Legal Billing—Is There a Change in the Wind? A Look at the UTBMS Task Codes
and the Future of Legal E-billing
December 2005
When I started in the P&C claims arena in
the late 1970s, law firms were still billing cases at the close of the file.
That's right, whether a case had been open 3 months or 3 years, you did not
see a legal invoice until the matter was closed. The other oddity is how the
invoice looked. It was generally a cover letter from the handling attorney with
a one-page invoice that said: "Service Rendered" and indicated the amount. Believe
it or not, the invoice was processed almost immediately.
by Michael
R. Boutot
International
Litigation Management Association
Around the mid-1980s, there was a "meeting of the minds" and we began to
see invoices on an annual basis. The law firms loved it because they didn’t
have to wait 3 years. Insurers loved it because they could better track what
became known as allocated loss adjustment expenses (or ALAE). Without going
through the gory details, by the end of the 1980s there were allegations of
fraudulent billing and a move toward quarterly invoicing. Around that same time,
legal bill auditing companies were becoming popular, as were the accusations
against law firms. Tensions were escalating between insurance claims personnel
and their outside legal panels. In fact, concomitantly there also came the growth
of in-house staff counsel, with the understanding that you could trust an employee
more than an outside legal services provider.
Amidst all of this, there was a growing awareness that something needed to
be done, as everyone was pointing fingers at everyone else. The long and short
of it was, "We have met the enemy and he is us." What had once been a friendly
environment was turning into a hostile one. The solutions varied.
Enter Billing Systems
Fast forward to the mid-1990s when, after significant research, a group met
to discuss the establishment of legal task codes. This tripartite effort of
the American Bar Association (ABA) Section of Litigation, the American Corporate
Counsel Association (ACCA), and a group of major corporate clients and law firms
coordinated and supported by Price Waterhouse LLP developed a budget and billing
system designed to provide clients and law firms with meaningful cost information
on legal services. The system was given the name "Uniform Task Based Management
System" or "UTBMS" for short. The first major area of legal work addressed by
the System was litigation.
The System enables lawyers to budget and bill by litigation task, aiding
client and counsel in understanding, managing, and conducting litigation. It
is intended to cover all contested matters, including judicial litigation, binding
arbitration, and regulatory/administrative proceedings. More information can
be found on the
ABA website. (Also see the
Uniform Task Based Management System website.)
Several software billing companies then began to come out of the woodwork
in an attempt to streamline these codes and introduce an electronic form of
billing via the use of these codes and the UTBMS.
TyMetrix,
founded in 1994, pioneered the electronic invoice processing industry and developed
the first and fullest-featured Web-based collaborative matter management system
that is also integrated with financial information. TyMetrix has been facilitating
the electronic preparation and submission of law firm invoices since 1995 and
appears to have been the first company to use the ABA/ACCA UTBMS task codes
to deliver easy-to-review invoices and quality, reportable data.
Looking for Standardization
As the concept of the UTBMS grew, so also did the desire to establish some
standardization. As such, the
Legal Electronic Data
Exchange Standard (LEDES) was adopted by a consortium of law firms, corporate
clients, and vendors in 1998. Essentially, LEDES permits law firms to generate
a uniform set of billing data no matter what their time and billing system.
As such, since other software companies like TyMetrix were getting established,
law firms were not locked into using one particular internal billing program.
LEDES was able to take what ever billing and accounting program the law firm
had and marry it to whatever legal processing program the insurance company
or corporation wanted. It codified a uniform data output from law firm time-and-billing
systems for export to e-billing systems. Spurred by this new industry standard
and the general advances of e-business, e-billing became more rapidly adopted.
These codes are currently used extensively in the United States by law firms
to code attorney time for submission via e-billing to their clients. By some
estimates, over 95 percent of the $10 billion in legal fees moved electronically
last year were coded using the UTBMS codes. This includes billings from more
than 98 percent of the 200 largest law firms in the United States, four of the
U.K.'s "magic circle" firms, and a rapidly increasing base of law firms and
legal vendors worldwide.
Since the late 1990s, there have been many more companies like TyMetrix which
have established programs utilizing the UTBMS via a LEDES transfer of data.
While this article is not designed to promote any one product nor to market
any, the following is a listing of those products that I am personally familiar
with to some extent (no doubt this is not an all-inclusive list, so forgive
me for leaving some out):
UTBMS Initiative Update and Internationalization Survey
In the spring of 2005, a group led by Jeff Hodge (vice president of Product
Marketing in the United Kingdom with DataCert; prior manager/principal consultant
with PricewaterhouseCoopers; creator of LEDES; and founder of the LEDES Oversight
Committee or LOC) and Brad Blickstein (founder of the
Blickstein
Group), began an initiative charged with updating and enhancing the current
UTBMS code sets to take advantage of lessons learned since their introduction
in 1995. At this meeting there was a three-prong focus on: (1) code updates,
(2) international implementation, and (3) intellectual property. The initiative
has received a great deal of attention from the legal community and is well
on its way toward meeting its goals.
As of this writing, the Initiative has more than 100 members from the United
States and Europe. Members are from many of the world's largest companies, law
firms, consulting organizations, legal vendors, the legal press, and others.
The group established the following six main goals:
- Maximize opportunities for broad industry input.
- Update the UTBMS code sets to address existing weaknesses and make them
more useful.
- Make the codes useful in an international context.
- Add at least an IP code set, but also address industry-specific needs
(like financial services) where possible.
- Get endorsement of the new work from the ABA, ACC, and IBA.
- Institute mechanisms to maintain the codes long-term.
There has also been a survey created to allow folks the opportunity to share
opinions and offer suggestions. Click on the following link to begin. It only
takes about 10 minutes!
UTBMS Initiative
Update and Internationalization Survey.
The UTBMS Task Force held its second general meeting on October 19, 2005,
in Washington, DC. It is reported that the meeting was quite a success, and
the various working groups and subcommittees are making great progress.
These committees and groups are hard at work trying to rectify many of the
issues that have escalated tensions. The bottom line is we all recognize the
value of technology. We also have seen how coding can make tasks much easier.
After all, think of how it was 25 years ago when you went through a grocery
checkout line and the cashier had to physically look at every item and enter
the price that was on the label. Not only were you at the mercy of who ever
placed the label on the item to make sure it was accurate, but you were also
at the mercy of the cashier that he or she entered the amount correctly. Today,
it is simply a swipe of a bar code. In fact, most grocery stores and even the
retail giant Wal-Mart have introduced self-checkout lines because technology,
and yes coding, has made it easier.
So, your task today is simple, complete the survey above and offer what opinions
and suggestions you have. If you don’t, take it like a political election. If
you don’t vote and your candidate loses, don’t run around complaining since
you had a chance to make a difference and chose to ignore it. I for one have
already completed the survey and have initiated contact with the groups. I am
a general member of LEDES, which I would encourage you to join as well. Then
if you have legal partners or claims personnel, direct them to do the same.
Let’s work together to improve this process for all.
The views, content, and opinions expressed herein are solely
those of Michael Boutot and are not those, nor intended to be those of the Board
of Directors and/or the membership of the International Litigation Management
Association (ILMA). For more information about ILMA, visit their
web
site.
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