When the expenses of a vendor such as a litigation support group or an expert witness are significant (greater than $5,000 perhaps), it is often advantageous for law firms and for law departments to have the vendor directly bill the law department.
Direct billing means the law firm does not have to carry the expense until the law department pays the bill and it gives the law department more direct insight and control over a major expense. Direct billing may also enable a law department to obtain discounts or special services from the vendor. It also makes it easier to enforce rules that certain national vendors be used by law firms (See my post of July 31, 2006 on national vendors selected by a law department.). Direct billing also clearly distinguishes the costs of various unbundled activities.