Perfect Balance: 5 Billing Tips for Law Firms
It’s neve the perfect time to update your law office management practices. But, if you allow your processes to stagnate over time, your law firm will become inefficient, meaning that you’ll work harder and make less money. Certainly, your practice management goals represent the opposite of all of those things. In terms of revisiting/revising your law firm mechanics, then: there’s no time like the present.
The end of Summer and the beginning of Fall means that everyone is refocused on work; and if this is the time you choose to revamp your law practice management posture, it can set you up for success through next Summer.
In this short series on time capture and billing, we’ll suggest tactics aimed at improving your realization rate. So, let’s start with some tips for better billing practices:
Right On Time.
Your law firm time capture system can be impeccable, including transfer of your time logs to the billing system; but it won’t amount to a hill of beans, unless your clients are actually invoiced. If law firms don’t end up developing invoicing systems, bills can sit, and collect . . . dust. Lawyers relying on their memory are often led astray, especially given the complexities impinging upon modern law practice. Just as you wouldn’t (or, shouldn’t) trust a conflict check to memory, neither should you expect to remember to bill your clients. Law firms wishing to realize timely payment on invoices should send out invoices in a timely fashion, particularly: on a schedule. In some practices, that schedule may be monthly; in others, it will depend on transaction and clients types. But, regardless of how it is amended, the schedule itself should exist. Create a task attached to a date certain for when the billing goes out, and when follow-up is made on unpaid invoices, and get it all done, in time.
Draft Better Bills.
If your invoices represent a naked and basic recollection of tasks completed (‘sent email’, ‘phone call’), your clients are likely to be even less enthused upon receipt of their bills. Never has there been a time when a client received a law firm bill, and rushed to pay it; however, there is a distinct difference between a begrudging transaction and a nodding one. You’ll want your clients to be willing participants in your representation, and that includes within the collection process. When you think about it, your clients are convinced of the efficacy of your services twice: (first) when they sign an engagement agreement, and (second) when they pay their first bill. Up to the point of receiving that first bill, ‘legal service’ is likely to be an amorphous concept for the client; the invoice fleshes out what has actually been done, what elements make up the representation. The more impressive an array of tasks that can be made to appear, the better for the prompt payment of your bill. Be honest; but, be affirming. There have been whole books written around this concept.
Don’t let overruns get the better of your client relationships. If there is one thing clients hate more than receiving law firm bills, it’s when those bills contain a surprise, i.e. — the representation has become a more expensive transaction than originally expected. (This is one of the reasons flat fees are becoming more popular: there is an established price for the whole deal — even if there is some risk involved for either side, that the value will be off.) There will be times when matters become more complex than you anticipated, when additional expenses are entailed: when more work needs to be done. Even if the extra expense cannot be avoided, your clients should not find about it for the first time via invoice. Maintaining continuous dialogue with your clients is a tremendous malpractice hedge. Your clients are smart people, who may not fully understand the legal landscape; your job is to walk them through it, in as transparent a manner as possible. Be up-front about everything, including when the client will have to pay more than expected. Like a good parent, rip off the Band-Aid for them, so they won’t have to do it themselves.
If you want to get paid, and quickly, it probably goes without saying that you should make it as easy as possible for your clients to pay you. Modern clients prefer plastic. Thus, if you are not able to accommodate credit or debit card payments, you’re practically asking for delayed payments. Automate the process as much as you can, make payment access points available (in your office, via your website). Make it easy for your clients to pay you on their preferred platform. While taking credit card payments for retainers gives rise to some ethics concerns (which are manageable), getting paid for work you’ve already done is a much simpler proposition — almost a no-brainer.
You probably went to law school for the same reason Gerald Ford went to the presidential debate: you understood there would be no math. It’s common knowledge that lawyers hate finance; and, that’s why relatively simple processes, like trust account reconciliation, become unmanageable boondoggles for some law firms. If you’re having trouble getting your accounting house in order, including developing a process for sending and collecting on invoices, call in some professional help: hire a good bookkeeper.