“We get a tremendous number of invoices — about 200 a month. To review all of that and to comprehend it means it needs to be in an easy format,” says Robert Shapiro, senior global lead patent attorney with Apotex Inc. in Toronto.
Last year Shapiro decided it was time to look for a better way to manage and pay the many bills coming from the company’s external counsel. He was looking for a more streamlined tool to house and review legal invoices.
As a global company, Apotex receives invoices for a range of complicated matters including litigation, patent, and trademark work. Some are billed on hourly rates and some arrive in different currencies.
“We wanted something paperless because there are approvers across the globe and it’s a lot simpler if we could have an invoice approved by someone in Australia and then immediately available for approval in Canada,” he says.
Apotex was also looking for a direct link to the company’s accounting system because there were concerns about the timely payment of invoices.
The department was using a third-party auditing company based in the United States that employs trained lawyers who review legal invoices and identify non-compliant costs.
“The problem was the cost-benefit ratio,” says Shapiro, “It was very expensive and the third-party lawyers were not as familiar with the cases as our own in-house lawyers were. So we made the decision that it was most efficient for our own lawyers who are giving out the work to review the work. It’s not a great area to outsource. We were not seeing them catch anything we would not have caught ourselves.”
After considering several options Shapiro decided to go with Serengeti Tracker. (Both Serengeti and Canadian Lawyer are Thomson Reuters businesses.) All of Apotex’s global law firms were already on the Serengeti system so that meant they were familiar with it.
Apotex uses the system primarily for billing but also for some minor matter management.
Law firms upload their invoices into the Serengeti system and the bills then show up in Shapiro’s inbox. The legal department now has all of its invoices going through the Serengeti system, including experts who bill Apotex through the law firms.
“Invoices can be approved quickly and if I’m not satisfied with a particular invoice it’s easy to reject or dispute an entire invoice or line item,” he says. “We can say we’re not paying something or dispute an item — it gives a firm a chance to explain.
“By giving them a chance to explain it maintains a positive relationship between the client and the law firm.”
Shapiro admits there was some work to do on his end before rolling out the system. It gave Apotex a chance to review the way it manages matters and review and reconsider invoice approval routes.
“It took about two months to get it implemented and ready to go live,” he says.
Now that the legal team is reviewing the invoices, Shapiro says he better understands what the law firms are doing with their cases.
“It’s helped the relationship between in-house lawyers and external counsel because you understand what’s going on,” he says.
He’s also been using a budget-tracking tool.
“I’ve entered in yearly and project budgets and the system automatically generates an alert if we’re exceeding the budget depending on the settings based on the per-month or quarter basis. It also allows the law firms to see what our budgets are — so it’s increased the dialogue and given firms a better understanding of what we can budget for on a particular matter,” he says.
Apotex is also using an accrual feature that allows the law firms to enter in their estimated fees and expenses at the end of the month.
“We ask all our law firms to give us their estimate from the previous month to run a pre-bill, which allows us to keep up-to-date information on what our expenses are going to be on our fiscal year,” he says. “Without that, if all of a sudden you suddenly got three or four invoices coming in at the same time it could sway your budget or spend forecast, whereas if you have up-to-date accruals you know what your spend is on a per-month basis and takes away the guessing.”
That means Shapiro knows if the department is going to be under, over, or on budget and can adjust behaviour if it is trending over budget.
Shapiro manages the system but a law clerk is the tracking co-ordinator and go-to person for the law firms if they have questions.
The cost of using the system is based on the amount of legal spend a department puts into the system.
Apotex challenged Shapiro to make it a self-funded system — the company expects him to save as much as he is paying for the service.
“It’s not necessarily a money maker for us and there are lots of soft benefits but overall they want to see a savings that equals the cost of the system, which will be done through rejection of invoices,” he explains.
Since it went live in September 2014, so far Apotex has made slightly more than what it has spent on the system.
“Most of the time it’s because someone invoiced us on the wrong file — maybe as a time entry — someone entered in the wrong matter number at the law firm. You can also identify where someone has spent too much time on something,” he says.
Serengeti also offers an automated auditing system. There are certain expense codes you can set limits on, so if those limits are exceeded an error alert pops up allowing you to reduce or ignore that error but it at least provides visibility, such as with photocopying costs. A company may have a limit of 25 cents a copy and if a firm tried to charge 30 cents it would show up as an alert.
By using uniform, task-based management system codes Apotex can also tell how much law firms spent on each area of a piece of litigation. It can run analytics across its law firms to see how much each stage of litigation cost. The system allows Shapiro to switch from hourly rates to alternative fee arrangements because he knows what the typical per-stage costs are going to be.
“I think when law firms know their invoices are being scrutinized the behaviours certainly change. I can’t say the system is always going to be self-funded but I would be happy at the end of the year if we weren’t rejecting as much and that the behaviours had changed,” he says.