Looking at the state of standards within the legal industry, we see the best avenues to generate efficiencies via the adaptation of agreed-upon protocols
In comparison to other software verticals which tend to be dominated by major players like Microsoft, Salesforce, Oracle and others, legal technology is a fairly fragmented industry.
In areas such as practice management, document management systems, and time & billing accounting, a wide range of companies have thrown their hats into the ring over the years. The lack of a market leader has resulted in a tech environment in which certain types of data exchanges are often custom designed, rather than using common, agreed upon conventions.
Today, however, the outlook is now one of consolidation and improvement. An industry whose interoperability was once defined by one predominant billing standard — the Legal Electronic Data Exchange Standard (LEDES) task-based billing — is now broadening its horizons. In this article, I examine some of the key benefits of a standards-based industry, show where the legal profession is today, and identify the most promising avenues to generate efficiencies via the adaptation of agreed-upon protocols.
A look back
Business Transactions — Stepping back in time to the 1980s and ‘90s, standards like ANSI (in the United States) and United Nations-based EDIFACT (focused in Europe) offered great value. Transmissions like EDI (precursor to today’s API or XML data exchange opportunities) provided an agreed-upon platform for major manufacturers and their customers to communicate about common business transactions like forecasts, orders, shipments and invoices. Other innovations like Universal Product Codes (UPC) further framed key elements of these frequent business transactions with similar nomenclature.
Legal — LEDES, in its most basic application, is a standard which makes e-billing easier throughout legal ops. The huge positive about this framework is clearly the wide adaptation level within the industry. It is a true success story. Perhaps both the greatest strength and weakness of the standard is the simplicity. The easy-to-adopt text-based standard allowed many, regardless of sophistication levels, to hop on board. Yet, the same standards limited the industry in the sense that custom fields or expansion of the standard tended to be hamstrung by the straight text processing conventions.
Looking back a decade or so, it’s certainly more than fair to say that the legal industry lagged a good bit behind other areas such as manufacturing, sales & marketing analytics or warehousing/shipping logistics. This, of course, was kind of a mixed outcome for those of us working in the field, lo those many years ago.
Legal industry benefits
Before we dig into some of the headway that legal operations achieved in the standards domain, perhaps articulating a few benefits of these standards as they pertain to the industry can offer some useful insight.
Interoperability is clearly a topic at the head of the pack. Regardless of the technology in play, the more that technology platforms play well together, the easier it is to benefit from timely updates to common events like matters opening, case resolutions, or anything else occurring along the legal project management continuum.
Another huge benefit is something I’ll call task commonality, which seeks to use common task descriptions across industries. In legal, for example, unless one knows what is meant by the exact legal task term — such as “conducting research”, “writing a brief”, “trial prep”, etc. — it’s virtually impossible to tackle the automation or planning process for emerging, desirable areas such as case budgeting or pricing legal services.
By contrast, in my former career in the logistics areas of industry, it’s fairly easy to quantify functions like “How many tons of a raw materials is needed to make product x?” or “How many units of product y can we ship in a railcar?” Getting to that point within the legal industry — a place where chunks of work-product moving through the legal work process could be quantified to the point they could be budgeted, relating to Key Process Indicators (KPIs) — is the prime benefit afford to the legal industry through task commonality.
Shifting our focus to today, let’s take a look at some of the recent initiatives and events helping to move the legal industry’s standardization movement forward.
LEDES — Let’s start by acknowledging one of legal operations’ strongest success stories over the past two decades, the LEDES task billing standards. To oversimplify, most of the inroads in legal billing initially occurred with the litigation (L Series) code set. Today, additional categories of legal work are now more tightly aligned with the LEDES code sets, most notably, functional areas like Legal Project Management and, interestingly, more nebulous (and thus more challenging to quantify) legal functions such as Counseling.
SALI Alliance — One of the initial organizational goals of the Standards Advancement for the Legal Industry (SALI) was the creation of a base version of what many consider to be SALI’s hallmark, the Legal Matter Standard Specification (LMSS). Fairly rapidly, the depth and breadth of the organization’s membership groups added sophistication to the newly proposed standards, providing greater transparency and uniformity to legal activities. Relating this back to the concept of task commonality, this is exceedingly helpful for budgeting and resource planning, especially in areas where disciplines like operations resources management have transitioned into data-based analytical functions (such as in manufacturing or logistics) that leverage deeply quantitative analytical tools.
SEC Edgar — Use of eXtensible Business Reporting Language (XBRL) within the U.S. Securities and Exchange Commission’s corporate filing system — known as the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system — allows for the integration of productivity into different classes of legal work beyond litigation. This started with voluntary programs for financial statements in 2005; and, over time, added more functional areas (such as risk/return info, and other company files and disclosures). In the end, a fairly broad set of filings and reporting elements were transitioned to a common template, an accomplishment which reduced both the cost and processing time of filings for both the SEC and external organizations alike.
On the horizon
Certainly, there are many exciting happenings within the SALI Alliance, with most legal ops visionaries frequently citing the work focused on advancing the LMSS Standard Version 2, which was released in June 2019, as particularly important. This updated standard expanded the scope of work once constrained to defining legal matters into many new areas, including courts and other U.S. government bodies, not to mention areas like legal player roles and legal processes. The increasingly broad consortium constantly builds on its founding principle of industry inclusiveness to provide many classes of stakeholders a voice in the creation of these standards. To that end, SALI’s expansion into Canadian working groups, for example, and its willingness to go deep into the integration of products like NetDocuments are also moving the ball farther down the field.
Overall, the LEDES litigation task code set as applied to billing was a very good first step. But the LMSS standards — as advocated by the fine work of the broad cross-section of the legal industry in groups like SALI Alliance — are a very promising methodology to take the analysis to the next, more sophisticated and analytical level.
All in all, the legal industry’s willingness and ability to standardize practices and methodologies will be closely correlated to corresponding gains in productivity and analytical reviews of legal ops in the years to come.