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Exaggerated savings from electronic billing software

Terry Crum, a director at Deloitte Touche, is quoted in Law Firm Inc., Vol. 5, Sept. 2007 at 27, on the subject of savings by law departments from their e-billing systems. Crum says that with e-billing “a client can save 15-18 percent of its outside counsel spend.”

No way, Crum! First, almost no law department imposes e-billing on all its law firms. If 70-80 percent of all invoice amounts filter through the software, that is pretty good. But you would have to save 25 or 30 percent off that portion to achieve Crum’s overall estimate. Second, most law departments have tried at least a few things to cut outside counsel spending, so the savings he estimates would have to come on top.

If a law department counts as savings the reduced time required of its lawyers and staff to process invoices, that is a legitimate savings – assuming data backs up the estimates – but those savings should not count toward reduced outside counsel expenses.