More Than You May Care to Know About Billing Codes and Invoices

By Joe Howie

The basics of generating invoices at law firms are relatively straight-forward: Entries are made in a law firm’s time and billing system for the time spent by specific firm personnel on behalf of specific clients and specific matters. The entries will include a description of how that time was spent, often with a billing code to help prepare summaries and reports. There will typically be hourly rates associated with different people’s time and the expenditures may be billed at cost or on some other basis. The partner responsible for the matter or the client will review what is essentially a draft invoice and decides whether to change individual line items before presenting the final invoice to the corporate client.

The task facing in-house corporate counsel charged with managing multiple firms on multiple matters in multiple jurisdictions is made more daunting by the lack of uniformity in the invoices the firms submit. To address this lack of uniformity, the ABA and the American Corporate Counsel Association (now the Corporate Counsel Association), with help from Price Waterhouse LLP, developed a set of Uniform Task-Based Management System (“UTBMS”) codes for litigation. The ABA Web site lists 29 litigation “tasks” in the litigation code set, divided into the five basic phases of litigation:

• Case Assessment, Development and Administration (L100-series codes)
• Pre-Trial Pleadings and Motions (L200-series codes)
• Discovery (L300-series codes)
• Trial Preparation and Trial (L400-series codes)
• Appeal (L500-series codes)

The primary codes affecting litigation support are L110, L140 and L320:

L110 Fact Investigation/Development.

All actions to investigate and understand the facts of a matter. Covers interviews of client personnel and potential witnesses, review of documents to learn the facts of the case (but not for document production, L320), work with an investigator, and all related communications and correspondence.

L140 Document/File Management.

A narrowly defined task that comprises only the processes of creating and populating document and other databases or filing systems. Includes the planning, design, and overall management of this process. Work of outside vendors in building litigation support databases should be an Expense.

L320 Document Production.

Developing, responding to, objecting to, and negotiating document requests, including the mandatory meet-and-confer sessions to resolve objections. Includes identifying documents for production, reviewing documents for privilege, effecting production, and preparing requested privilege lists. (While a general review of documents produced by other parties falls under this task, coding and entering produced documents into a data base is Task L140 and reviewing documents primarily to understand the facts is Task L110.)

There is more than one version of UTBMS codes. The Defense Research Institute (“DRI”) formed a task force that came up with modifications to the UTBMS codes to better suit the needs of insurance companies. It eliminated one catch-all category, added a code for On Site Inspections and discontinued an “Other Discovery” code.

Task codes can be supplemented by Activity codes which provide more detail:

Finally, there are defined codes for expenses, many of which may be relevant in any given litigation support project:

The use of the UTBMS Task, Activity and Expense codes makes it possible to prepare uniform case budgets and then track projected expenses vs. actual.

One example of how corporate legal departments manage incoming legal invoices is Serengeti Tracker. Over 280 corporate clients use this web-based electronic billing and legal matter management system to manage and track their litigation expenses. A corporation establishes an account with Serengeti and then has the law firms representing it submit their invoices using the Serengeti system. Serengeti says that over 20,000 law firms in over 180 countries submit their invoices to those of their corporate clients who are Serengeti customers. In order to normalize or standardize the invoice entries, the invoices must be prepared using UTBMS Codes. The law firm exports the reviewed invoice data formatting it as according to the 1998B Legal Electronic Data Exchange Standard (“LEDES”) and Serengeti imports those files.

Serengeti permits corporations to establish detailed budgets for litigation and to track all costs against specific budget categories. It also goes well beyond just invoice data. It can also be used to set up the frequency for status updates and has an automatic way of suspending invoice payments until reports are filed. Key dates can be established and key documents can be shared. Major vendors can be set up to enter their invoices directly into Serengeti for direct billing of the corporate client. Finally, litigation expenses have become so large that in some cases accrued-but-not-billed time and expenses can be a material fact for corporate reporting purposes. Serengeti has the functionality where law firms can enter the time and expenses accrued but not formally invoiced on specific cases and make projections on work that will be performed in a given accounting period.

Although Serengeti is a sophisticated, powerful system, there’s no button that in-house counsel can push that will compare how one firm is doing compared with another in terms of specific types of technology employed (e.g. which firms are performing duplicate consolidation within custodians versus across the whole project, which are using threading technology or clustering technology) nor is there a single report that will compare the performance metrics of different law firms, e.g. document review decisions per hour or volume reductions achieved by various technologies.

The periodic status reports do provide one great opportunity to provide details on metrics that may not be tracked directly in Serengeti, e.g. duplicate consolidation ratios, review decisions per hour, e-mails per thread, etc. The larger the cases you’re handling the more important that you communicate the technologies you’re using the results you’re achieving because otherwise all clients can use to evaluate you are the dollar totals.

This article appeared originally in the December 2009 ALSP Update, the monthly publication of the Association of Litigation Support Professionals and is reprinted with permission. Read more about this nonprofit membership organization at www.alsponline.org.