When Aniz Alani arrived at the City of Abbotsford in early 2017 as the municipality’s first in-house counsel, he quickly identified one area in particular he knew he needed to get some control over — managing the bills coming in from external law firms.
As director of property, risk management and legal services at the city — the largest in British Columbia outside Metro Vancouver — he was facing the challenge of creating a department from scratch.
“When I joined, it was necessary to build the corporate legal department from the ground up and I was looking at all of our systems,” says Alani, who had come to the municipality from B.C. Hydro. “Before my arrival, the city was exclusively using external counsel, but had billing arrangements in place. What was painfully obvious to me was how slow and tedious the paper-based invoice process worked.”
Alani decided it was a good time to revisit the decades-old system that involved an external counsel firm mailing a hard copy invoice that would work its way from desk to desk — a slow, painful process that really only served two key purposes — to document the internal approvals and inform accounts payable at the city how much to pay and which budget to take it from.
“Our external counsel had been pretty accommodating in terms of preparing manual summaries, but it was just inefficient — it was slow and prone to being held up. Individual line items on an invoice would need a cost centre tagged to them before a bill could get paid — the bill sat on someone’s desk and we would lose track of it until we heard from the vendor as to when it was going to be paid,” says Alani.
There were about half a dozen firms doing work for the city and each one would have a different point of contact within the muncipal organization, so invoices were going to different people. The process issue aside, there was also the fact that the information was not being committed to a system that would record the historical billing information and Alani knew he was missing out on valuable data he could potentially be using to budget or leverage better rates.
“I figured there had to be a better way,” says Alani. “I didn’t want to spend a significant portion of my day keeping track of these invoices, to say nothing of the fact that once they were paid they sat in a drawer somewhere and no one ever looked at them again. We were losing all the potential data sitting in those invoices telling us who was doing what and depriving us of any line of sight into those vendors and the work they were doing for us.”
Alani knew something had to be done about the invoice review and collection process.
After evaluating several software systems, Alani settled on a product from SimpleLegal.
“Everything was gravy,” he says. “Quite often, before we moved to SimpleLegal, our vendors would set up these general matter buckets and things would go to general files. Basically, every time we send a request to external counsel, we set up a discrete matter that is tagged to a specific department budget — a customized approval workflow — so exactly the right people have visibility on the spend.”
SimpleLegal launched in 2013 and includes e-billing, matter management, accruals automation and advanced reporting to help legal departments streamline and make informed decisions.
The company’s CEO, Nathan Wenzel, says he thinks lawyers get a bad reputation around their adoption of technology. “I don’t think they are necessarily technology phobic; I think it’s more about the process and culture of the law firm side,” he says. “They know that other departments have these great systems that talk to each other and work well together. If you look at folks who have gone in-house, especially around the movement around legal ops, you have folks who are really looking to technology to leverage what they do.”
On the law firm side, it’s about hours and, on the in-house side, it’s about outcomes, he says.
“In-house teams have grown in the last 10 years by seven times the rate of law firm headcount,” he says. “This idea of growing solely based on headcount starts to present challenges and so you want to provide for scale. So, we provide tools to allow legal departments to grow for scale.”
The SimpleLegal system has been in place at the City of Abbotsford for just more than a year now. They sell to the corporate client side but have tools law firms use such as uploading documents, status updates, etc.
Using the system has been a “night and day difference,” Alani says. “From the vendor side, they are seeing payments delivered electronically into their account from a week of submitting an invoice to us. What used to take weeks to collect those internal approvals on paper invoices now takes days if not hours. Everything is logged; it’s secure. There is accessibility any time anywhere — I don’t have to wait weeks for a bill to be populated in our accounting system — I know from the moment it’s submitted I can see from my iPad or iPhone how much has been spent.”
Having the data available allows Alani to answer questions from city staff and council more immediately and there is open access to city management if they want to know exactly how much is being spent.
“In that way, it’s made the legal spend a lot more collaborative in the organization — the data isn’t siloed off in the legal department or in finance. It’s easy enough to use that staff feel pretty comfortable going in and doing a deep dive whenever they want,” he says.
Overall, he says, the system has “easily paid for itself.”
“It’s a huge savings in person power,” he says. “We previously had a filing clerk receive the invoices, stamp them, hand-write accounting codes on them and shuffle them through the organization manually collecting signatures. Once all the approvals came in then they had to redact sensitive information before going to accounts payable. Now, all of that labour is just eliminated. The invoice comes in electronically and exactly the right people see it in their inboxes and review and click approve. The billing data goes right to the city’s SAP system and gets deposited to the vendor bank account the same week.”
Some new features of the SimpleLegal tool include alternative fee arrangement enforcement including fixed or flat fees, fixed total costs, task-based fees, blended rates, volume discounts, vendor-specific rate cards and matter-specific rate against various rate cards.
While Alani has only recently started experimenting with alternative fee arrangements, he says the system does handle the volume discount arrangements the city has with external firms.
“The system handles all of that really well. With the time keeper validations, we preload all the agreed-upon rates and it gets flagged for whatever reason if an invoice comes in that doesn’t align with that,” he says.
Wenzel says the evolution he has seen is that the conversation is no longer just that “legal is expensive, why are we spending so much on legal” to general counsel who want to showcase what they are doing to move business objectives forward. It’s not just about where are the dollars going, it’s more about what legal is working on to show value to the business.
“You see general counsel moving into other roles in the C-suite. We see companies such as Airbnb where both of their general counsel has moved into the COO role. The role has changed and so that changes what they want from technology — it’s not just where are the dollars going but how can I show them I’m pushing the business forward; that’s the big change we see.”