The first time you hear the acronyms LEDES or UTBMS, you might think, “What’s Ledes got to do with legal spend management? The UTB-em-what now?” These tongue-twisting abbreviations are legal industry standards for coding and submitting legal invoices when using e-billing software. Read on to learn the basics of LEDES and UTBMS.
WHAT IS A LEDES FILE?
LEDES stands for “Legal Electronic Data Exchange Standard” and is a framework for the exchange of legal e-billing information. The LEDES file format specifications are globally recognized as the legal industry standard for recording legal e-billing data. The file formats go beyond e-billing, also providing formats for legal budgeting, timekeeper information, and IP matter information.
WHAT IS UTBMS?
UTBMS stands for “Uniform Task-Based Management System” and is a series of codes used to classify legal services. Outside counsel records their time and classifies the work using the appropriate code from the UTBMS set. UTBMS-coded time entries and invoices show the timekeeper, the tasks (e.g., taking a witness statement), activities undertaken (e.g., drafting a letter), the time spent, and the rate and cost of the item of work. As with the LEDES format, such codes standardize how legal work gets recorded worldwide, with law firms, legal departments, and e-billing vendors using the same codes.
HISTORY OF UTBMS
Before e-billing, paper invoices would contain lengthy descriptions of services that could run for multiple pages. It was difficult to digest the work and determine how much it cost. Driven by the need to digitalize this process, and alongside the formation of LEDES, The American Bar Association, the Association of Corporate Counsel, and PricewaterhouseCoopers formed a group to create a unified electronic billing standard. The UTBMS codes are sometimes known as ABA task codes for this reason. They decided that electronic invoice time entries should be task-based and aggregated by the type of work performed:
- Task codes are a granular description of the service provided by an area of law. Task codes are organized in sets under their less-granular phases within the law: Litigation, Bankruptcy, Trademark, etc.
- Activity codes identify the specific service performed or “how “the work is being done.
- Expense codes were created to categorize expenses on matters. This group eventually morphed into the LEDES Oversight Committee. The LOC has since updated and created several UTBMS standards and codes, but other organizations do so as well. The revision and evolution of the codes continue today.
BENEFITS OF UTBMS FOR CORPORATE LEGAL
For law firms, standard invoice file formats and time entry recording significantly reduce administrative burden since they use the same standards regardless of who the client is or what e-billing software they use. Most law firms, and indeed all the large firms, use the LEDES file format and UTBMS code set as standard, and many have been doing so since the mid-90s. For in-house legal departments, the use of UTBMS also delivers significant benefits:
- Legal e-billing systems can electronically review invoice submissions before they reach a human reviewer. The system checks the invoice against the billing rules – for example, if a specific task code reaches a pre-defined budget threshold – and can flag or reject the invoice automatically if desired. This saves in-house counsel time reviewing invoices manually, freeing them up to do more high-value work. BusyLamp legal spend management customers notice billing errors missed during the previous process (error-prone, human review).
- Standard codes allow for easy comparison of work performed across different matters or firms. Cost, efficiency, and quality can all be compared quickly and consistently.
- This legal spend reporting can be used to negotiate better rates, decide which work to bring in-house/outsource, evaluate which firms to use for which types of work or matters, and to make a business case for additional headcount.
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