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The Comprehensive Guide to LEDES Billing for Beginners

LEDES 101: 01/09/2020 by Easy Legal Billing Team

You’re on your way to becoming a Legal Electronic Data Exchange Standard (also known as  LEDES) billing expert. Once you get the hang of it, LEDES billing makes legal invoicing and data exchange easier and more standardized, saving both your firm and your clients time and resources. Whether you’re familiar with the Legal Electronic Data Exchange Standard (LEDES) or are just starting out, we’ll cover all the basics and include step-by-step guides for generating or converting invoices.

After reading our easy to follow guide, you’ll be a LEDES billing pro. You’ll gain a full understanding of LEDES billing and why it’s important. Plus, we’ll make sure you have all the tools you need to easily generate invoices or convert files into the proper format.

Keep on reading  as we will learn about:

What Are LEDES Invoices?

Legal Electronic Data Exchange Standard invoices are legal invoices formatted according to a specific set of standards that make data exchange, processing, and payment easier and standardized for all parties. LEDES invoices are machine-readable text files that require the  information to be displayed in the correct order and format. Using an open-standard format, LEDES invoices can be directly integrated into a company’s financial systems.

This format has been around for over 20 years and come into favor in the  00’s due to its uniformity and ease of use. It was developed and is overseen by a not-for-profit organization of legal industry professionals who work for the best interests of both lawyers and their clients.

Here’s why your firm should be invoicing using the LEDES format:

  • It’s widely accepted as the industry standard, greatly reducing the need for firms to educate their clients or new hires on billing practices. 
  • You bill for precisely the work your firm did, and your clients see exactly what tasks they are paying for.
  • Uniformity and standardization of invoices leads to greater efficiency and fewer opportunities for error during the invoicing processes
  • Protects law firms by only requiring them to provide information that they have readily accessible
  • The standard adheres to existing formats as much as possible so firms don’t have to waste time and resources learning and adapting to new standards
  • LEDES formats are designed to be as unambiguous as possible, making them easy for firms and their clients to understand

Learning a new billing format may seem overwhelming, especially at first glance. Multiple LEDES file formats currently exist, and creating files by hand can be arduous. But, keep in mind these standards were specifically designed to make the invoicing process simpler for both law firms and their clients. With some basic LEDES knowledge and the help of our tools, it’s easy to whip up a legal invoice with  LEDES compliance.

Types of LEDES Formats

LEDES billing has evolved over time since the first standards were released in 1998. The format has been adjusted to adapt to advancing technology and allow more flexibility.

Let’s walk through all the formats:

  • LEDES 1998

    The first LEDES billing format that was introduced in 1998. This format is no longer accepted as a legal industry standard.

  • LEDES 1998D

    Introduced after LEDES 1998, 1998B is to this day the most accepted and widely used of all the LEDES formats. These pipe-delimited plain text (.txt) files have 24 fields. Although newer and more flexible formats have been released since its introduction, it’s still the most popular file standard for the legal industry.

  • LEDES 1998BI / 1998BI V2

    Based on the popular LEDES 1998B format with some modifications to make it adaptable for legal invoices generated outside of the United States. These .txt files include all the same fields as 1998B. It also requires the client’s TAX ID.

  • LEDES 2000

    This XML based legal billing format is similar to LEDES 1998B with some modifications to make it more simple, flexible, and universal for legal e-billing. It allows firms to adapt invoices to specific client needs without breaking the format. Many firms were initially slow to adapt to this new format, adhering to the 1998B standard instead. However, it’s now widely accepted and used.

  • XML 2.1

    This format was released just two years after XML 2.0 and made improvements to standardize math logic between law firms, clients, and third-party billing software. XML 2.1 files are in the .xml format and include 16 segments and 191 data elements.

Easy Legal Billing supports all active LEDES formats listed above. Once you decide which LEDES format is the right fit for your firm and your clients, our software will allow you to track time and matters, select your ideal LEDES format, and send invoices all in one place.

What Are LEDES Codes?

The UBTMS, or Uniform Task-Based Management System, is a tracking structure that categorizes lawyers on-the-job activities and tasks with a standardized set of uniform codes. These codes simplify how lawyers bill clients on an hourly basis. Lawyers can track their time by assigning the appropriate codes to their day-to-day billed activities.

There are four sets of LEDES codes:

Task codes– these are a description of the legal activity performed broken out by the area of law that is practiced

  • The five types of task codes are:

  • Litigation 
  • Counseling
  • Project
  • Bankruptcy
  • Trademark

Activity Codes– also called fee codes, these add more information to the task code based on what specific actions you are performing, such as speaking with your client, attending an event, researching, or preparing.

Expense Codes– these categorize expenses you may incur on behalf of our client such as travel, postage, or paying other professionals for their services. These work independently from activity codes.

Timekeeper Codes – these simply refer to the job title of the timekeeper billing hours to a client. Timekeeper Codes are important for maintaining digital security and calculating the profitability of individual team members.

Don’t worry about memorizing every single code! Easy Legal Billing writes each code’s description next to the code itself, making timekeeping a breeze. Plus, we offer a complete list of all the task codes that you can download right now.

ledes-codes

How to Create a LEDES invoice

Now that you know the basics of LEDES billing and the UBTMS, let’s walk through the process of generating LEDES invoices for your firm. The easiest and fastest way to create a LEDES invoice is to use a solution like Easy Legal Billing to track time and bill your clients in LEDES format.

The process for creating a LEDES invoice with Easy Legal Billing is identical, regardless of the LEDES format, until the final step. Read our step-by-step tutorial to learn how to create an invoice from beginning to end.

Before you set up your invoice, you’ll need to add your client to the Easy Legal Billing system.

  1. Click “CLIENTS” from the top navigation bar
  2. Click “NEW CLIENT” on the top right side of your screen
  3. Provide your client’s information including their primary address and the main point of contact. The LEDES Client ID and Tax ID are optional fields. 
  4. When you’ve added all the necessary information, select “Create Client”
create-a-ledes-invoice

Now that your client is added, let’s cover how to create a matter to be billed.

  1. Click “MATTERS” from the top navigation menu
  2. Click “NEW MATTER” at the top right side of the page
  3. Select the desired client
  4. Provide the necessary information and a matter description
  5. Click “Create Matter” to save
create-a-billing-matter

Now that your matter has been added to the system, you’ll be able to bill time for that particular project. You can also choose to skip this step and add your billed hours as you create your invoice.

  1. Click “TRACK TIME” from the top navigation menu
  2. Select the matter for which you would like to track billable hours
  3. Click “NEW ITEM” 
  4. Add the necessary information including a description, task code, hours, and rates
  5. Click “Add Item” to save
create-a-legal-billing-line-item

Before you download your invoice as your desired LEDES format, you’ll prepare a standard invoice in Easy Legal Billing.

  1. Click “INVOICES” from the top navigation menu
  2. Click “NEW INVOICE” 
  3. Select your client and matter
  4. Click “Create Invoice” 
  5. Easy Legal Billing will generate an invoice number which can be altered if necessary. You can also add payment terms, a PO number, and notes. 
  6. Add fees and expenses. You’ll be able to add new items if you haven’t created them yet by clicking “NEW ITEM”,  or add existing items that haven’t been billed by clicking “ADD UNBILLED”   
  7. Add any additional fees or adjustments by clicking “ADD ADJUSTMENT” and providing the necessary information
  8. To preview your invoice, select “PREVIEW”
  9. Click “SAVE & FINISH”

Now it’s time to convert your invoice to comply with the  LEDES standard.

Simply select the desired LEDES format and it will automatically download to your computer, ready for you to send out!

From this page, you can go back and make edits, duplicate, preview, send, or delete the standard invoice. You can also mark as void or open by selecting the appropriate action.

ledes-invoice

How to Convert Files to LEDES Format

If you have an existing invoice that needs to be converted into a LEDES format, we can help with that too! Unfortunately, there’s no quick fix to convert the files on your own, but that doesn’t mean you need to recreate the invoice from scratch. Using our Invoice SOS system, we can convert the files for you.

We can convert any invoice of up to 20 line items into the LEDES format within 24 business hours. You are not required to subscribe to Easy Legal Billing to use this service. Simply send us your invoice and we’ll take care of the rest.

What’s Next?

Congratulations! If you’ve completed this guide, you are now a LEDES billing pro. Not only do you understand how LEDES billing can make invoicing and data exchange easier for your firm and your clients, but you are also equipped with the accepted LEDES formats and the codes you need to track time and matters. We walked through exactly how to generate a LEDES invoice using the Easy Legal Billing software and how to convert other file types into a LEDES format of your choice.

Now that you have the knowledge required to generate LEDES invoices for your firm, it’s time to create your first LEDES invoice. Claim your free trial and try the Easy Legal Billing software for yourself. There is no credit card required and you can generate as many invoices as you want during your 15-day trial.

What are you waiting for? Download your free copy of the Comprehensive Guide to LEDES Billing to help your firm get ahead with LEDES.


Authored By

Easy Legal Billing Team

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