Managing e-billing rejections and appeals can be a serious resource drain. For billing managers, invoice rejections can drive ballooning workloads and staff burnout. They’re also a profitability problem: frustrated clients may consider switching firms, while delayed payments translate into rising write-off rates and more collections work.
Here’s the good news: there are many e-billing rejections law firms can prevent. Most stem from the same few causes, primarily time entry and prebilling problems.
How Corporate E-Billing Review Works
E-billing uses standardized, machine-readable file structures (LEDES) and billing codes (UTBMS) to create legal invoices that can be reviewed and validated electronically, instead of by hand. That speeds up payment (for conforming invoices) and reduces companies’ outside general counsel spend. But invoices with errors can be rejected, creating more work for the law firm’s billing department.
In an ideal world, corporate e-billing is beneficial to law firms and their clients. Law firms get paid faster and end up with cleaner internal data, which helps them understand their own profitability better. Corporate clients can see and predict legal spend, control legal costs, spend less time on invoice review, and justify legal budgets to their leadership.
In reality, law firm billing departments are usually juggling many sets of billing guidelines and multiple e-billing platforms. Even when everything goes right, the process is challenging. Rejected invoices add extra complexity, upset clients, and increase the need for write-offs. When those problems impact the firm’s profitability, the billing function comes under the microscope.
The Most Common Rejection Causes
Many rejections are automatic. Newer e-billing platforms may also use AI to find problems that can’t be automatically detected, like poor narrative quality and inefficiencies, which can fuel additional rejections. Most are caused by a few common problems.
LEDES format and structure failures
Rejections related to the LEDES file format are common, and indicate a problem with the formatting of the invoice as a whole.
How to prevent: Use the client’s desired LEDES format. Many clients use the original 1998B format, which is a text-based file. The newer XML formats use tagging that allows for more detail and flexibility.
UTBMS coding errors
UTBMS coding problems happen in the line items, like fee entries and expenses. Common problems include missing expense codes, task and activity codes that don’t match in fee entries, and simple miscoding by timekeepers.
How to prevent: Within the billing function, the fix is a thorough prebilling process that catches errors before they make it into the invoice. The firm can amplify those impacts with improvements at the time entry stage, like better timekeeper training and resources.
Billing guideline violations
Even when the UTBMS coding is correct, the fees and expenses in a line item may not be in compliance with the client’s billing guidelines. For example, clients use a variety of time increments (like .25 vs .1 as the base unit) and may disallow certain activities, like internal meetings, or expenses, like travel time.
How to prevent: The fix at the billing function is robust error-checking during prebilling. Like UTBMS coding errors, billing guideline violations can also indicate a problem with training and resources for timekeepers.
Wrong timekeeper and/or rates
An invoice that includes time entries from an unapproved timekeeper or the wrong timekeeper rate will likely be rejected. In addition, many corporate clients monitor efficiency drivers, like the partner-to-associates ratio on the work, throughout the matter.
How to prevent: The billing function should check timekeeper rates for accuracy during the prebilling process. Work by unapproved timekeepers is a bigger problem and is not solvable in the billing function. The hours will likely need to be written down or written off, so billing staff typically need to flag the issue for the partner on the matter.
Block billing
Block billing means vague fee entries like “legal research” or entries that combine tasks, like “call to client, call to opposing counsel, draft letter, work on brief.” Block billing is a problem no matter what the client’s billing guidelines are, but the indicators clients check may vary.
How to prevent: Billing staff should screen for block billing during the prebilling process, and there should be clear guidelines for the billing function about what to flag. But this is primarily a timekeeper training and supervision problem, so billing departments should raise this problem to leadership.
5 Actions To Reduce Rejections Before Invoices Go Out
Everyone in the firm plays a role in reducing rejections: the billing department, individual timekeepers, supervising partners, and firm leadership. Here are five key actions to take.
1. Do a Robust Prebill Review
The firm needs a strong prebilling process that spots errors before they make it into invoices. That means clear guidelines from clients, robust resources on guidelines and coding for timekeepers, stringent cross-checking, and partner approvals.
2. Build a Feedback Loop for Rejections
It’s also critical to track rejection reasons and periodically review them for patterns of errors. Firms can track errors common to many clients and timekeepers, errors for specific clients, and the error rates for each timekeeper. The billing function may have the most visibility into this issue, and can elevate concerns like persistent training issues.
3. Create Guideline Libraries
The billing function can advocate for robust guideline libraries that are available to all timekeepers and billing staff, with consistent updates and ongoing training. Guideline libraries should be accessible while timekeepers are creating a fee entry.
4. Train Timekeepers
Billing managers are a key partner in developing training for new timekeepers, as well as ongoing training. Training can cover general principles, like avoiding block billing and looking up billing guidelines regularly, as well as client-specific training for larger clients.
5. Automate Error Detection When Possible
The standardization efforts that created present-day e-billing practices were a collaboration between attorneys, corporate counsel, and accountants. They were intended to benefit law firms and their corporate clients. Billing managers should advocate for automation wherever possible, so that ease for clients doesn’t come at the expense of inefficient, repetitive manual work in the billing function.
What Your Billing Software Should Handle for You
Modern law firm financial software can reduce the load on the billing function, improve the timekeeper experience, and boost profitability. Here’s how Orion can help you reduce e-billing rejections.
- Easy set-up of e-billing clients with built-in error checking and templates.
- Improved time entry with automated guardrails like problem word/phrase detection tied to client, matter, or task code set, so you start prebilling with cleaner data.
- Convenient electronic prebilling with status tracking, an audit trail, and real-time adjustment insights. Also eliminates the need to decipher handwritten notes.
- Comprehensive technical support from Orion’s e-billing experts.
Ready to reduce e-billing rejections?
See how Orion helps firms catch billing errors earlier, streamline prebilling, and submit cleaner invoices.