process, but also the power to “throttle back” the amount of work being delivered by the firm based on real-time access to hours in the online system. This collaborative approach between client and attorney is intended to help clients budget better and eliminate surprises when the bill arrives.

According to ViewABill, the first of these companies in the market, the initial response by law firms was fear that the software would drive a wedge between them and their clients. In an article earlier this year in Bloomberg Business, ViewABill reports that half the top law firms in the country are now using their software, helping the firms to promote a culture of collaboration with their clients. A marketing video for LeGuard  touts the “revolutionary way to control legal billing by holding lawyers accountable for the number of hours they bill to a client.” Apperio provides customizable dashboards to track time, provide real-time alerts based on spending thresholds the clients set, and compares performance to other law firms, encouraging the firm’s clients to “keep your eye on the ball.”

Based on the annual IPA National Benchmarking Report, more than 95% of the revenue generated in firms still comes from the traditional “dollars times hours” formula. It’s just a matter of time before this same technology innovation permeates the accounting profession.

  • Could this promote a culture of greater collaboration between firms and their clients?
  • Could it drive the profession to issue invoices in a timelier manner?
  • Could it eliminate those awkward after-the-fact billing questions from clients?
  • Could your clients demand that YOUR firm provide this type of access?

Whether this specific disruptive innovation is met with defensiveness or eagerness, the fact remains that it is here now, and is part of the growing trend empowering clients. Firms that embrace collaborative billing, prepare for it, create processes to maximize its potential, and appropriately communicate to clients, in my opinion, will win.