LEDES API Effort To Address Serious Ebilling Issues

As many are aware, I have led the LEDES Oversight Committee (“LOC”) for many years now. We have a project underway that could solve some significant law firm ebilling problems and I would like to use this forum to spread the word.

Let’s talk about the problems. 

A law firm’s time and billing software is set up to capture the date an invoice (i.e., a paper bill) was generated. But with ebilling, that is only the first step. The biller must then create a LEDES invoice file, and then log into the client’s ebilling system, upload and submit the invoice and attachments, and then wait for information on whether the invoice has passed electronic validation or not. Typically, this happens in a relatively short period of time from when the paper bill was generated. But if the invoice is rejected during electronic validation, there can be a cycle of correction/resubmission until the invoice is accepted by the system. Once accepted, the bill reviewer can also reject the invoice, which starts off another cycle of correction/resubmission until the invoice is finally approved for payment.  

In ebilling, the date an invoice is accepted is equal to the date the paper bill is generated but there can be a delta if the invoice has been rejected and requires correction/resubmission. Since time and billing software is totally disconnected from ebilling, it does not pick up information on when an invoice has been accepted by the ebilling system, nor does it provide information on invoice status, particularly on rejections that need correction.

To compound the situation, most clients have rules specifying the maximum number of days to submit services and expenses for payment. This means that an entire invoice can be rejected if the invoice end date exceeds the specified time period, or individual time or expenses can be rejected based on aging. With no recourse for getting paid, the law firm must write off the time and expenses. 

As if that wasn’t bad enough, Law Firm collection software uses the date the paper bill was created for collection action on overdue invoices. Billers must check whether the client is an ebilling client and, if so, follow up on the invoice status prior to taking any collection action. In many cases this is the point where the law firm learns that a rejected invoice has not been corrected/resubmitted and may have exceeded the client’s submission criteria.

When I say these are big issues for law firms, I mean BIG!

So now let’s talk about how the LOC is working on something that could solve these issues. 

We started an effort led by Nick Puschak a couple years ago to create an API to allow for system-to-system transmission of ebilling invoices and provides calls for updates on invoice status. The first version of the API was released in 2020 and can be found here: LEDES API – LEDES.org. 

Nick started version 2 discussions earlier this year with the intention of dramatically expanding the scope of tasks that the API can handle. 

With respect to invoice status, the calls proposed in v.2 at this time will identify: 

  • received:  Receiving system has simply received the Invoice, however no file error processing or other actions have occurred at this time. The invoice will stay in this state until the file error checking has been completed.
  • file_error:  There are errors in understanding the invoice data. The invoiceErrors array should list the errors. If no file errors are found then the status should be set to one of the following statuses, which will imply that the invoice data was understood. Even though there may be no file errors found, this does not mean there are no errors in the invoice and it still may be rejected due to some automated audit checks or manual checks by a user.
  • pending_client:  The receiving system understands the invoice and it is pending review or future action by the client.
  • pending_tax_authority:  The receiving system understands the invoice and it is pending approval from the tax authority, when that is required.
  • pending_vendor:  The receiving system understands the invoice and the invoice is awaiting a response for some action from the Vendor. For example, if the client needs a receipt attachment to be submitted. 
  • delivered_to_client:  The receiving system has delivered the invoice to the client system. This optional status can be used when the invoices is passed to a separate client system.
  • rejected:  The receiving system has rejected the invoice with errors. The invoiceErrors array should list the errors.
  • approved:  The invoice was approved by the receiving system or by users and its awaiting payment.
  • sent_to_ap:  The invoice was sent to an Accounts Payable system.
  • paid:  The invoice was paid. The invoicePayment array should list any payment data. On some systems the receiving system may not receive payment data or even a paid status.

Think about it. It will be possible to either support an additional field or update the paper bill create date to reference the date the invoice has been accepted by the ebilling system and a new Ebill Invoice Status field can be updated to provide information on ebill status. Think about the potential of having a report showing invoices with Rejected status that need correction/resubmission! 

What I envision requires a commitment on the part of the time and billing vendors and the ebilling vendors to add this functionality. My hope with this post alerts these vendor communities to the API effort, that they consider joining the LOC to participate in the API development, and they look for the release of the API v.2 so that API support and associated updates within their systems can be immediately rolled out to their customers. 

(This post was also shared on LinkedIn.)  

Acquisition of InvoicePrep

I read today that InvoicePrep, a legal ebilling outsourcing and invoice compliance review provider based in Westport CT, has been acquired by Frontline Managed Services.  Frontline, based in Atlanta, provides administrative, financial and IT managed services to law firms.  Sounds like a good fit!

One Less LEDES Creation Tool Available

We were sad to learn that Wolters Kluwer ELM Solutions will no longer be selling its eBillingDesk product as of 1 June 2021. It was perhaps the most versatile of the stand-alone LEDES invoice file generator/editor tools available in the marketplace. We learned that they will honor existing subscriptions to the end of their subscription term, but no new subscriptions will be available for purchase. 

doeLEGAL Acquired

Questel, a globally-based IP management solution with headquarters in Paris, has acquired doeLEGAL, the last of the original matter management and ebilling companies from the 1990’s that remained under original ownership.  doe has been successfully expanding their global footprint over the past couple of years. Our hope is that this acquisition will accelerate their global client base and continue the family-owned business’ practice of delivering excellent client service. You can read the press release here.

Organizational Donation

GLE has been fortunate to work consistently throughout the 2020 pandemic year at a time when so many are struggling. As you may have noticed on our 2020 holiday card, GLE made the largest donation in our 9 year history to World Central Kitchen and Chef Jose Andres. In addition to the obvious synergy (we are Global Legal Ebilling and they are World Central Kitchen), we have enormous respect for the mission of WCK.  Imagine formulating and then executing a plan to tackle hunger on a global scale!  You can learn more about the work of this very worthy organization here.

eDiscovery Proportionality Project

I have been asked to join an effort spearheaded by George Washington University and members of the US judiciary on eDiscovery proportionality. Proportionality considers the size of the claim and risk involved versus the amount of effort and associated cost for eDiscovery to be undertaken. The premise is that a small claim should not require a “drain the ocean” amount of cost and effort.
This project is similar to one undertaken by the judiciaries of England and Wales to create an electronic form bill of costs, which was PM’ed by a UK LOC board member.
Look for more information on this effort in this blog. 

Growth of CTC Tax Systems

Years ago I had read a statistic that CTC (Continuous Tax Control) systems were expected to be in place in 80% of the countries worldwide by 2025.

Implementation of CTC represents an additional step in the billing workflow. If required for the sale of services, a law firm within the country must transmit information on the cost of services billed to the CTC system before rendering an invoice to their clients. A copy of the approved transaction should be provided to their client as part of the supporting documents when an invoice is uploaded to the ebilling system.

In the next two years, 22 countries are coming on-line with CTC systems, and a colleague expects that CTC will be implemented in every country globally except the US, Canada and the UK by 2035.

Tax compliance is an area of specialization within GLE.  If you have questions on CTC systems, contact us at info@globallegalebilling.com.