Legal Attorney Billing: LEDES Billing
There are so many acronyms when you work with attorneys. You may be asked as a bookkeeper who works with lawyers about LEDES. LEDES is an acronym for Legal Electronic Data Exchange Standard. What does that exactly mean?
LEDES has been around since 1995 and is a file format that supports hourly billing, flat fee billing, and expenses. This particular billing type was created by the LEDES Oversight Committee (LOC). This committee, which was made up of legal departments at larger corporations, law firms, universities, and software vendors, sought to address legal e-Billing software issues with a “standard format for the electronic exchange of billing and other information between corporations and law firms.” Basically, they were trying to create a uniform format for billing across all law firms. This coding system has been updated several times; however, the most commonly used one is, LEDES1998B.
To create this uniformity, they developed a coding system. The attorneys need to use these codes as they track the hours billed to their clients. The most commonly used code list is one created by the American Bar Association. If you have ever worked with a contractor client, these remind me of the codes used for a general contractor. The first letter of the task code indicates the type. The letter “A” for example, means “activity” and “L” is for litigation codes.
- A102 Research
- A106 Communicate (with the client)
- A107 Communicate (with other outside counsel)
- L310 Written Discovery
- L329 Document Production
- L330 Depositions
You will tend to see this type of billing with attorneys working with insurance companies or larger corporate firms. Workers Comp attorneys will work in LEDES with the billing code “WC”. Bankruptcy law firms also work with LEDES billing. There is a whole series of codes that start with the letter “B” which refers to bankruptcy activities. Expense codes start with the letter “E” and include any expenses on the matter or case.
Most legal software has some integration capabilities that can convert a regular invoice to the LEDES type of billing.
Clio, for example, has a converter. LeanLaw has LEDES billing right in the print section in its software under the QuickBooks tab.
Below is an example of what LEDES billing would look like:
The LEDES system uses a text-based format, so it appears as a text file when completed. There are no formatted columns, which can make figuring out this billing system complex. QuickBooks does not have LEDES billing, but as you know, I recommend firms use legal software to make QuickBooks work for law firms. You could manually format invoices, but that can get time-consuming quite quickly. LEDES billing is a reason to add the software to create the invoices in the proper format. Even with the software, you may have to do a bit of arts and crafts on these text files. Since they are exported as a simple text file, the find and replace button can be your best friend.
So if the above seems daunting and confusing to you, you are not alone. I found this great blog post from Quovant that demystifies the code and may help you when the site you have to upload these files to rejects the .txt file
We hope you enjoyed our article about lawyers and LEDES billing. It’s always great to highlight how technology can benefit lawyers and law firms. We know that this blog post has helped you understand the benefits of LEDES billing, and we also know that you can use this new knowledge to improve your business’ efficiency and profitability. If you have any other questions or concerns about LEDES billing, please get in touch with us anytime.