Critics say it is time-consuming and only benefits bulk work but, as Michelle Madsen finds, some are banking on e-billing to put the client in control

When Barclays unveiled its new panel last week the final list held few surprises. However, for the 24 law firms the bank appointed to its coveted roster, this year's mandates hold a new dimension in the shape of an online tracking system the company has put in place to improve its grasp on its legal spending.

In February, Barclays announced that it had partnered with US electronic invoicing provider DataCert in an initiative aimed at handing Barclays a deeper insight into where its legal budget was being spent. The bank signed up to use DataCert's invoice management system, which processes electronic invoices from firms and delivers them to the bank in a standardised format.

The model, which is often dubbed e-billing, might not sound like rocket science, but the potential for corporates and banks to have real-time access to information is being touted in some circles as a revolution for the legal market.

The first attempts to create faster online billing systems started more than 10 years ago when DataCert launched its first legal management product, AIMS. The program, which can monitor staffing in real time, allows clients to keep an eye on legal costs as they mount up, rather than waiting to receive a paper bill after the job has been done – in theory handing the clients more power.

DataCert senior director Jeff Hodge says the system was devised in response to clients' need for billing transparency.

"When the idea originally came about, some firms let their clients onto their systems – a laborious process as the client still had to use lots of different systems to get the information needed," he says.

"Some firms responded by pushing out invoices to extranet sites. Now you have a shared document whereby all firms can submit information onto one platform; that way the client can see and compare at ease."

Hodge, understandably for a IT provider, is bullish about what systems like AIMS can do for companies and banks and says that with access to well-ordered, detailed information it is much easier for clients to compare different legal advisers.

DataCert is not the only company to offer cost-conscious corporates online tools to monitor billing and adviser staffing. Information provider
LexisNexis runs a similar service in the US called Examen. Other providers include CT TyMetrix, Serengeti Law and OB10, although so far only DataCert and CT TyMetrix have made any impact on the less-developed European market.

One issue that makes European general counsel sceptical of the concept is the perception that e-billing is largely about managing bulk instructions.

Ian Woods, group legal director at Virgin, comments: "One of the key ways of keeping track of legal spending is to be involved in deals
so that you can ensure your advisers are delivering value for money. However, if you need to get a picture of what is going on across a very large team with a high volume of matters, I suspect this could be a helpful tool."

But Ben Hawkins, head of marketing for corporate legal at LexisNexis, argues that e-billing is only one aspect of a wider push by clients to gain more meaningful control over relationships with external advisers.

"E-billing is just one side of the wider concept of legal spend management," he says. "This is more about monitoring activity than actively driving down costs. The end result is that it puts the power of managing this information into the client's hands."

One of the reasons why the legal cost management model has had more of an impact on US companies and banks to date is, according to Hawkins, due to a codification system called the uniform task-based management system (UTBMS).

Created in the 1990s by the American Bar Association and the Association of Corporate Counsel to demystify the process of legal billing by codifying different practices, the standard is now widely used across the US and makes it easier for clients to see where their money is going.

Taking on board this sort of technology comes at a price, however. Hawkins admits that LexisNexis' packages can cost hundreds of thousands of pounds, so even major clients have so far been slow to invest.

"There is no off-the-shelf price," concedes Hawkins. "We go in and try to work with existing management systems to create something that suits the client. It is bespoke."

Richard Bennett, general counsel at HSBC, says: "We have an internal system for purchasing which we looked at about 18 months ago with a mind to adapting it for our firms and starting to use electronic billing. It was not a great success but we are looking at it as something to do in the future.

"We have a substantial legal spend and if we had some software to track costs and cut and dice things into easily digestible portions of information it would be very useful."

These comments are backed up by other corporate counsel who have found that such systems take time and effort to get right.

So what potential do information management systems hold for both firms and clients? On the one hand, the emphasis on transparency means that firms will be pressed to become more efficient with their own information management systems – a trend which some firms such as Eversheds and DLA Piper seem to have embraced.

Clients are also beginning to consider the scope for e-billing packages which allow corporate counsel to monitor a wider range of metrics regarding their outside counsel. Bank of America recently tailored its e-billing system to allow it access to diversity statistics about the lawyers its outside firms assigned to different matters.

DataCert has added a similar element to General Electric's (GE's) e-billing database, which has allowed GE to ensure that its firms are adhering to its diversity policy.

Wragge & Co business development partner Derek Southall says using information management systems and
e-billing is something that has only really had any resonance for large corporations thus far, but predicts its effects could soon be felt across the industry.

"There has been a need for this for a while," he says. "It is an appropriate thing for a client to do. Some people in private practice are nervous about
e-billing but they have to realise that we work in a corporate market and firms need to be efficient in these areas."

Clients in the UK are listening, even if they are yet to be convinced.

Bridgepoint Capital general counsel Barry Lawson comments: "Conceptually, e-billing sounds like a good idea for companies that have a high volume of regular work going on. We keep a tight control on our costs, although I must say our methods do not give us the scope to compare details on fees.