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Is SimpleLegal A Step Forward or Back on the Way to the Future of Legal Billing?

by Carolyn Elefant on August 6, 2013 · 4 comments

in Fees & Billing, Tech & Web, Trends

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Screen shot 2013-08-06 at 2.39.22 PMTechCrunch reports that there’s a new law technology on the block: SimpleLegal, a company that employs a  machine learning to read, understand and ultimately reduce legal bills.  As TechCrunch describes:

 All a customer has to do is ask their law firm to copy SimpleLegal on each invoice, and then the magic starts to happen. SimpleLegal’s system ingests the invoice and parses each line item into its database. Natural language processing systems figure out who billed what and for how long — and then that data is run through a machine learning system that flags outliers. One example: the system flagged a line item where a professional billed a half hour for mailing. That might not be too unusual but for the fact that the system knew the thing being mailed was a one-page form.

To date, SimpleLegal’s customers have reported savings of between five and twenty percent on legal fees. And SimpleLegal isn’t just for big firm clients – the service is free  for companies with up to $15,000 in annual legal bills – which falls squarely in solo/small firm territory.  It’s also not clear how SimpleLegal protects confidentiality (yes, attorney-client privilege applies to bills which are rich with insights about work-product and strategy) but presumably, transactions between law firms and SimpleLegal would be structured like those with other third-party freelancers or LPOs such that confidentiality is maintained (in fact, my 21st Century Retainer Agreement includes clauses to deal with preservation of confidentiality with outside providers).

What has me most curious is the legal profession’s reaction to SimpleLegal. On the one hand, SimpleLegal represents the kind of techno-powered ethical oversight (since reasonable fees are an ethics obligation) applauded by legal futurists. On the other hand, SimpleLegal’s entire formula revolves around the billable hour and reducing legal services to hours and minutes which most forward-thinking lawyers view either as an antiquated model that fails to align price with value or that commoditizes legal services by imposing uniform standards.

In addition, I wonder about what kinds of behavioral signals will SimpleLegal send? Will SimpleLegal operate as the straw that broke the camel’s hourly-billing back (or more accurately clock?) In other words, will lawyers hoping to avoid the harsh, objective light of SimpleLegal adopt flat fees or pricing arrangements where time spent on tasks is more opaque? Will clients, now empowered with a tool to make lawyers accountable require lawyers to document hours spent on a task? Will SimpleLegal eventually modify its system to keep a check on flat fees – for example, by reviewing costs relative to results obtained, or evaluating the scope of work promised with fees paid?

For now, my simple mind can’t formulate any predictions about SimpleLegal’s implications for the legal profession  – but I’d love to hear your thoughts.

  • Patrik Outericky

    Carolyn – thanks for the interest in SimpleLegal. I’m one of the co-founders.

    There are certainly a lot of questions and concerns you pose and I’d be happy to discuss your concerns – reach out.

    As for some quick answers – confidentiality, we maintain highly secure/encrypted systems. However, we are only brought into the process by clients. Not law firms. So privilege is at the discretion of the client. That said, no eyes see the details unless absolutely necessary, and that access is limited to a small group of named, screened individuals. Individuals clients can be in contact with if they need to.

    Our free tier allows smaller companies a place to organize/maintain/review their legal bills. Our goal is not to go after small firms (or any firms for that matter). We want to provide transparency and understanding for our clients – many of whom are frustrated with the lack of understanding a legal bill provides.

    While the review / reduce portion of our toolset is newsworthy, most companies are already reviewing their legal bills (and if they aren’t they should be!). We provide them an ability to receive them all in one place (vs mail and email messages), review them quickly, understand/track their spend across matters and types of work, as well as approve and pay them (integrated ACH payments).

    Our ultimate goal is to provide all companies with a toolset to make this whole process easier and more transparent. Law firms provide valuable services, and companies should pay what they owe; no more.

  • nwenzel

    Carolyn – Nathan from SimpleLegal here. We agree that billing in 6-minute increments is far from an ideal solution. But until alternative fee arrangements take hold, it’s where we’re stuck for now.

    I know the problems that attorneys have with seemingly arbitrary push back on line items. Often, that push back is just a cash flow management strategy to delay paying a bill. Many times a simple phone call would have cleared up any misunderstanding.

    Our goal is to be part of the solution. I don’t want to see legal billing become what medical bill is today.

    Our belief is clients should pay what they owe, but not more. Of course, there are endless debates on how to determine what you “owe” and we won’t solve them here.

    One of the big issues that our clients have is when they see a bunch of names show up on their bill that they’ve never heard of and never met. I think that’s where solo firms have a big advantage. That’s why we use a solo attorney!

    Thanks.

  • myshingle

    Thanks for stopping by. I use flat fees for about 80 percent of my cases because of administrative ease. I think that both hourly fees and flat fees are vulnerable to abuse and overcharging. In fact, what many flat fee aficionados forget is that the bar moved to hourly rates to improve transparency. I am really intrigued by this product and look forward to seeing how it will be used. Many times, companies oversell disruption but I think this product comes closer than most so described.

  • Adam Ziegler

    Really interesting questions about the possible impact and consequences of SimpleLegal. I’m excited to see how it plays out.

    I personally think that clients should take the time to review bills closely, not so much to ferret out anomalies and mistakes (for which an algorithm should be superior), but to better understand the legal services and value they’re receiving and to get a feel for who’s actually doing what work.

    I love the idea of a smart, data-driven tool that can enhance a client’s review of legal bills, encourage good billing practices and bring more transparency to the process. But I think it would be a mistake for clients to abdicate review entirely to machines. That doesn’t seem to be what SimpleLegal is proposing, but I hope clients don’t view this as a reason to say: “I don’t have to spend time looking at my legal bills; there’s an app for that.”

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