UTBMS
Starter Kit
Table of Contents
1.
Overview
2.
The Canadian Initiative
3.
Background: The Need
4.
The Principles and
Assumptions Underlying UTBMS
5.
The Code Sets
a) The Litigation Code Set
b) Project and Counseling Code
Sets
c) Bankruptcy Code Set
d) Additional Code Sets
6.
The Benefits and Uses of
UTBMS for the Law Department
a) Improved Capacity for Budget Development and Monitoring of Costs
b) Streamlined Administrative
Process through Facilitated Review of Legal Bills and Invoices.
c) Meaningful decisions on file
strategy based on cost information
d) Benchmarking Performance and
Costs
e) Co-operative planning with
law firms on file management and staffing
f)
Improved reporting to internal clients on where, what and why legal
dollars have been spent leading to improved file management.
7. The Benefits and Uses of UTBMS for the Law Firms
a) Better Planning and
Budgeting.
b) Better communication with
clients
c) Active File Management
d) Streamlined Administrative
Processes and Reduction in Invoice Cycle Times
e) Competitive Advantage
f)
Alternative fee arrangements.
8.
Implementing UTBMS
a) What is the Strategic
Objective in Implementing UTBMS?
b) How will UTBMS be used to
Develop Management Reports
c) Use an Inter-Departmental
Team to lead the Planning and Implementation Process
d) Use a Pilot Program and
Phase-in Approach for Implementation
e) Develop a Communication and
Training Program to Introduce the UTBMS to Law Firms and/or Clients
f)
Do the Law and Accounting Departments Have the Capacity to Receive and
Store UTBMS Data?
g)
Develop a Standard Invoice Format
h)
How will
9.
Technology Planning and
Technological Support for UTBMS
a) Software requirements for
the law firm
b) Software requirements for
the law department
c) Communications
technology/services
10.
Applying UTMS Data
a) Description of How the Law
Department Conducts and Shares the Analyses Resulting from the Data
b) A Description of How the Law
Firm Budgets Time, People and Money using UTBMS
c) Using UTBMS and Project and
Case Management
11.
UTBMS Relationships
a) Requests for Proposal and
Terms of Engagement
b) UTBMS and Alternative
Billing Arrangements
c) UTBMS & Performance
Measurements in the Law Firm and Law Department
12. The Help Resources for UTBMS
a) The Code Sets (not included
at this time)
b) Case Studies (to be
selected)
c) Consultants (to be compiled)
d)
1.
Overview
The Uniform Task-Based Management System (UTBMS), a
Price Waterhouse facilitated initiative, supported by the American Bar
Association and the American Corporate Counsel Association, enhances the
planning, budgeting, billing and
management of legal services. UTBMS
systematizes the collection and transmission of information on legal tasks from
outside counsel to law departments, enabling law departments to receive a
consistent, detailed description of the outside lawyers’ work. As a management
tool, UTBMS provides users with the potential to analyze activities and
identify costs by legal tasks, to improve budgeting processes, to streamline
accounts payable procedures, and to provide a foundation for alternative fee
arrangements.
The UTBMS emerged from an industry-wide need to
create a standard system for task-based billing. Analogous to the role of standards in other
industries and functions, standard billing categories make it possible for
corporate law departments to work with their law firms in a far more efficient
manner. A consortium was formed in
early 1994 comprised of approximately 50 law firms and law departments, the
Section of Litigation of the American Bar Association (ABA) and the American
Corporate Counsel Association (ACCA) and coordinated by Price Waterhouse
LLP.
The consortium captured a movement that was already
underway, namely, to restructure legal bills to show the value of legal
services. Task-based billing has been
adopted by numerous corporations and law firms, and some attorneys say that
they have been using task-based billing for years because of the text
descriptions incorporated into hourly bills.
UTBMS is designed to consolidate and standardize the myriad code sets in
use by individual companies. As an
industry-led initiative, the aim was to establish one code set for all of the
parties who are involved in providing and receiving legal services.
UTBMS made its first appearance with the issuance of
the Litigation Code Set in May 1995. In
December 1995, the UTBMS initiative released the Project, Counseling and
Bankruptcy Code Sets which were designed for all aspects of legal work outside
of litigation.
Since the release of the code sets in 1995, the (UTBMS) has quickly become the
legal industry’s standard task-based billing and management system. The 1997 Price Waterhouse industry-leading
Law Department Spending Survey (LDSS) noted that 41% of the over 250
respondents have, or plan to, implement the UTBMS.[1]
Despite
the widespread and general knowledge about the system, many law firms and law
department are still moving up the learning curve on this issue and have yet to
capture the full benefits of this management system. Many law departments are still learning how
to manage, process, and interpret the data to provide value-added management
information. Furthermore, many
departments and firms have not initiated processes to analyze and review the
task-based data. From the perspective of
law firm respondents, the adoption of UTBMS has been largely reactive and
restricted to re-tooling the invoice process.
Few law firms have made much headway in applying the system within the
firm as a management tool.
This thorough and detailed starter kit is designed
to facilitate the implementation and application of UTBMS in law firms and law
departments. The guide provides an
overview of the development of the UTBMS, the assumptions and principles
guiding the development of the codes, and the codes themselves are described. Drawing on presentations, survey results and
input from actual users, the guide also details the benefits of the UTBMS for
law firms and law departments, provides a step-by-step review of how to
effectively implement the system, and shows the links between UTBMS and other
key performance tools and measures for law firms and departments.
This
guide has been developed in partnership with members of a Canadian consortium
that adapted the American UTBMS for the Canadian legal structure. (A member list of this consortium and the
original members of the
2.
The Canadian Initiative
The
Canadian UTBMS project emerged at the suggestion of the legal department of the
Insurance Corporation of British Columbia (ICBC). This department saw the value of the UTBMS
system that had been developed in the
The
first meeting of interested participants took place in November 1996. Participants decided to develop a Canadian
set of standard task and billing categories based on the American Uniform
Task-Based Management System.
Cross-border transactions and activities demand that the codes adhere as
close as possible to the
The
Canadian litigation code set has only been altered from the
The
intellectual property code set was also developed by the Canadian
consortium. The code set is quite
detailed with phases for litigation, trade-marks, patents, copyright,
industrial design, plant breeders' rights, and integrated circuit topography. Under each phase, there is a detailed list of
tasks. The litigation tasks are listed
as per the Canadian litigation code set but distinguished by the alpha-code
"IPL."
3.
Background: The Need
Until the past decade, law firm billing was
relatively straightforward. Firms billed
their clients in greater or lesser detail, typically providing in-depth
narrative descriptions of the tasks and processes underlying their hourly
charges. When issuing bills and
providing the underlying detail, each firm followed its own approach. In recent years, however, clients have become
more focused in requesting additional billing information of their outside law
firms, or asking that billing data be presented in specific formats. In some instances companies have wanted to
analyze their costs along various dimensions to provide benchmarks for the more
systematic evaluation of legal costs. In
others, there has been a desire to develop a database of costs on discrete
legal activities. Most of these efforts
have been part of an overriding effort to manage corporate legal expenses more
effectively by considering inside/outside mix, comparative performance by
attorneys and firms, and other aspects of cost.
As a consequence of these trends, many law firms'
administrative organizations were faced with the challenge of complying with a
broad range of specialized billing requirements - each unique to one
client. The situation posed a
substantial burden to a number of firms.
As law departments expand their use of "task-based billing"
and broaden their efforts to manage outside legal costs more effectively, firms
are faced the with prospect of overwhelming complexity as they strive to comply
with the various requests of dozens of clients.
Aside from "need" narrowly defined, there
are significant benefits to both law firms and law departments in terms of
administrative simplicity and cost reduction to be gained from
standardization. In addition, the
development of standard billing categories permitted introduction of billing
based on Electronic Data Interchange (EDI).
This technology is already widely employed in other areas of commercial
activity. By linking the suppliers and
consumers of legal services, EDI offers "paperless billing" and a new
level of administrative and cost efficiency.
There
was a need, therefore, for a uniform set of billing and task categories -
detailed describers of legal work acceptable to both law departments and firms
that could prevail across American industry, financial services, and
commerce. Analogous to the role of
standards in other industries and functions, standard billing categories make
it possible for law firms to standardize their billing systems and for
corporate law departments to work with their law firms in a more efficient
manner.
4.
The Principles and
Assumptions Underlying UTBMS
The
consortium that developed the UTBMS were guided by several clear principles
that ensured the codes were flexible and adaptable to a wide range of legal
activities.
Support of business objectives and processes
Members of the consortium
identified a number of business objectives and administrative processes that
are supported by the Uniform Task-Based Management System, including planning
and budgeting, time entry, status monitoring and reporting, bill preparation,
electronic transmission of bills and payments, bill review and analysis,
development of alternative financial arrangements, and practice and
profitability analysis. Consistently,
the group returned to the question: How
are we going to use the data to be tracked?
Simplicity and ease of use
Experience of consortium
members whose companies have implemented task-based budgeting and billing
programs has led to a fundamental guiding principle: "keep it simple." Throughout the process of developing the code
set consortium members continually returned to this maxim and the result is a
flexible code set with a manageable number of individual tasks.
Chronology
Another important issue
resolved by the consortium is that of chronology. Although the process of litigation largely
proceeds along a timeline, the group realized that tasks are often performed
out of sequence. The Code Set
accommodates the need to record time out of sequence, and at the same time
embraces the logical sequence of steps that occur in litigation.
Suitability for all size offices
Currently-available
technology will be an important asset in the efficient implementation of the
coding scheme. Still, the group has
assumed that not all law offices will have technology solutions at their
disposal to facilitate the capture and analysis of time. Law offices and attorneys can use the codes
in a manual fashion.
Avoidance of multiple interpretation
A primary concern with some
existing code sets is the multitude of ways in which a single time entry can be
coded, depending on individual interpretation.
The codes should minimize opportunity for multiple interpretation.
Flexibility to
track both tasks and activities
Some UTBMS users value the ability to analyze work
according to categories of activity (e.g., communication, drafting) in addition
to task (e.g., deposition). Others
emphasize the importance of tracking and analyzing the level of effort expended
to complete tangible work product, segments of a case, or defined business
objectives. For this group, simply using
task codes is sufficient. As an option
for those seeking activity detail, the System permits firms and departments to
code activities separately from tasks.
5.
The Code Sets
UTBMS is a budgeting and billing system designed to
provide clients and law firms with meaningful cost information on legal
services. The system is based around
four sets of alphanumeric codes, complete with corresponding terms and
definitions that describe the universe of legal work in a given area. The four codes forming the UTBMS are
Litigation, Project/Transaction, Counselling and Bankruptcy. [Exhibit 1a and 1b].
The UTBMS bill is organized according to the tasks
and activities that produced the end result.
As a system used over time, it provides law firms and corporations with
the ability to build databases that can accurately assess the true labor cost
of legal services for specific kinds of projects, construct budgets, manage
cases by evaluating matters at different stages, and cut down on the time it
takes to get a bill paid.
The fundamental coding structure has two
fields: tasks (embedded within phases)
and activities. Whereas task codes track
time associated with tangible work product accomplished (e.g., motion, deposition),
activity codes describe how the work was performed (e.g., communicating,
drafting). Not every law office will
wish to use activity codes, but the coding scheme is flexible to accommodate
those who value activity analysis.
The Code Sets do not
eliminate narrative descriptions of time entries. For purposes of tracking and analysis, a
matter type code distinguishes among various types of matters. A matter type designation can be used to
distinguish among various types of litigation and to identify alternative
dispute resolution matters.
a)
The Litigation Code Set
The System enables lawyers to budget and bill by
litigation task, aiding client and counsel in understanding, managing and
conducting litigation. It is intended to
cover all contested matters, including judicial litigation, binding arbitration
and regulatory/administrative proceedings.
The goals of the Litigation Code Set are to:
1. Enable
client and counsel to plan and maintain an efficient and effective litigation.
2. Facilitate
effective communication of the tasks and costs of litigation and any variations
from the expected or the norm.
3. Provide
each client and law firm with a means to individually understand and compare
the cost of litigation for greater efficiency and as a foundation for use of
alternative billing arrangements.
4. Harmonize
the various task-based efforts to ease widespread adoption of a simple, concise
and flexible task-based management approach.
The Litigation Code Set is grouped into five basic
phases or aspects of a litigation, plus expenses. For litigation cases, each file is broken
down into five different phases:
L100 Case assessment, development and administration
L200 Pre-trial pleading and motions
L300 Discovery
L400 Trial preparation and trial
L500 Appeal
Each phase consists of a number of tasks, such as
Written Discovery, Document Production and Depositions. In total, 29 tasks comprise the Litigation
Code Set.
All work associated with a task should be included
in that category. For example,
Depositions (L330) encompasses all time spent on depositions including
deposition notices and subpoenas, deposition scheduling and logistics, planning
for and preparing to take the depositions and any deposition summaries. The intent is to provide a true picture of
the labor cost of each task. (Out-of
pocket expenses, such as witness fees and transcripts, are treated under
Expenses.)
b)
Project and Counseling Code
Sets
Released in December 1995, the Project and
Counseling Code Sets are designed to be adaptable to all practice areas and
matter types. The consortium concluded
that it would not be practicable to develop practice-specific task codes, and
instead developed a standard that specifies the principal categories or types
of tasks undertaken on most non-litigation matters.
Specifically, the Project Code Set are used for the
following types of assignments, which share, to a large extent, many of the
same underlying process steps:
· Transactions (e.g., real
estate, securities, financing, restructuring, and mergers and acquisitions);
· Administrative filings
with Federal and state agencies; and
· Stand-alone projects
(e.g., establishing an environmental compliance program).
The Counseling Code Set gives added flexibility to
UTBMS. It is intended to capture time
spent by attorneys in preparing and delivering general legal advice for all
areas of law (e.g., tax, labor, corporate, regulatory, and lobbying). Also, it may be used to record time over a
monthly billing period that is not otherwise attributable to a discrete matter,
transaction, project, or litigation.
c)
Bankruptcy Code Set
The Bankruptcy Code Set is based on a code set
published by the U.S. Department of Justice, Executive Office for the United
States Trustee. The Bankruptcy Code Set
is intended for use on all matters relating to bankruptcy. However, tasks relating to adversarial
matters, such as preference actions are assigned codes under the Litigation
Code Set.
d)
Additional Code Sets
Intellectual
Property Code Set
The
Canadian consortium, in addition to revising the US Litigation code for the
Canadian context, also decided to develop an Intellectual Property code. The IP code uses the litigation code set as
its templates with phases and tasks identified by the alpha numeric code
“IPL”. The code set is quite detailed
with phases for litigation, trade-marks, patents, copyright, industrial design,
plant breeders' rights, and integrated circuit topography. Under each phase,
there is a detailed list of tasks. The
IP code set was finalized by in June 1997.
Workers Compensation Code
Set
In
Spring, 1998 a group of leading insurance carriers noted an interest in
developing a Workers Compensation code set. The working group is being
facilitated by Price Waterhouse. The
code is currently undergoing development, however, to date the working group
has determined that the structure of the UTBMS litigation code set will be used
as a template for the uniform WC code set.
Further, the phase and task level codes should be nationally applicable
with state specific interpretations incorporated into the definitions.
6.
The Benefits and Uses of
UTBMS for the Law Department
The
framework of the UTBMS provides a vehicle to respond to management inquiries
about the time, cost-drivers, and value of legal services. Sophisticated purchasers of legal services
are looking for predictability in service and results, risk-sharing in price,
and appropriate rewards for legal services.
Effectively applied, the UTBMS can assist law departments achieve these
and other management objectives.
a) Improved Capacity for Budget Development and Monitoring of Costs
Used over time, the UTBMS creates a database or
collection of historical information about the cost of types of matters, phases
or tasks. As a result, it is possible to
generate budgets that are more accurate and reliable. This is a plus for corporations and their
clients which require detailed budgets to help them plan for fiscal outlays,
Coding time by phase and task provides users with
the ability to monitor matter-specific task-based budgets to a better
understanding of the cost components of legal service at the matter-specific
and aggregate level. Practice group
managers can say “How am I doing?” and more importantly, have a quantitative
measurement to accurately gauge performance.
Either the client or the law firm can realize at an early stage if a
particular phase, task, or activity in a matter is using significantly more
legal resources than planned. In such a
case, the budget can be adjusted at a middle point, getting the matter back on track.
In addition, departments can use an inventory of
cost data and experience to more knowledgeably negotiate and monitor
alternative billing arrangements.
b) Streamlined Administrative Process through Facilitated Review of Legal
Bills and Invoices.
There are significant benefits to both law firms and
law departments in terms of administrative simplicity and cost reduction to be
gained from standardizing the processes of billing, bill review, authorization,
and payment/collection. Also, UTBMS lends itself to automated bill review
processes and electronic billing, opening opportunities for on-line accounts
payable including, where appropriate, up-front monthly advances. These processes and the technology support
for UTBMS is discussed in greater detail below. Without lengthy dissection, bills can be reviewed, understood,
compared, and paid. Today it is not uncommon for bills to take six months from
the time they are delivered to the time a check is written, and both law firms
and law departments seek to gain efficiencies in this area. [Exhibit 1c]
c)
Meaningful decisions on file
strategy based on cost information
Good
data allows in-house managers to track results and form strategic decisions
about the defense of a case or the conduct of a matter. This improves discussions about settlement,
outsourcing specific types of legal files, and long range legal services
support based on facts. Overall, the
system and the information it provides gives in-house practitioners greater knowledge of, and
influence over, file management both internally and externally.
d)
Benchmarking Performance and
Costs
Many
departments are learning that UTBMS coupled with a case management plan and
budget is a powerful tool to gauge the comparative performance of law firms.
UTBMS provides bottom-line financial information as well as insights into how
efficient the matter was handled through a comparison and analysis of costs and
value provided by different law firms along a number of measurements. With the assistance of analytical software,
data regarding cost, time and resources applied to different phases and tasks
can be broken down as a percentage of the total. This information can be displayed in
reader-friendly tables and pie charts, greatly enhancing a reviewer’s ability
to determine what the bill is saying.
e) Co-operative planning with law firms on file management and staffing
UTBMS
is a stimulus to improve law department operation and law firm
relationships. The data promotes and
facilitates discussions on planning and budgeting and reveals opportunities to
improve resource allocation and work processes between internal and external
providers. For example, the data can
help determine efficient staffing on files where routine, labour intensive
activities such as the collaboration of documents can be handled internally at
lower cost.
f)
Improved reporting to
internal clients on where, what and why legal dollars have been spent leading
to improved file management.
The
UTBMS system provides objective data to respond to management inquiries and at
the same time promotes communication within the client company and with outside
firms. Less time is spent on the justification of legal costs because objective
data provided by UTBMS is readily understandable
UTBMS
data supports strategic management decisions, but departments must bear in mind
that UTBMS is not a “turn-key” solution for managing legal work and costs. Rather, it is one of a range of tools that is
being applied to improve the supply and delivery of legal services. Using value-added concepts, a progression of
strategies is emerging for working with outside counsel on the strategy front,
on collecting data for case management systems, on the technology front with
the use of the Internet, intranets and the use of groupware.
The
goals are to increase communications, facilitate teamwork, enhance
productivity, and reduce costs. A
partnering or alliance between a law department and a law firm can mature, and
then progress on the productivity spectrum:
Rate
à Reduction in à Shared à Work
Reduction number of outside Technology process
counsel re-engineering
à Performance à Value-added
measurement billing
7.
The Benefits and Uses of
UTBMS for the Law Firms
As
identified in the Fall of 1997 Price Waterhouse users survey on the use of
UTBMS, many law firms have implemented UTBMS at its most basic level solely in
response to client requests. UTBMS has
largely been seen as a client-driven initiative, yet the systems offers many
benefits to law firms as well as law departments. It is fundamentally a cost
accounting system which can assist firms to gain a better understanding of
their costs, highlighting opportunities to refine their processes and better
price their services. Law departments
that are implementing UTBMS should discuss the strategic and operational
benefits offered to firms.
a)
Better communication with
clients
Clients
want a detailed explanation for the fee being rendered and UTBMS provides that
detail. The use of UTBMS makes it easier
to pinpoint areas of concern as to whether time is being spent productively,
from both the perspective of the client and as well as the lawyer.
b) Better Planning and Budgeting.
An
ability to be able to analyze the actual costs of providing services is
critical to the success of a law firm.
It enables a firm to determine and compare the costs of similar types of
files, different types of files, and to identify its sources of profit, areas
of efficiency and areas that need to be improved. It enables a firm to analyze the costs of
managing work and provides a framework for budgeting work in the future. Increasingly, clients are demanding budgets
for major projects and the use of UTBMS is ideal for this purpose. Law firms
are in a proactive position to advise their clients up-front about the costs of
their services.
c)
Active File Management
UTBMS
makes it easier for the managing lawyer to assess whether there are
inefficiencies which should not be billed.
It makes it easier to see at a glance what stage the file is at, the
lawyers involved in the file, the time expended on tasks and costs incurred.
This precise understanding of costs exposes inefficiencies (e.g., inadequate
delegation, over-researching) and serves as an incentive for appropriate and
effective delegation of work to lawyers and paralegals. Indeed, a speaker at a
recent New York LegalTech conference in January noted the that the benefits of
strategic task-management included a reduction of 5%-15% in write-offs because
the quality of work improved.
d)
Streamlined Administrative
Processes and Reduction in Invoice Cycle Times
UTBMS
provided the ability to sharply reduce the cycle times for bill preparation by
the firm and bill payment by the client
. Benefits from improved cash flow and streamlined administration are
available to firms in the short term and accordingly should be helpful in
convincing them to make a start. The costs can be justified by (a) time value
of money as receivables agings are reduced through operating efficiencies and
(b) less nonbillable time (post-implementation) because of the improvements to
the billing and budgeting process.
e)
Competitive Advantage
Clients
are aggressively looking to better manage and reduce costs. Law firms willing and able to use UTBMS will
be able to offer a proven method of billing that will meet these objectives. A significant side benefit is that the law
firm utilizing UTBMS will also achieve a far better understanding of the
economics of its business. The ability to manage their own staffs more
effectively than is possible with handwritten or typed timesheets in
block-billed format and more consistent time entry. For law firms, the benefits
can include a better understanding of their own costs which is critical in
proposing and responding to requests for alternative fee arrangements. This
demonstrated ability to meet client-specific billing and cost management
demands is a strategic advantage over competitors - particularly where the use
to task-based billing is a component of an RFP process.
f)
Alternative fee arrangements.
Whether
a firm is considering offering a discount rate, a fixed fee for services or
some other form of alternative fee arrangement, it is imperative to know the
bottom line. Uilizing UTBMS can allow
easy access to data which can be analyzed in a variety of ways to enable a firm
to offer a more creative and attractive billing arrangement to a client. This information will include seniority
levels required to staff files, management costs, and activity levels at
various stages of files.
8.
Implementing UTBMS
The
benefits of UTBMS fundamentally rely on reliable and consistent data. Law department and law firms must be willing
to apply the up-front resources - namely thorough planning of the necessary
steps for effective implementation to reap the benefits of the management
system.
In late 1997, Price