A Law Firm Guide To LEDES Billing

//A Law Firm Guide To LEDES Billing

The LEDES (Legal Electronic Data Exchange Standard) Oversight Committee (LOC) is a not-for-profit organization of legal industry professionals who are responsible for creating and maintaining open standard formats for e-billing and other information exchanges between corporations and law firms.  This organization was formed in 1995 as an informal group who was tasked with creating a framework for the exchange of billing information. Today, LEDES provides over 250 EDI (electronic data interchange) formats that make issuing a LEDES invoice in the proper LEDES billing format easier. The LEDES Oversight Committee’s work is guided by five basic principles:

  1. Simplicity. Every LEDES billing format is designed to be as simple as possible so that no one has to work harder than necessary to use a LEDES file.
  2. Clarity. Every LEDES invoice is designed to be as unambiguous as possible. No need to play guessing games when you’re generating an invoice.
  3. Use past formats as a foundation. There’s no reinventing the wheel. The LEDES format tries to avoid shifting too much from past formats.
  4. Only request accessible information. A LEDES invoice will only request information that the law firm will have readily accessible.
  5. Focus on law firm and vendor needs. LEDES software is designed to be as law firm and vendor friendly as possible.

Using a standardized method for creating invoices, LEDES makes it easy for the legal industry to issue and track invoices.  This is why it’s important that law firms only use legal billing software that supports LEDES files. Software such as Smokeball legal case management software will support LEDES format such as LEDES1998B and make sure that you’re meeting the standards that the legal industry uses when issuing electronic invoices.

Smokeball LEDES Billing

There are several LEDES billing formats that exist, however, Smokeball offers the most commonly used one, LEDES1998B.

What is a LEDES billing file?

A LEDES file is a text-only invoice file that displays invoice data in a specific order and format.  A LEDES file makes it possible for all law firms to issue electronic bills in a standardized way, making billing easy for the legal industry and the clients they serve.

What are the benefits of using a LEDES billing file?

Law firms who use a LEDES billing file for their e-billing needs are in a better position to extract data for billing analysis. Invoices that use the LEDES format allow law firms to extract valuable invoice data to find out how money is flowing in the firm. This type of insight can help law firms getting a better picture of how well (or how bad) they’re performing financially.

Why e-billing is more than a PDF?

As some law firms make their first leap from paper invoices to e-billing some may use PDFs as a first step. But e-billing is more than just issuing a PDF copy of a paper bill.  Using LEDES compatible software such as Smokeball, you will have the ability to use a LEDES generator easily so that you can access the right kind of LEDES file for your invoicing needs.   When law firms use LEDES format billing, they access special codes that let them categorize legal services and expenses in a standardized and useful way. These special codes are called UTBMS codes and are sometimes referred to as LEDES codes.  These codes will unlock the power of data analysis because they allow both law firms and clients to easily rack and compare specific legal services and expenses and then connect those data points to specific outcomes.

It’s important to note that when law firms fail to use UTBMS or a LEDES format, it can become impossible to track data accurately. Imagine using a few catch-all codes for every type of legal service your provided, it would become next to impossible to then figure out which legal services you provided most often and to whom. By using a system that has been carefully refined over the past 20 years, you give yourself access to the infrastructure needed to collect and track financial data for the well-being of your law firm’s bottom-line.

Can law firms use a LEDES file converter?

There are many reasons to use a LEDES file converter but for the most part law firms have three reasons:

  1. Convert from one LEDES file to another LEDES format.
  2. Convert from a non-LEDES format to a LEDES billing format.
  3. Convert from a LEDES file to a non-LEDES format such as Excel.

If you’re using a LEDES software compatible law firm management system such as Smokeball, it should be easy to convert your files or generate a new one.

What should law firms consider when using a LEDES invoice?

The first thing law firms should consider are the tools that they are using. Is the software that your law firm uses for billing compatible with LEDES software? Tools such as Smokeball make it easy to generate a LEDES invoice and track your data. You should also take the time to get training on your LEDES software tools so that you don’t overlook important features just because you don’t know how to use them. It can take some time to master a new tool but the time investment is worth it in the long run. Eventually, you will collect enough data on your LEDES invoices that you will be empowered to leverage the data you uncover.  Enlist the help of a professional.  If you want to get the most out of using LEDES, work with a professional who understands the power of the system and how you can use it to reach your law firm’s goals.

If your law firm is looking for a powerful and legal industry standardized way to do e-billing, using LEDES is a smart system that will continue to work powerfully as your grow.  Look for software tools that are LEDES compatible and that leverage the data analysis capability of the LEDES format.

By |June 18th, 2019|

About the Author:

For years, Josh has helped lawyers become more organized, productive, and profitable. A trained litigator, Josh came to Smokeball from a large east-coast law firm where his practice focused on franchise, insurance, marine, and general litigation. His work with Smokeball, and his continued passion for what he does each day, is driven by a desire to help lawyers and their staff do better in every way. Knowing well the stress and strain put on today’s legal professional, he regularly focuses on improving work and life in the law. He has traveled the country working with and learning from lawyers and their staff. Josh speaks regularly to bar associations about successful law firm practices and other legal topics. Recent notable engagements have been with the Chicago Bar Association, the Illinois State Bar Association, and the Missouri Bar’s Solo and Small Firm Conference. In addition to his work at Smokeball, Josh serves on the Writing Resource Center staff at The John Marshall Law School. Besides legal technology, his research interests include judicial decision-making, jury decision-making and psychology, and legal writing. He has written and overseen research exploring causal effects of sex/gender on federal appellate court decision-making, and assisted with research for a forthcoming textbook on judicial decision-making. Additionally, Josh sits on the Board of Directors of Chicago-based Community Activism Law Alliance and on the Board of Directors of Chicago Fringe Opera Company. Josh holds his J.D., cum laude, from Washington University in St. Louis, where he served as a Senior Editor of the Wash. U. Law Review, held the prestigious Thompson Coburn Research Fellowship, served as Research Assistant to then-Vice-Dean (now Chancellor) Andrew D. Martin, and clerked at the U.S. District Court for the Eastern District of Missouri. He holds a B.A. in Political Science and a B.M. in Music Performance with Honors Scholar distinction from the University of Connecticut, making him a Huskies basketball fan through and through. Follow Josh’s activity on LinkedIn, and keep up with new articles on the Smokeball Blog.

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