Revelations: 10 Years of LEDES XML and Global E-Billing

Hard to believe, but the evolution of the LEDES XML formats started 10 years ago. 

So after all these years, how many time and billing vendors can generate these formats accurately?  None.

How many e-billing vendors accept these formats?  Does it even matter if the law firms can’t even produce these file formats?

The cold, hard truth is that time and billing vendors are not interested in helping their clients (i.e., Law Firms) produce invoice files beyond the LEDES 1998B and BI formats.

  • Philosophy of Time and Billing vendors:
    • Time and billing systems are vehicles for revenue generation
    • E-Billing decreases law firms’ revenue capture rate, countering law firm revenue goals
    • Therefore, they will not add features to their product that counter their value proposition.

In retrospect, doesn’t that make sense?

Okay, so here’s what we have to do to make global e-billing happen:

  • E-Billing clients (i.e., corporate law departments) have to demand “Global E-Billing” of their E-Billing vendors and their outside counsel firms.
  • E-Billing Vendors (i.e., Bridgeway, CT TyMetrix, Datacert, Mitratech, etc.) need to provide global e-billing solutions for their clients, as well as for their clients’ outside counsel firms.  Yes, they need to provide a comprehensive solution to make global e-billing happen.

 Go Global E-Billing!!

Global E-Billing made possible by RORA Client Systems

I’ve been a bit remiss the last couple of months with regard to updating my blog, but I have very good reasons for this.  We’ve been working extremely hard on our new services/products; we presented our solutions in the UK at Legal IT Forum in mid October; developed some LEDES educational material; and we’ve just started another business.

Okay, so I’m not going to go into details, but here’s the scoop: 

In developing these LEDESense products, we decided to put all the LEDES formats side-by-side to better understand the reasons why no time and billing or e-billing vendor has been able to achieve these LEDES XML formats that have been around for ~ 10 years!  When we completed our map, we realized that, though the LEDES formats continued to evolve, there was really no path for upwards compatibility.  In other words, the vendors would have to invest a tremendous amount of development time and treat each XML file format as having nothing to do with the other, rather than just developing for incremental changes.  Also, with no schemas, even if the vendors were to accommodate all these formats, it didn’t necessarily mean that the data could be exchanged between law firms and law departments (if you want a more detailed explanation, just contact me). 

From this realization, we developed LEDESense Web Service and LEDESense<Omni>.  LEDESense<Omni> is a web based tool that will read in LEDES files in any format (including XML 2.1, 2.0, and 2000).  It allows the user to add/modify any of the data in a BEAUTIFUL grid (a lot of money and time were invested to make it user friendly and aesthetically pleasing), and “Save As” a LEDES file of another format.  This tool also allows for the creation of “New” LEDES files.  So now with LEDESense<Omni>, law firms globally can generate LEDES compliant, VAT invoices in any currency! 

This is great, but which e-billing systems can accept all of these formats?  NONE!  So in parallel to LEDESense<Omni>, we developed the LEDESense Web Service.  By having e-billing systems interface with LEDESense Web Service, it can accept electronic invoice, pipe delimited files, as well as any XML files formatted through LEDESense<Omni>.  Systems can now exchange data in any LEDES format or LEDESense Invoice XML data object, relieving vendors of having to translate between all the LEDES formats.

Finally! A comprehensive, global e-billing solution that makes sense. 

 The “LEDES educational material” I refer to above is the LEDES mapping.  We created a poster titled “LEDES E-Billing File Formats at a Glance”.  It’s available in PDF format for download at http://www.roraclientsystems.com/ledes-ebilling-formats-at-a-glance.pdf.  I encourage you all to take a look at it (it’s actually very pretty with lots of colors – great for the office), but be forewarned, the printed version is 26”x50”.  We really tried to make it smaller, but it wasn’t possible.

I was going to describe our new business, but I’ll save that for my next blog entry.

First World Corporation, Third World Law Department

I started my career, over 20 years ago, in the financial industry as a programmer. Financial firms understand that technology gives them competitive edge and they compensate IT professionals extremely well for their work. The trainees I started with right out of college were recruited from the top universities and I loved working with all these really smart people. To give you an idea of how much technology was valued by this firm, their 2007 IT budget was $32 Billion!

Fast forward to 2005, the CIO (Chief Information Officer) asked me to join the Law Department and head up technology strategy for them. Needing a change in scenery, I went along with it. A week later, though I admit her plan was clever, I was cursing her for putting me there.

Regardless of the firm’s huge IT budget, the law department was stuck in early 90’s technology wise. How could a first world financial firm be supported by a third world law department?

Unfortunately, this is common amongst law departments and law firms. Lawyers don’t understand or appreciate technology so don’t spend the money on systems or IT professionals.

The Legal Department vs. The Rest of the Company & Do you need a consultant when implementing e-billing?

I was contracted back in early February to help implement e-billing for a global Fortune 100 company.  The agreement was to implement it for the US legal department by the end of April.  This company already had a matter management system and well documented processes for handling paper invoices.  Implementation was going to be a piece of cake! – Boy, was I wrong.

It all started out very smoothly.  My client is smart and easy going; everyone I met with in the legal department was competent, cooperative, and pleasant; and the e-billing vendor team was also a really strong and fun group.  Everyday was a pleasure!

 But then we started meeting with Finance and AP and the fun ended.  For the last several months, they had done everything they could to derail this project.  Regardless of the fact that the company already committed and signed a contract with the e-billing vendor; an e-billing system can really assist the company to better manage legal spend and realize efficiencies; and most importantly, the CLO, CFO, and CEO have been waiting for this e-billing system to be implemented; they just couldn’t seem to rise above the politics and work with the legal department.

 It is now August and my clients finally went live with e-billing.  No, Finance and AP didn’t come around.  Instead, the legal department prints out the invoices from the e-billing system; the attorneys review and approve the invoices on-line in the e-billing system as well as sign the paper printout of the invoice.  The paper invoice goes to AP and that’s what gets processed. 

 Now, the story doesn’t end there.  Throughout this nightmare, I prepared countless presentations for my client and coached him through the political obstacles.  We first had to get the attention of the senior members of the Office of the General Counsel.  With their support, we presented to the Chief Legal Officer.  He then opened the path for my client to meet and present to the CEO and CFO.  My client did great and he gained their full support.  So now Finance and AP are working with us, and for the last two weeks I have been busy preparing very detailed workflows to get them up to speed.  They are still not very nice to work with, but we are making progress.

 My client said to me last Friday, “we couldn’t have done it without you,” and I have to agree.  With regards to technology and operations, legal departments are usually isolated from the rest of the company.  Moreover, the legal department usually gets exempt from all sorts of company standards.  So when legal departments work with other departments, there can be resentment.  Hire the right consultant and he/she can be very instrumental in working through all of these difficulties.

 What should you look for when hiring a consultant?  The consultant should have:

  • Experience working in a law department, because the corporate law department is very different from law firms and “other” departments.  He/she should have a strong understanding of law department operations.
  • For technology projects, he/she should have some real applications experience (e.g., developer/programmer, business analyst, application architect, database design, etc.)
  • Commitment ensuring a successful implementation.  When I saw the difficulties my client was experiencing, I made it my problem and helped lead him through the political maze.  I didn’t say “call me when you get this resolved” – which I could’ve easily done.
  • Patience! (^-^)

Taking the Leap and Making a Commitment!

Up until a week ago, RORA Client Systems, Inc. was operated out of my apartment in Manhattan.  My dining table for eight had been taken over by office equipment and paper piles sorted by client or project.

But since our announcement of LEDESense Office Edition, we have been inundated with inquiries and requests.  Yes, we have simple, inexpensive solutions for a problem that’s been ignored for 10+ years.  We have a pulse on what this industry needs.

With this validation and encouragement, we signed a lease for office space and we just completed our move. 

This may not seem like a big deal, but it’s a huge sign of growth for this 42 year old, never married, commitment phobe. 

Besides LEDESense Office Edition, we actually have 2 other products.  Next week, we’ll be releasing LEDESView, a $99 product which allows a user to upload a LEDES 1998B, 1998B-I, or a 1998B-I V2 file, make edits, and save it without losing the formatting.  It will also allow the user to create new LEDES files.  This product does not do business rules validation, but it will have data format validation – Not bad for $99!  Of course, for this price, there is no user support or upgrades.  That will come with a slightly more expensive version to be released in the very near future.  The future product will also address the XML 2.0 format.

Our other product is LEDESValidation – a free service!  This is a webservice where the user can upload their LEDES file for instant trouble shooting.

You may ask: “why are your services so reasonable?”  That’s because our products and services evolved from a sincere desire to help our clients.  We believe that in doing good, we will do well.

So stay tuned!  RORA Client Systems, Inc. is here to stay and we are committed to enhancing your e-billing experience.

Law Firm vs. Corporate Client: Getting the Invoice Paid

I have been planning to further examine/ponder the reasons we’re stuck in our progress for global e-billing (i.e. Global E-Billing Disconnect: Part 3), but I’m going to take a break for now.  Instead, I’d like to examine this interesting, passive aggressive war that’s going on under the radar between the corporate clients and their outside counsel firms.

I had a very interesting conversation with a very senior manager at one of the largest time and billing, software company.

I’m paraphrasing, but he basically said:

Corporate clients do everything they can to reject invoices from their law firms.

 OH MY!  I was shocked!

Until March ’08, I headed up technology strategy for Morgan Stanley’s law department globally and managing the e-billing effort was one of my responsibilities.  During my tenure, I had never heard anyone say or imply anything of the sort.  Many complained how large the invoices were, and we’ve seen some interesting disbursements come through (e.g., $24,000 for weekend air-conditioning; $700/night hotel charges; $2.50/copy where the line item for copies totaled $8,000, etc.), but they were all okay with being fairly charged and paying for services rendered under their request .  Since I left Morgan Stanley, I’ve consulted to several corporate law departments, and the attitude has been similar across the board.

Yes, corporate law departments issue Outside Counsel Policies containing guidelines on attorney and disbursement rates, but the purpose is not to create an obstacle for the law firms to bill.  So let’s dispel this notion.

On the flip side, though most law firms are reasonable and fair with their billing practices, why would a law firm charge for air-conditioning which should be part of overhead; or charge $2.50/copy when it should be a pass-through cost?  When corporations are tightening T&E, is it smart for outside counsel to stay in a $700/night hotel?  Perhaps it’s those few law firms that have caused corporations to question their integrity; implement Outside Counsel Policies; and police invoices.

Global E-Billing Disconnect EXPOSED, Part 2

In last week’s post, The Disconnect in Global E-Billing, Part 1, I started a foray into the more absurd aspects of our global legal e-billing milieu. Here in Part 2, let’s start peeling back those layers and begin to bare the underlying factors and belief systems at work in the collective legal unconscious, so to speak:

  •  Despite the popular and well-recognized LEDES file formats, there remain >250 OTHER format “flavors.” Add to this particular disconnect the fact that some of the influential corporate clients impose their own proprietary electronic invoicing file format on their outside counsel firms.
  • Law Firms and time and billing vendors are bamboozled—how do they possibly accommodate all the disparate electronic file formats currently in play?
  • Corporations that issue Outside Counsel Policies frequently inject yet still more maverick billing factors into the toxic brew:  allowable attorney rates, various disbursement rates, and other traditional rules of engagement. For example, one company may allow $.15 per copy, while another allows only $.04.; some corporate clients may agree to pay for first year associates, while many others refuse; and so on. Tracking these “rules of engagement” is onerous and over the long haul, a costly time-suck—no time and billing system currently in use is able to track all these billing variables.
  • Billing Clerks earn on average $40,000 annually, which in the Big Picture is but a drop in the bucket for most law firms. Hire more billing clerks and simply raise rates so clients can absorb the cost, right?

A tactic of RORA Client Systems’ R&D is yanking open the hood on some of the popular law firm time and billing systems to see what’s inside. As expected, we found that each comes bundled with different assortments of e-billing file formats from which a law firm may choose.  But more importantly, we realized that regardless of the corporate client, the underlying e-billing data requirements for all of them are basically the same!  Yes, it’s the same data in different order, using different delimiters. 

What’s needed to connect the dots?

Agreement on a few standard formats.

Sounds simple, right?  Though the law firms may still need to manually handle the Outside Counsel Policy requirements, this affirmative action alone could launch a powerful domino effect:

  • Fewer human errors.
  • Far less law firm overhead.
  • Measurable financial savings passed onto clients.

I often hear corporate lawyers say something like this, “We spend so much money with our law firms. They’ll do whatever we say.” Perhaps this attitude has helped perpetuate the electronic billing mess we’re all left to mop up.

Stay tuned for Part 3 next week.