E-Billing Cuts Costs and Delays for Phoenix City Attorney

Electronic billing system speeds invoice processing, improving relations with outside counsel.

by / April 24, 2008

Like many legal clients, the city of Phoenix has a love-hate relationship with its outside counsel.

Phoenix needs outside counsel to defend its interests when the City Attorney's Office lacks the staff, resources and expertise to handle matters. But the city is under continuous and unrelenting pressure to cut costs, including its legal bills. Compounding this dichotomy is the frustrating delay in payment often associated with traditional governmental processes.

Enter e-billing, which is popular among insurance companies, but not as widely accepted in government. E-billing was once an alien concept for Phoenix - but that's no longer the case.

Now, thanks to e-billing technology, the city has improved its billing process by offering timelier invoice review and approval, improved data integrity and prompt payments. These upgrades have improved our relationship with outside law firms.

Bye-Bye, Paper
Before we implemented e-billing, it took a frightening number of steps to process a paper invoice through to payment, including some redundant data entry between the Phoenix City Attorney's Office and the city's Risk Management Division.

Law firms submitted paper invoices to the City Attorney's Office. The invoices were logged in manually, routed to attorneys for review, logged out, and then forwarded to Risk Management for payment. Risk Management would then repeat the process. Each department recorded the same information in separate computer systems.

The City Attorney's Office used ProLaw and a home-built Microsoft Access database, while Risk Management used CS STARS, a risk-management information system from Marsh Inc.

These two systems didn't communicate with each other, however. Consequently there were errors and inefficiencies caused by manual data entry. Time was wasted trying to address billing questions and resolve billing errors. 

The city quickly realized its e-billing system would need to integrate with the city's existing case-management and risk-management information systems.

Funding Fiasco Fixed
Many e-billing vendors price their systems well into six figures. TrialNet's price point for a network of the size required to meet the city's needs was in the mid-five-figure range. Unfortunately the city was experiencing budget cuts and layoffs during this time, and funding wasn't available for innovative new procedures.

Desperate to develop a funding mechanism, the city turned again to the insurance industry and learned that it wasn't uncommon for insurance companies to receive a quick-payment discount: If the insurance company pays the law firm's invoice within 10 days of submittal, legal fees are reduced by 2 percent. The city calculated that the 2 percent discount would more than pay for an e-billing application within the first year of operation. So the city modified its standard contract to include a quick-payment discount.

Implementation Challenges
In early 2006, TrialNet was selected as the preferred vendor. TrialNet was implemented, up and running, and integrated with ProLaw and STARS by July 2006.

A typical TrialNet e-billing implementation is straightforward: A city attorney's office or corporate law department uploads information about its law firms, including rules based on its agreement with each law firm, and TrialNet's team trains the firms to upload invoices electronically via the Legal Electronic Data Exchange Standard format.

In Phoenix's case, however, the three-way integration with STARS and ProLaw made the implementation more complicated.

The city's electronic billing system needed to not only assist in the processing and analyses of legal bills, but also connect the ProLaw system used by the City Attorney's Office and the STARS system used by the Risk Management Division and provide an interface for outside counsel to input information.

Interfaces were developed between ProLaw and TrialNet, and between TrialNet and STARS, with the input of representatives from TrialNet, CS STARS, ProLaw, the City Attorney's Office and the Risk Management Division.

E-Billing Functionality
Now, when a law firm uploads invoices using TrialNet, the system sends an e-mail notification to the attorney assigned to review those specific invoices. The reviewing attorney then accesses TrialNet via the Internet and reviews the invoices electronically.

The system tests each invoice and rejects those that fail critical tests, such as billing on a closed file or invoices by an unapproved timekeeper. The law firm can adjust these invoices before the City Attorney's Office spends time on them.

Accepted invoices are routed electronically, with potential problems highlighted for simple review by the approving attorney. Attorneys can accept the invoice, reject it or modify it. For example, if a firm bills more hours for a deposition than budgeted, the approving attorney can modify the invoice. With this electronically assisted analysis, law firms are forced to comply with the guidelines outlined in their contracts, resulting in additional savings for the city.

Our solution's portability is also important to note because it allows invoices to be reviewed - and subsequently approved, questioned or modified - when attorneys are out of the office.

Each night, approved invoices are electronically transmitted to an FTP site and then automatically downloaded to STARS. There, the invoices are matched to claims, and checks are automatically processed and queued for payment. Once a check is issued, STARS sends the payment information back to the City Attorney's Office through TrialNet, enabling the City Attorney to track payments.

At the end of the cycle, the city has a complete audit file: Every detail of every invoice is electronically preserved, as are all dates associated with invoice submittal, review and payment. All personnel involved in processing the invoice are identified and their respective actions captured. Finally, all payments are reconciled against the original invoice when the invoice is paid.

The e-billing process has reduced greatly the cycle length of an invoice, from weeks to days. The typical cycle length - from receipt to payment - is now three to four days instead of three to four weeks. This new process helps the city pay invoices within 10 days and recover the 2 percent discount.

As the process accumulates data on law firms' performance, the city will be able to adopt best practices that evaluate law firms against a series of benchmarks. Some of these metrics are purely financial, like a budget-against-spending analysis. Other benchmarks are tied to litigation performance.