Elite has published research showing invoice rejection rates at law firms rose 64%, based on billing data from about 400 firms.
The report points to a tougher collections environment as corporate legal departments increasingly use artificial intelligence to review invoices before payment. Rejection rates rose from 11% to 18% in 2025, the data showed.
The sample included roughly half of the Am Law 200, providing the study with a broad view of large commercial firms. The findings suggest that billing disputes and payment delays are becoming a more significant financial issue for firms that still rely heavily on manual compliance checks.
Outside counsel guidelines, or OCGs, set the billing rules law firms must follow when charging corporate clients. They can cover staffing, time entries, rates, expenses and formatting, and have long been a source of friction between firms and in-house legal teams.
What appears to be changing is the speed and consistency of enforcement. Automated review tools let clients check invoices at a greater scale, increasing the likelihood that non-compliant entries are rejected or reduced before payment is approved.
Many firms have not adjusted their internal processes to match that shift. Elite's research found that 71% still rely primarily on manual processes to manage OCG compliance, while 48% of Global 200 chief financial officers identified e-billing as their biggest revenue-cycle challenge.
That combination points to a widening gap between the billing controls clients use and the systems many firms use to prepare invoices. For finance teams, the practical effect can be longer payment cycles, more write-downs and extra administrative work after an invoice has already been sent.
Mark Dorman, Chief Executive of Elite, said the move toward automated review is changing how firms need to manage billing risk.
"As corporate legal departments apply more automation and AI to billing review, traditional compliance processes will increasingly fall behind," Dorman said.
"Firms need trusted data, governed workflows, and embedded intelligence that can identify risk before an invoice ever reaches the client, moving from reactive billing correction to proactive revenue protection," he added.
Payment trends
The report also highlighted a divergence in payment performance among firms using more integrated billing systems. Customers using Elite's eBillingHub product recorded average payment times of 50 days in 2025, down from 62 days, the lowest level in more than 15 years, according to the company.
That nearly 20% reduction indicates that firms with more automated billing review and submission processes may be better placed to avoid delays once invoices reach clients. Faster approval can make a material difference because partner distributions, hiring and borrowing costs are all affected by how quickly fees are converted into cash.
The data also underlines how e-billing has shifted from an administrative back-office task to a core part of law firm financial management. A rejected invoice does not simply create extra work for billing staff; it can also disrupt revenue forecasting and tie up partner and finance time in appeals, corrections and resubmissions.
Dorman said manual review is no longer enough in that environment.
"You cannot manually review your way out of an AI-driven compliance problem," he said.
"The firms responding most effectively are taking a platform approach, embedding intelligence directly into their workflows so issues can be identified upstream rather than after rejection."
Broader pressure
The findings reflect a broader push by corporate legal departments to control external legal spending more closely. In-house teams have faced pressure for years to show value and manage budgets, and software-based invoice review has become one way to enforce billing rules more strictly without adding headcount.
For law firms, that means the traditional approach of fixing disputed bills after submission may become more costly and less reliable. If clients detect non-compliant time entries earlier and more systematically, firms may have less room to negotiate exceptions once an invoice enters the approval process.
The study does not say how rejection rates vary by practice area, geography, or client sector, but the sample size suggests the issue is not confined to a small group of firms. With around 400 firms represented, the report points to an operational challenge spreading across the legal market as billing scrutiny becomes more automated.
In 2025, Elite's eBillingHub customers saw average payment times fall from 62 to 50 days, a nearly 20% improvement and the fastest payment cycle in more than 15 years.