Law Technology Today From the ABA Legal Technology Resource Center
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Some say that the most important piece of paper that a lawyer sends to his client is the bill! Why? Yes, it is the thing that helps us get paid, but it should be a lot more. Your bill should tell a story for the client on what is happening with their matter and how you are helping them with it. A bill should be understandable and show the value you are providing them and why it is worth paying you to handle it.
For more than 50 years, the authors of the book How to Draft Bills Clients Rush to Pay have written about and lectured on the topics of fees, billing, and client relations. Each have been partners in smaller “Main Street” practices and have had the opportunity over those years to use all the tips they have offered to other lawyers. However, none of the advice given lawyers has had such a dramatic and immediate impact upon successful client relationships as the approach to drafting bills outlined in the book and touched upon in this article.
The bill is a powerful vehicle for projecting the lawyer’s efforts. The client wants to know what work the lawyer has done. As lawyers who wish to be paid for our hard work, we need to draft client-oriented fee statements that clients will want to pay. The bill must reflect the full scope of the effort made by all members of the legal services delivery team on the client’s behalf. Consider the bill the climax of the lawyer-client relationship—its power to build or destroy that relationship should not be underestimated. If the client feels that the bill is unfair or unjustified, the client will refuse to pay it, in whole or in part; or the client may pay the bill but not recommend you to others, so you risk losing that client and potential referrals—a lose-lose situation.
The book focuses upon drafting bills that clients will understand, find justified, and hence be more likely to pay promptly than the typical lawyer’s bill. What are the highlights and some of the tips that warrant the reader’s continuing with this article?
Building a Relationship From the Start
The activities in which the lawyer engages before and during the course of legal services help set the stage for bills clients rush to pay. These activities include the initial client intake, the first discussion of fees, the fee estimate, the fee agreement, and sustained client communications.
Surveys have shown that clients want the following, in order of priority:
- Concern
- Honesty and ethics
- Competence
- Efficiency
Thus, a lawyer who places the strongest emphasis upon efficiency fails to understand the client’s perspective. Nonetheless, most lawyers’ priorities for delivery of legal services differ from those of clients. Most lawyers’ priorities are these:
- Efficiency
- Fair fee
- Competence
- Concern
Studies and research have all shown that there is less than a 20 percent overlap between what lawyers and clients want from the lawyer-client relationship.
As you begin the first conversation with the potential client, show that you really care. While discussing fees is important in your first meeting with a client, start by expressing concern for the client and his or her issues. For instance, if someone tells you he has been injured, take care to show you really care about the client first as a human being. The effort projected in the bill is part of an overall approach of demonstrating concern for the client’s well-being and legal needs, which begins at the initial intake and carries through to the final bill.
Demonstrate a high level of integrity in the way you handle cases. This will indicate to clients that there is also integrity in the billing process. Talk about the client’s case and give an honest assessment of it before you decide whether to handle the matter. Clients should know what lawyers’ expectations are, and lawyers must know how to manage clients’ expectations regarding services, outcome, and billing.
Communicate competence by using the appropriate terminology, citing relevant cases you have handled or reviewed and their outcomes, and acknowledging up front some of the obstacles you may encounter and how they can be handled. Demonstrate concern and honesty by referring the client to another lawyer when you lack competence in the subject matter.
Establishing Fees and Budgets
The timing of fee discussions, billing, and payment is of vital concern to clients and thus is important to client-oriented lawyers. Most of the time, a client wants to have at least a ballpark idea of the fee—of what it will cost the client to be represented until completion of the matter. Clients, however, are afraid to raise the issue of fees with lawyers. Therefore, the lawyer must initiate discussion about the cost of his or her services as early as possible. To do so, a lawyer must first assess the case, determine the time that will likely be involved, apply the rate for the lawyer’s time per hour and the rate for an associate lawyer time per hour (or determine whether an alternative fee arrangement is appropriate), charge for staff time, and estimate any other likely expenses. Only then can the lawyer offer a reasonably reliable fee estimate to the client.
The “comfort factor” of the fee payment is highly valuable to the client. Although the law office may not have a desperate need for the fee deposit, the client has an acute need to feel sure of the employment of the lawyer. A policy by the law firm of always asking for a retainer deposit for new clients is just good business practice. The client rests confidently in the knowledge that the lawyer is involved with the client’s problems when the client has engaged the lawyer’s services by paying, or promising to pay, a fee.
Using Technology
Most lawyers now enter their time from their own desktop or mobile device directly into a time and billing system that might be a stand-alone program or integrated into a comprehensive practice management system designed specifically for lawyers.
Bill-specific timekeeping systems, such as Timeslips by Sage, are popular in law firms. Timeslips tracks time with individual time slip entries, has a built-in timer, generates bills that can be in customized formats, generates reports, tracks receivables, and manages trust accounting. Timeslips can also link with QuickBooks. There are a number of other timekeeping and billing software offerings that work in both the Mac and PC environment and can be on the law firm’s server or in the cloud as software as a service—Bill4Time, EasyTime, and Billings Pro to name just a few.
There are integrated packages available for law firms that are accounting, time and billing, case management, e-mail, calendaring and docketing, and task tracking, all rolled up into one program with such features as manual and automatic timers. Some of these programs are installed on just the firm’s server and some offer a cloud-based suite. Clio, Rocket Matter, MyCase, Zola Suite, PCLaw, Tabs3, Cosmolex, and ActionStep are some of the programs available for solo and small firms. Each of these practice management systems has timekeeping and billing features that allow the lawyer to use the techniques discussed to generate bills clients will rush to pay. Many have features such as allowing the client to receive the bill electronically and pay by credit card or electronic check directly from the bill. Most have their own payment programs or integrate with programs such as LawPay for these types of payments. Studies conducted by these companies reflect the demonstrably quicker payment of invoices sent electronically than those mailed.
There are also a number of accounting programs that have a billing function that is used by lawyers. QuickBooks is by far the most popular for solo and small firms. Although Quickbooks doesn’t track time, there are add-on applications and programs that work with Quickbooks that can track time. Quickbooks also requires some amount of customizing to format bills in accordance with the suggestions in this book, but it will track receivables and payments very well. Quickbooks also doesn’t handle a lawyer’s trust accounting as well as other accounting programs designed specifically for lawyers.
Communicating Value/Projecting Effort
The time entries you make need to communicate the value of that time you have spent in terms that the client will understand and appreciate. Bills should have detailed description of the work product and value to the client. The client is not primarily interested in the amount of the bill, but rather, in the projection of effort. By interlacing the amount of the bill between the description of the work done and the effort and value given, the amount of the bill is typically not given undue emphasis by the client. A client may not even read a bill that focuses only upon the amount owing. But a bill that primarily emphasizes the work that has been done will be read by the client—after all, it tells the client’s story. By getting the client to read the bill you increase your chances of having it paid.
Lawyers are well advised to recognize that although they may define effort as time spent, clients do not. Most clients equate effort with service rendered, not with time. In one Texas bar study, lawyers and clients were asked how lawyers were to determine reasonable charges. 56% of lawyers replied, “time, or by the hour”—but only 20% of clients gave this response. The clients felt that lawyers should determine fees based upon services delivered.
Clients think of time as minutes on a clock, unrelated to service rendered or work completed. This means that clients believe a lawyer can work very hard or very little in an hour. Clock time is not effort in the clients’ eyes. From a client’s point of view, how hard the lawyer tries—as perceived by the client—is effort, and that projected effort is the service the client seeks from the legal professional. The implication of research in this area is that, for most clients, bills need not include the number of hours expended but, rather, should give detailed, specific delineation of the work completed for the client.
In Summary, what the client’s expectations as defined in your initial meeting with the client and what you say in your bills will determine if clients are happy with you, your services and are willing to rush to pay the bill.
