In the U.S., legal departments frequently amend invoices
submitted by their outside counsel and other vendors. Through the use of a business rules engine, systems can automatically make line item adjustments based on agreed-upon fee agreements, including negotiated discounts and alternative fee arrangements, says Mark Poag, GC of Datacert.
A system can also be created to conform to practices in other countries. Billing in Europe, for example, is governed by an EU Directive on value-added tax (VAT) requirement which in effect says an invoice can't be modified after it is sent to the client. It is also partially driven by a cultural difference. "In Europe, the culture of the client/law firm relationship doesn't typically support a client making adjustments--also known as 'short paying'--to an invoice, especially without first discussing disputed items with its law firm," says Poag.
To change an invoice in Europe, a rules engine can be configured to notify the law firm of a disputed charge. The law firm can subsequently issue a credit note. Additional functionality might include the ability for these credit notes to be tracked in a matter management application.