Every year, companies unknowingly overpay on legal invoices due to vague billing, inflated rates, and non-compliant charges. In-house teams often lack the tools, time, and expertise to catch these errors – leading to millions in unnecessary costs. Outsourcing legal bill review eliminates these inefficiencies, ensuring compliance while reducing legal spend overall.
Industry estimates suggest that the legal bill review software market size at $1.46B in 2023 and the legal process outsourcing market at $13.67 billion in 2022, reflecting the increasing reliance on expert outsourcing to handle complex billing protocols.
How Legal Billing Discrepancies Fall Through the Cracks
Consider this common scenario: A claims team receives a legal invoice from outside counsel. The adjuster, already handling multiple cases, gives it a quick review before approval. While major red flags may be caught, subtle discrepancies—incorrect hourly rates, vague time entries, or excessive administrative charges—slip through unnoticed.
Furthermore, adjusters may not want to strain business relationships by questioning their colleagues’ billing practices. As a result, small discrepancies are allowed to stand, and over time they can add up to significant costs.
Few companies have the in-house resources necessary for a thorough legal bill review, and outsourcing this task can save money while removing friction.
The Risks of In-House Bill Review
Without a dedicated bill review process, companies may end up overpaying on legal invoices in several ways:
- Non-compliant timekeeping – Is time recorded in tenth-hour increments per contract terms?
- Billing rate errors – Are attorneys billing at agreed upon contracted rates?
- Role-appropriate tasks – Are partners performing paralegal work at high hourly rates?
- Vague descriptions – Are ‘review emails’ or ‘work on case’ entries clearly defined within the billing entry?
- Lack of budget oversight – Is the bill within approved budget reserves?
These risks aren’t just hypothetical – real-world cases demonstrate how unchecked billing errors can escalate:
- Cost of Billing Errors: After implementing billing guideline review with Alan Gray, a global financial services firm achieved an across-the-board fee discount of 10% with one law firm in a single fiscal year, illustrating the potential savings from catching billing errors like role-inappropriate tasks (e.g., associates doing paralegal work at higher rates).
- Non-Compliance in Catastrophic Events: Alan Gray found during billing audits that 45% of the invoiced activity was non-compliant in a case involving multiple clients with $75M in billings from a catastrophic event. This underscores the risk of vague descriptions or lack of budget oversight, especially in high-stakes scenarios where legal costs can spiral.
Given these challenges, it’s no surprise that leading insurers and corporations are turning to outsourced legal bill review to manage costs, ensure compliance, and streamline operations.
Five Major Advantages of Outsourcing Legal Bill Review
- Precision and Expertise. Legal billing lacks consistency across firms, making errors inevitable. Some firms adhere to strict guidelines, while others unintentionally misclassify work or inflate hours. Without oversight, these inconsistencies add up.
- Automated and human review by expert auditors ensures compliance with custom billing guidelines, ethical obligations and ABA standards which are based on state-specific Rules of Professional Conduct.
- Firms become more adept at billing accuracy when clear standards are enforced
- Technology-Driven Efficiency. Internal teams lack the technology to analyze and aggregate data trends. Outsourcing this task is an effective way to access the sophisticated tools needed to combine automated flags and alerts with human analysis to ensure non-compliant or unreasonable tasks don’t slip through the cracks.
- Automated flags & alerts for rate discrepancies, excessive billing and coverages
- Predictive analytics to track billing trends and improve budgeting
- Proactive alerts when a file approaches budget limits before overruns
- Improved Business Relationships. In-house teams hesitate to dispute legal invoices to avoid damaging relationships. Outsourcing removes personal friction from billing disputes.
- Third-party experts handle invoice negotiations, which ensures fair billing without straining partnerships.
- Incentives are aligned as third-party partners are paid based on a percentage legal spend reviewed, not a percentage flagged for reduction.
- Firms respect external audits and are more likely to comply with the Billing Guidelines when these rules are enforced by a third party.
- Cost Savings and Process Improvement. Alan Gray’s SIMS solution has helped clients save up to 15% on aggregate legal spending, yielding significant savings with no upfront or onboarding costs charged.
- Every hour spent reviewing legal invoices is an hour not spent on high-value claims management. Outsourcing to a trusted third-party frees your team to focus on strategic priorities.
- No recruiting, training, or turnover costs
- Optimized workflows reduce invoice processing time
- Billing Guideline compliance eliminates unnecessary legal spend
- Every hour spent reviewing legal invoices is an hour not spent on high-value claims management. Outsourcing to a trusted third-party frees your team to focus on strategic priorities.
- Team Morale. Outsourcing eliminates the frustration of bill audits, allowing in-house teams to focus on strategic claims handling, improving efficiency and job satisfaction.
- An outsourced legal bill review allows teams to focus on claims management and legal strategy priorities like making accurate and timely claims decisions or minimizing risk and fraud.
- Higher morale and productivity as employees focus on their areas of expertise.
How It Works
Alan Gray’s Smart Invoice Management System (SIMS) ensures invoice compliance while providing comprehensive data and analytics and a collaborative appeal process before payment on any invoice.
Setup and automation. We help set up each law firm in Alan Gray’s SIMS system. SIMS manages budget requirements and timekeeper rate checks with automated and human analysis of bill compliance. If the automated system flags a potential discrepancy, the issue is then reviewed by a human analyst. Meanwhile, the law firm can independently monitor the approval status of their invoices.
Human oversight. Unlike many providers that rely on offshore teams, Alan Gray’s 100% U.S.-based legal bill review team ensures faster response times, stronger compliance oversight, and seamless collaboration with your claims and legal teams—no communication delays, just expert service you can trust.
If a discrepancy is uncovered, Alan Gray handles the negotiation through a collaborative appeal process. This process gives the firm a voice in the bill negotiation and approval. This protects the client from incorrect payments while preserving the relationship between the client and the law firm.
In our experience, a leading international insurance group using SIMS reduced firm friction and shortened payment cycles by implementing a collaborative appeal process, achieving more than 10% savings while maintaining strong law firm relationships.
Support and reporting. Our best-in-class team provides seamless onboarding with no upfront costs, helps keep your legal spending under control, provides ongoing support for claims teams and adjusters and generates detailed reporting and analytics for company management to review or discuss with our experienced attorneys.
Take the Next Step
Cut legal costs by up to 15% with no upfront costs—schedule your free consultation today to see how SIMS enhances legal bill review and reduce firm friction.
Let us show you how an outsourced SIMS solution can increase legal bill review effectiveness and reduce firm friction. Schedule a consultation.