What is LEDES And Why is it Important?

What is LEDES And Why is it Important

LEDES stands for Legal Electronic Data Exchange Service, and functions as the global standard for legal billing exchange. Founded in 1995, LEDES was originally formed by the Law Firm and Law Department Services Group within PwC. The organization is run by the LEDES Oversight Committee (LOC), which consists of law firms, corporate legal departments, universities, and software vendors. The LOC was initially created under informal pretenses to address e-billing issues in the late 1990’s, but later became incorporated as a not-for-profit California mutual-benefit corporation in 2000. Since then, LEDES has become internationally recognized and used, and is run by legal industry representatives who work to create and maintain uniformity for e-billing between corporations and law firms.

The program does this by creating standardized formats for electronic invoicing that do not cater to any one organization, and instead offer common solutions based off of five basic principles:

  1. “Keep it simple;
  2. Make it unambiguous;
  3. Diverge from existing formats as little as absolutely necessary;
  4. Only ask for information the law firm is typically able to provide from their financial system; and
  5. Meet the needs of corporations, law firms and legal industry software vendors to the maximum extent possible consistent with the first four criteria.”

Utilizing these five ideals, LEDES serves to standardize legal invoices globally. Though adopting the standards is voluntary, given that LEDES has been around and widely used for almost two decades, it would behoove law firms to adopt the standards to ensure that they can better meet the needs of corporations, other law firms, and legal industry software vendors. LEDES first and foremost caters to this by helping law firms generate invoices that are more easily understood. Because of this, those firms get paid faster (since their invoices are so straightforward).

Furthermore, the implementation of LEDES can:

  • Provide the base for implementing better digital security
  • Allow for data infrastructure to be scaled more easily
  • Increase staff understanding
  • Improve reporting on standard metrics
  • Assist with making more informed and strategic decisions
  • Help you gain a better understanding of staff productivity

All of this, when combined through the utilization of LEDES, can help a firm allocate resources more effectively, increase working efficiency, and realize profitability more seamlessly. The LEDES format reduces the time spent on invoice creation and task descriptions, while also allowing for ease of access and processing for uniform invoices.

Your firm can also benefit from the billing analysis capabilities that come alongside the utilization of LEDES. LEDES works to ensure that all software programs (even your firm’s) can handle bills the same way because due to the standardized format, the bills can be easily “read” by the software program designed to handle them (which is most programs).

Authored by:

Matthew Markham

Matt is an experienced writer, having learned his approach from time spent at Brown University and Oxford University's journalism course. He is the COO of Bilr, a leading legal billing application, and has authored a number of #1 Google ranked articles that have featured in CNBC, Forbes and Entrepreneur. His background originated in investment banking at Morgan Stanley, where he had first had experience looking at the inefficiencies of law in business today.

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