The Value of UTBMS/LEDES Codes

Uniformed Task-Based Management System (UTBMS) billing codes have brought clarity to billing and related data analysis since their introduction more than 20 years ago. In fact, clients are increasingly using UTBMS billing codes to analyze much more than just legal service costs. Clients and law firms can use UTBMS billing codes to track and compare specific legal services and expenses, and then map these data points to specific outcomes.

UTBMS codes are used to categorize legal services and expenses provided by a law firm or other vendor. The Legal Electronic Data Exchange Standard (LEDES) provides uniform data formats for UTBMS-coded invoices to be submitted, whereas UTBMS billing codes categorize legal work and expenses. As a result, lawyers frequently refer to UTBMS codes as “LEDES codes,” which is a bit of a misnomer.

However, inaccurate coding, catch-all codes, and random or non-uniform billing code application, all have a negative impact on the valuable data analysis and reporting that UTBMS codes envision and enable.

When billing codes do not accurately reflect the services or expenses provided, they are effectively rendered useless. The UTBMS goal of allowing law firms and clients to visualize profitability and make impactful decisions is significantly thwarted in the absence of accurate and uniformly applied UTBMS codes.

“When it comes to optimizing your practice, do you trust your gut? Don’t.” writes Ed Finkel of the Illinois Bar Journal. Finkel continues, “If you aren’t using data to measure what works and what doesn’t, you can’t be sure you’re winning the game. The good news: your practice generates the data you need to gauge success and adjust as needed.”

If you don’t already use UTBMS codes and LEDES-formatted invoices, or if you want to brush up on your knowledge, this article will show you how to get the most out of this valuable data.

UTBMS Coding: A Brief History

UTBMS codes were created when law departments at large corporations that purchased a large volume of legal services wanted a better understanding of the services they received from outside counsel and other vendors. Consider attempting to make sense of legal spending based on bills that include only a hazy description of services performed by multiple timekeepers over the course of one day, with multiple intertwined paragraphs or pages to describe the services.

Both the legal profession and corporate America recognized areas for improvement and took steps to address them. The American Bar Association, the Association of Corporate Counsel, and PricewaterhouseCoopers joined together to develop UTBMS, a standardized task-based billing process.

Codes are assigned to discrete legal tasks and expenses by UTBMS when categories of such tasks and expenses are created. The UTBMS codes allow clients to track their legal expenditures based on the stated categories by connecting these codes with time and expense entries in invoices. With more accurate data reporting and fact-based decision making comes better data analysis and reporting.

Legal tasks and expenses were difficult to categorize, and the necessary information supplied on paper bills was inaccessible, making it even harder to use.

Once the UTBMS billing coding guidelines were complete, the joint group turned its attention to standardizing the manner in which billing information could be shared.

The LEDES Oversight Committee (LOC) was established as “an international, voluntary, not-for-profit organization comprised of legal industry representatives and is charged with creating and maintaining open standard formats for the electronic exchange of billing and other information between corporations and law firms.” The LOC is committed to using open standards to meet the demands of the legal industry.

LEDES standard formats provide for easier electronic billing job and expenditure assembly, thereby allowing for faster payment evaluation and payment processing times. As such, many bill reviewers were relieved of some of their load.

Internal reporting and action items based on empirical data analysis are made easier thanks to the combination of UTBMS codes and LEDES structured bills.

It is possible to compare the services offered by outside counsel more accurately by using UTBMS codes and LEDES invoices.

Benefits

As a result, both clients and law firms may monitor their profitability and efficiency in a more accurate way, as well as promote openness for all parties involved.

In order to assess the quality of the legal services they receive, clients and law firms can take advantage of these tools to collect useful billing data.

Customers and their legal firms can also more easily check the accuracy of billing data to ensure they comply with the standards for outside counsel billing.

“A process that provides for actionable information from that data is central to being able to manage a legal department strategically and with greater efficiency. This is why the Uniform Task-Based Management System (UTBMS) code set is critical when looking at process improvements,” according to the International In-house Counsel Journal.

In reality, it is impossible to effectively monitor legal spending or create relevant insights justifying outside counsel retention and legal spending decisions without the usage of the UTBMS and LEDES standards.

However, the implementation of UTBMS and LEDES standards is beneficial to everyone. Understanding and increasing efficiency are advantages for both legal firms and clients.

Josh Becker, Head of Legal Analytics at LexisNexis, explains that “It’s using data to demonstrate your expertise and to compete now on data, not just on kind of reputation or relationships maybe from the past, but to compete on data to showcase your expertise. And secondly, after winning business is winning cases. So, using data to determine the best strategy in front of a judge, to size up your opposition, to understand how long it’s going to take to do your budgeting, all that part of winning cases.”

Using these guidelines, law firms will be able to improve their strategic planning and collaborative efforts by developing more meaningful measurements. They’ll be able to better explain these findings to clients, too. As a result of this, attorney-client interactions will strengthen as well.

Making critical judgments based on erroneous or misleading facts might be disastrous. However, by establishing common data standards, clients and legal firms may make better informed decisions based on empirical evidence.

Plan of Action

For both law firms and their clients, efficiency and innovative best practices are always a priority. One way to achieve these objectives is by the use of the UTBMS/LEDES standards. Law firms and their clients, on the other hand, can take things a step farther.

Whenever a new standard or procedure is established, new technology jumps in with quickly developed options to support it. These procedures and requirements can be streamlined using a variety of legal technology systems. As of today, many tech applications exist that can provide solid return on your investment for your law office.

Legal Tracker (Serengeti) from Thompson Reuters, CounselLink from LexisNexis, and TyMetrix 360° from Wolters Kluwer are just a few of the programs clients can use to track bills from outside counsel, track payments, and do internal data analysis.

UTBMS coding and LEDES invoice formatting can be accomplished quickly using a variety of software. It’s possible to add UTBMS codes to legal billing software like Clio and Rocket Matter, as well as to create LEDES-formatted invoices with other legal billing software.

Time and expenditure entries in most of these programs need the user to pick and apply the proper UTBMS codes. Using applications like EasyCodes, you no longer have to manually enter UTBMS codes into your billing records.

Automating the procedure increases the value of UTBMS codes by ensuring that the codes are applied consistently.

As a law firm or a client, you need to choose which application is best for your specific needs.

According to a Deloitte report on legal billing and predictive coding, “current technology advances are providing opportunities to better measure, manage and optimize legal spend, even while leveraging conventional management tools… These advancements are expected to enhance management activities for both corporate law departments and law firms, and potentially allow the promise of activity-based management for legal activities to become better realized.”

By examining Case Crunch’s lawyer challenge, we can assess the predictive analytical tools’ potential value to your firm. Case Crunch pitted over 100 commercial lawyers against its computer software in an attempt to determine who could better anticipate if the Financial Ombudsman would grant a claim. The results of the 775 prediction entries revealed a clear winner: the computer, with an accuracy rate of 86.6 percent, beat the lawyers, who had a rate of 66.3 percent.

Law firms and law departments can accomplish even more by merging internal litigation records with billing data for relevant cases. The potential for uniform coding and the data it generates is infinite, and its applicability is not limited to billing.

The UTBMS and LEDES standards have been adopted mostly as a result of client requests for additional data and information about the services they pay for. However, having these technologies in place to better properly utilize data and information will make lawyers more competitive and efficient.