Why Claims Organizations Are Moving Beyond E-billing Software
The claims litigation department is becoming one of the most highly scrutinized, pressure-packed divisions within organizations. Why? A large reason includes the rising costs of litigation on both the legal fee and indemnity side. Another is the increased scrutiny claims organizations are receiving from the C-Suite to control these costs and better understand the metrics behind their claims litigation program. During a pursuit to lower these costs, many claims departments look to traditional e-billing software to reduce their legal spend.
While these solutions have been the popular pick over the course of the last few decades, savvy claims leaders have recognized that more robust and beneficial offerings are now available, allowing them to focus on and affect the case outcome, not just the invoices they receive.
In this article, we’ll define what e-billing software is and how it can benefit claims departments. We will also highlight inherent shortcomings and illustrate alternative options.
What is E-billing Software for Claims Departments?
E-billing software is a way for claims litigation teams to track and review the defense counsel and other case-related vendors’ fees incurred while working on a case. Complete a search on the internet for e-billing software, and you’ll find many different providers, each with its own pros and cons. This kind of solution was once considered innovative and forward-thinking. It was sought to provide an enhanced element of transparency, and it even saved claims professionals from poring over pages and pages of faxed bills and documentation.
Efficiency savings and the ability to dispute charges on the invoice are among a handful of benefits that claims organizations receive by implementing e-billing software. Unfortunately, and in most cases, the solution leaves out important data that would help claims leaders make better and more informed decisions.
Benefits of E-billing Solutions
It encourages billing compliance
Many e-billing software solutions have configurable rules that allow the claims organization to set parameters on how invoices are designed and delivered. Any inputs or charges that don’t match those pre-established guidelines can be flagged or automatically adjusted.
E-billing reduces fees
With additional insight into fees by line item, claims organizations get better visibility into exactly what they are charged, giving leadership a more informed idea of what could be adjusted. With customized workflows, it allows management to question exorbitant costs easier and not let items fall through the cracks.
Automation and established workflows speed up processes
E-billing software hinges on efficiency. What used to take hours for multiple people to review hard copies of invoices and documents can be streamlined and automated to just a few minutes, requiring fewer resources. Invoices that fit the pre-established guidelines the claims team has created are automatically routed to accounts payable for payment, while those that don’t are returned to defense counsel for justification or adjustment.
What Are the Downsides?
Strategies are formed based on invoice
There are numerous reasons why claims organizations are moving beyond traditional e-billing software solutions, but perhaps the most momentous is that e-billing software supports a purely reactive strategy. An e-billing solution’s sole focus is on the invoice, which is only received after the work has been completed. That means there’s no time for discussion about work product and no means of using that information to inform ongoing case strategy.
E-billing software successfully makes the lives of a few people easier, but it does little to advance what should be the goal of every claims organization: to close cases faster and with more favorable outcomes.
“An e-billing solution’s sole focus is on the invoice, which is only received after the work has been completed.”
Misguided cost savings
Proponents of e-billing software will often tout the marginal cost savings in legal fees, but we believe that focus is misguided. According to industry data made available to CaseGlide, legal fees and expenses make up just 23% of total litigation program costs for the combination of auto, liability, property, and workers comp cases. Meanwhile, 77% of total costs go toward indemnity and settlement, or what’s referred to as the case outcome. Those numbers become even more extreme when looking specifically at property cases, with legal fees and expenses totaling just 13% of total costs.
By using e-billing software and not a more advanced and comprehensive litigation management solution (more on that later), claims organizations are focused on reducing line items that have little impact on the total case costs.
Legal review tools strain carrier and council relationships
There’s also the potential of damaging the claims organization’s relationship with defense counsel. The cutting and slashing of bills generated by an e-billing solution can cause friction and create distrust between the two groups. The partnership between a claims organization and its outside counsel is critical to the success of the litigation management program. It’s clear that nickel-and-diming your partnership not only disrupts the relationship but focuses on a minute part of the overall costs of the claims. (See ways to maximize your relationship with outside counsel here.)
Alternatives to E-Billing Software
The alternative to these limited e-billing solutions is a claims litigation management software. Unlike pure e-billing arrangements that often generate conflict or tension, claims litigation management software actually brings counsel and claims professionals together. Both parties work simultaneously on the same platform, which eliminates the needless re-keying of critical case data and activities.
That shared functionality also means that all stakeholders have universal access to real-time updates that can affect case strategy and outcomes, including the decision to settle cases sooner. It’s that type of activity that influences the high-dollar aspect of total costs—or the 77% of total claims expenditures that goes toward the outcome. In fact, that same data we referenced earlier tells us that just a 1% improvement in outcomes is worth roughly a 3% improvement in legal fees.
Claims litigation management software also enables claims organizations to harness the power of structured data. Defined as sortable, quantitative data that comprises clearly defined information fitting within specific fields, structured data is the key to gleaning actionable insights that drive case strategy. As we wrote recently in our article on structured data vs. unstructured data, this information provides a multitude of benefits, including the historical context to guide claims departments in attorney selection and preparation.
An advanced claims litigation management solution will also have an e-billing feature built into the software. You would be able to achieve the benefits of automated billing, workflows, and efficiencies, as well as advanced reporting capabilities, with less friction between claims departments and defense counsel.
Final Thoughts on Why Companies Are Moving Beyond E-billing Software
While utilizing e-billing software to reduce legal spending is a cause that many claims organizations can get behind, not everyone has found the right approach in getting there. E-billing solutions that are limited in scope and fail to provide useful data remain common practice in the claims industry.
In order to realize a meaningful reduction in overall claims cost, organizations must shift their focus to claims litigation management software solutions that also have an e-billing feature. This allows claims leaders to harness the power of real-time structured data and will unite counsel and claims professionals onto one platform.