November 2, 2005
Increase Realization on Law Firm Fees from Insurance Companies
Some great information came out of a presentation on successfully billing insurance companies for legal services provided. The panel discussion was a part of Juris® Users International conference in October 2005. Insurance companies have largely adopted e-billing. Unfortunately, the insurance client’s requirements often make the process a bumpy road for the law firm. As a result, bills get rejected and/or adjusted downward unilaterally by the client.
The Juris law firm representative presenting the session listed the following conditions that typically result in downward adjustments or rejected bills:
• Attorneys billing for clerical functions¾scheduling depositions, arranging for court reporters, preparation of form documents like deposition notices and cover letters, faxing documents
• Attorneys billing for paralegal functions - preparation of form documents such as subpoenas, notice of appearance, medical record summary, records requests, basic discovery such as form interrogatories
• Paralegals billing for clerical functions - scheduling depositions, arranging court reporters, organizing files, calendaring and conflict checking
• Prior approval for various tasks - such as attending depositions, retaining experts, performing research, certain types of motions
• Excessive time billed for tasks - receipt and review of court notice
• Block Billing - multiple tasks in a single entry
• Vague entries that do not completely define the task performed
• Unidentified parties - every name should also have a relationship to the case and visa versa even if you use the same name 100 times in a bill
• Duplication of effort - two timekeepers performing the same task
• Invalid billing increment - most insurance companies require .10 multiples
• Unapproved timekeeper or rate
• Invalid Task or Activity Code - wrong code set or type of code
• Repetitive and duplicated entries - proofreading or editing, multiple revisions to documents
• Interoffice communication - group meetings, memos to file, paralegal/attorney meetings to discuss task outlines
• Invalid rate for expenses - copies, postage, fax, long distance telephone, research
• Invalid expense - or expense over billable cost advance threshold
When it comes to wording entries, the speaker’s advice was:
• Always use the 5 W’s - Who, What, Why, and sometimes When and Where.
• MOST IMPORTANTLY - BE SPECIFIC - each entry must stand on its own and not depend on a prior entry.
Keeping time and expense entries compliant with insurance company requirements have exceeded the capacity to do so manually. Insurance companies are using technology to reduce its legal cost. The law firm has to use technology to avoid inappropriate adjustments. You have to get the words right. But more important you have to improve scheduling within the law firm so that the firm does not use the wrong person or more resources than the client authorizes you to use in performing requested services.
Using technology to audit time and expense entries against engagement standards before the billing process can eliminate rejected bills and reduce adjustments—that puts money in the partners’ pockets. Applying technology to the compliance issue materially increased realization at the speaker’s firm–from the high eighties to the high nineties. That is a 10 percentage point increase! That is "more partner income" worth going for.
Most law firms that are billing insurance companies try to adhere to the rules, but good intentions and manual testing haven't avoided the rejects and write downs. As far as I know, Juris, Inc.'s optional application, MyJuris®, is the only off-the-shelf product that includes an automatic compliance feature. The application's compliance feature automatically audits time and expense entries against the client's billing standards or rules before the billing process; thus, eliminating rejected bills and reducing adjustments. If you want to know more about ths alternative for increasing realization, go to www.Juris.com.
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Filed under Blog by Tom Collins