Using AI to solve UTBMS issues in law firms and corporate legal departments
What is Legal e-Billing and the UTBMS?
Before looking at UTBMS issues affecting law firms and in-house departments, we first need to distinguish between ‘full’ e-Billing compared to the uploading of a copy of a paper bill or the keying of invoice details to a client or third party web site. Full e-Billing involves the production of an electronic file, usually in one of the LEDES formats (Legal Electronic Data Exchange Standards), which contains not just the invoice header, matter information and bill totals but a detailed breakdown of timelines and expenses. This detail is coded using the Uniform Task-Based Management System (UTBMS), also known as ABA task codes, which is comprised of sets of codes that help breakdown legal work and expenses across a timeline of activity to a fine level of detail. The codes were designed to provide clients and law firms with a common method for identifying the work breakdown and cost information of legal services.
There are legal task code sets for different types of legal work (e.g Litigation, Bankruptcy, Trademark, Project/Transactional and Counselling) and a set of activity codes to categorise “how” the work on the matter is being done. For every matter, the in-house client receives an itemised bill with full transparency of the outside counsel fee earners who worked on the account, what tasks (e.g. taking a witness statement) and activities (e.g. drafting a letter) they undertook, and the time taken, the rate and cost of the item of work. Once the e-Bill is generated, the information is validated against client guidelines held in the e-Billing solution.
The e-Bill passes various levels of validation before being uploaded to the client’s systems where it is then authorised and paid. The in-house legal team is then able to use legal spend management software to analyse the billing data using the UTBMS code detail and compare like-with-like information across all their outside counsel submitting e-Bills.
The benefits of this approach are many. Corporate legal operations teams can easily compare and contrast the cost and efficiency with which different law firms execute similar matters. Such insight allows in-house lawyers to have intelligent and well-informed conversations during law firm reviews and re-negotiations. Over time, this enables the corporate legal department and law firm to become smarter in the way they execute matters.
The importance of accurate legal time recording
It is outside counsel’s responsibility to maintain accurate time records, detailing the time spent on each item of work throughout the day. Without proper time records, the billing entries must be reconstructed from memory and the time spent on each task could be based on nothing more than a guess. This practice could ultimately lead to overbilling. Therefore, it is imperative that bills are based on accurately documented time records that detail each task and activity performed. However, daily time records are not enough if the entries are recorded in a block billed format.
Breaking the block billing practice
Block billing occurs when several, discrete tasks or activities are recorded under a single time unit, rather than itemising the time spent on each separate activity. In-house clients usually prohibit this practice because it makes it difficult, if not impossible, to determine whether the work performed and the fees incurred are reasonable. Although most examples of outside counsel billing guidelines prohibit attorneys from submitting invoices that are block billed, clients typically allow their attorneys to correct such entries without penalty.
Positives of using UTBMS codes
As noted above, the UTBMS codes are a powerful tool for analysing patterns and comparing performance.
UTBMS information is, of course, useful to compare how law firms deploy their resources for work on similar phases/tasks/activities of like matters (e.g. percent of partner, associate or paralegal time and fees) but also reveals the average and median rates, as well as by level of resource for that legal work. Examining activity at this level across firms invariably reveals diverse practices with the best and worst practices being immediately apparent. When addressing such issues with firms, the client has the data and the data is based upon that firm’s actual invoice entries.
The information is also useful for examining billing on diverse matters, as the UTBMS information can be used to compare the performance of multiple firms working on the same matter as well as compare individuals within the same firm working on the same matter.
In the past 20 or so years, there has been a shift. Clients are now requiring their outside counsel conform to billing practices that provide more than just a basic level of standardisation. These standards are designed to make non-compliant charges stand out where they may have been buried previously.
Problems with UTBMS codes
On the one hand, the standardisation offered by the Uniform Task-Based Management System (UTBMS) and Legal Electronic Data Exchange Standard (LEDES) codes has created a path towards greater transparency in legal spend management. Their implementation, however, created issues of their own.
UTBMS codes are problematic for several reasons but primarily because they can be unreliable and the system is totally reliant on each timekeeper to provide accurate data, which they often fail to do. Firstly, timekeepers must be trained and become familiar with the expansive list of codes – a large undertaking. For instance, the Litigation Task Codes (one of several such code sets) has close to 30 legal task codes, each of which rolls up to one of five phases. Adding to the complexity, there are nearly 30 activity codes that may also be applied and many more expense codes.
Secondly, this complexity can cause confusion as to which UTBMS code to apply to which task/activity. In addition, timekeepers may intentionally assign incorrect codes because they are either too busy to search for the correct code or are indifferent to how these codes may benefit them or their clients. One common action is that a timekeeper will select the first legal task code or a commonly used code from the UTBMS drop-down list in their billing software. This saves them time, and they do not see a negative impact from doing so. Other mistakes might be unintentional, involving issues with the billing software or accidental errors that can occur from a user typing or using a drop-down menu to input one of 30 codes. All these errors affect the integrity of the data, making the codes unusable for analytics and therefore frustrating the in-house client.
In truth, the framework of legal task codes was a great achievement for the industry and while it may be possible to refine the UTBMS codes it may not be feasible to make them any simpler. Solving this problem requires being active, adaptive, and creative with the data that’s available.
Use of AI (Artificial Intelligence) in law firm timekeeping
At a law firm, manual time and task logging is a time-consuming, error-prone process that does not benefit itself from being billable. Adding UTBMS or LEDES billing coding to the mix slows the process even further. On top of that, coding mistakes can lead to invoice rejections, while compromising collection rates along the way.
However, new AI (Artificial Intelligence) and machine learning applications can offer solutions to these problems. Instead of submitting bills without review and hoping the client does not dispute the charges, or manually reviewing billing entries prior to submission in order to comply with the client billing rules, new applications are being used to automate the process at law firms.
With previous e-Billing solutions, lawyers and other timekeepers would have to manually look up the corresponding UTBMS code for each specific task or expense. With the new artificial intelligence applications, the software will automatically determine the correct code from the task, activity or expense description. The code selection process uses the law firm’s own data to make sure the codes are accurate and uses machine learning to adjust to any changes. The outside counsel save valuable time – addressing the issues mentioned above – and the in-house client receives accurate legal bills that have the level of data necessary for analysis of their matters, legal spend, and law firms.
In recent years, new legal spend solution providers have come into the market – both in the US and from within the EU. Some of these, such as BusyLamp, were founded by lawyers who realised that many legal departments and their outside counsel were resisting the more “traditional” e-Billing solutions.
These new solutions bring a fresh perspective to legal spend management and utilise tools and techniques that are ground-breaking in legal technology. While not all products have all the features, most utilise a number of them, including ease of set-up, use of AI for the bill review process, use of AI for UTBMS time recording, and a high degree of collaboration.
- Easy to use and configure, and use intelligent defaults and data driven user set-up.
- Use text recognition software to read/convert the data from the e-Bills or from pdf documents.
- Automate manual, low-skilled processes so both the in-house team and the law firm can spend more time on high value work instead of admin.
- Take advantage of the latest developments in AI (Artificial Intelligence) to automate the bill review process, categorise narratives and provide pricing analytics.
- Combine the above with machine learning to enhance the data mining possibilities of the invoice information for the client to make better and informed decisions.
- Offer a low cost of ownership as they require no on-site installation and are delivered as web services.
- Easily integrated with other client applications such as document/knowledge management, project management, calendaring and the standard desktop – thus reducing costs for corporate legal IT.
- Cover a wide range of the business processes – from Requests for Proposals and Procurement, matter budgeting, resource planning, project management, through e-Billing to a reporting and management information suite with easy to understand metrics for corporate legal departments and the law firms.
- They facilitate collaborative working between the client and their outside counsel and allow the client to review WIP and expenses in the pre-billing stages of each matter.
Bryan King, e-Billing Consultant