Story

Fixing the Problem

Legal bills are notoriously long, detailed—down to the tenth of an hour—and often flawed. Errors can be caused by undertrained staff assigning the wrong billing increments to a task or lawyers charging for work that’s unrelated or unnecessary. It’s up to the client to vet the bill, line by line.

Furthermore, sorting through legal bills so that finance and accounting teams can allocate fees is an inefficient use of employees’ time and companies' budget.

Both are tasks that software should be handling, according to SimpleLegal. The startup is positioning itself as an enabler of a data supply chain connecting the law firm, in-house legal team, and finance team by producing a realtime feed of expenses, replacing PDF and paper bills with an interactive, visual dashboard.

“Taking the crap off people’s desks is what gets customers interested,” says SimpleLegal co-founder Nathan Wenzel. “It’s what this software is for.”

Getting data instead of PDFs means companies can find out how much they’re paying for what and easily follow up with law firms about any questions.

Aiming for Efficiency

Wenzel and co-founder Patrik Outericky are repeat entrepreneurs , previously running Edge Solutions, a successful data analytics services company. After working for a variety of clients, they developed a suite of analytic applications to help corporate legal departments and insurance companies to review legal invoices. SimpleLegal builds on that process, bringing it to all kinds of businesses.

SimpleLegal was born out of impatience with inefficiency—Wenzel observed that insurance companies would typically audit their legal data in assembly line fashion, often assigning skilled, high-level professionals to painstakingly review invoices one item at a time. The ineffectiveness struck a chord for Wenzel who, as a former data consultant, once refused to key expense figures into Excel from a PDF file because it was silly to extract numbers from a computer just to type them back into a computer. Seeing the same problem in auditing legal bills, he set out to develop a software solution that would automate, parse, and organize the muddle of invoices.

The system has stood up to the job. In pilots with several companies willing to hand over their historical data, the results of the algorithms closely matched the findings of the experienced human auditors. In fact, in some instances the algorithm detected discrepancies that less-experienced auditors tended to miss. The clients reported that the software was more consistent than some of their employees’ work, Wenzel says.

Making the Process Better

“We’re not trying to be a new puzzle piece [for auditors],” Wenzel says. “We fit into their existing process.” First, law firms can submit bills by email or direct upload. Then the system takes over, using its natural language processing system to order the data and flag inappropriate charges. Auditors’ judgments continue to play the key role of helping the software constantly stay one step ahead. “People and software working together is how you really create value. Software can weed out the frequent, transactional issues and people can then focus on high-value tasks,” Wenzel says.

Target Market

Smaller companies spending less than $25 million on legal fees are SimpleLegal’s prime market, according to the founders. The system can save those businesses’ high-level staff from time-consuming bill-proofing—an attractive offer.

“What allows us to initiate the sale is this headache that either a founder or General Counsel or the CFO is having where they’re just getting mountains of PDFs dumped on them and having to sort it out,” Wenzel says. Plus, SimpleLegal streamlines payments and invoices since clients pay their bills directly through the system.

SimpleLegal is also getting traction with larger companies. It landed a pilot with a Fortune 500 insurer that’s handed over a year’s worth of legal data; about $1.1 billion dollars worth of legal bills.

Currently, SimpleLegal charges 1% on the bills that run through its system, but they anticipate moving to a flat-fee, tiered model based on anticipated legal spending in the future. Also down the road, Wenzel says: “Our goal is not just to make auditing better. Our goal is to fix the billing problem created by hourly billing. We've already helped customers move to a fixed price model.”