Effective billing practices are one of the cornerstones of a successful law firm. Of course, ensuring that your firm has effective billing processes in place easier said than done. More likely than not, you know how important it is and have taken steps to streamline your law firm billing processes, but you know that you could – and should – be doing more.
If you’re not sure where to start, then we’ve got your covered! It’s a topic near and dear to our hearts and one that we focus on often in blog posts, webinars, and ebooks. There are many ways to ensure that your firm’s billing processes are as efficient as possible. What follows are 7 of our top legal billing tips.
Clarify fee and payment expectations in the retainer agreement
It’s important to ensure that your clients fully understand the terms of engagement when retaining your law firm. And, as explained in this post, one of the most important topics that you should cover in the every retainer agreement case is fee and payment expectations. That way, you’ll ensure that your clients fully understand payment expectations at the very outset of a case.
So, when your law firm is first retained make sure to clearly explain the fee agreement and invoicing process to your client. Then, memorialize these terms in your fee agreement using simple, understandable language. That way, you reduce the likelihood of confusion or non-payment later in the case. It simply make sense: greater clarity about billing and invoicing at the start of the case ultimately results in happier clients who pay their legal bills.
Add financial controls to your practice
Did you know that 5% of business revenue is lost through fraud or theft every year? That’s just one striking fact shared in this recent webinar on law firm profitability. The good news is that there are steps you can take to reduce the likelihood that your law firm will fall victim to fraud.
For starters, as explained in the webinar, there are a number of accounting policies and anti-fraud methods that every law firm should adopt to be less susceptible to loss. First, adopt standard accounting policies in your law firm. By doing so, you’ll be able to better track your firm’s finances.
Second, introduce anti-fraud controls in your firm. These should be written policies that determine how money is handled in the firm. For example, policies should be established regarding how law firm checks are handled that include at least two levels of approval from two different people in the firm. Another step that should be taken is to establish a policy that prevents anyone from writing checks to “cash.”
Also disperse certain functions across law firm roles so that one person isn’t solely responsible for all of the tasks related to managing your law firm finances. Finally, consider using law practice management software, since this type of software creates reliable audit trails, thus ensuring that you know how money is being handled in your firm.
Regain time lost while multi-tasking
These days, multitasking is a fact of life. The problem with multitasking for lawyers is that when you quickly jump from task to task, you sometimes forget to bill for some of the smaller tasks completed. Fortunately, as explained in this post, there’s a solution to the multitasking problem: multiple desktop timers.
With multiple desktop timers, you’re able to start and stop different timers as you work on each matter. That way you don’t lose track of any billable time, and at the end of the day all of your time is tracked, captured, and automatically associated with the appropriate case file. Instead of facing an empty timesheet at the end of the day, you’ll have captured all of the time billed throughout your busy – and productive – day.
Increase Revenue By Discerning Financial Trends
If you don’t track your firm’s financial trends, you could be leaving money on the table month after month without even knowing it. Fortunately, if you put reports and KPIs in place, you’ll be able to look for and identify financial trends in your practice and then act on them to give you a competitive advantage. By tracking financial trends, you can make revenue projections for the practice as a whole, or for individual practice areas.
As explained in this blog post, having this this information readily available will help you identity which practice areas are rising and falling, and thus which are most profitable. And with this verifiable revenue data you can build accurate and sustainable revenue projections that will allow you to better plan for a growing, thriving law firm.
Capture billable time – even when you’re out of the office
For many lawyers, capturing billable time is incredibly important, since the failure to do so means lost revenue. As discussed in this post, one significant way that lawyers tend to lose time occurs when they’re working away from the office.
When you’re on the road, you’re often engaged in billable activities. The trick is to ensure that you capture all of that billable time as it occurs using your smartphone and legal billing software. When you use mobile time-tracking, you’re able to enter time using your mobile device no matter where you are. This means that you can immediately enter all of the billable activities that you just completed using your smartphone. When you do this, all of the time entered is immediately captured and associated with the appropriate case. Time captured, and problem solved!
Make sure you’re charging enough
Does your firm charge enough? If you’re not sure, you’re not alone. As explained in this recent webinar, a significant amount of law firms are either charging too little for their services, don’t raise their rates over time, or both.
In the webinar we learned that many lawyers don’t realize that if the market will support it, you’re entirely justified in charging more for your legal services – and that doing so can significantly improve your business long term.
Here’s how to ensure that you’re setting the right fees for your firm’s legal services. First, get a baseline for legal fees in your area by asking around to get a broad sense of the price ranges out there. Then consider how much money you need to make in order to run a profitable law firm. Once you have that number, work backwards to establish rates for your firm, keeping mind the the baseline numbers you obtained for your area. Finally, as more fully explained in this post, you can then use those numbers to create a fee schedule for your firm.
Offer clients multiple ways to pay
And last, but certainly not least, another final and very effective way to get paid promptly is to offer your clients multiple ways to pay their bill. As discussed in this blog post, the days of accepting only checks or cash are long gone. If your firm doesn’t provide clients with multiple payment options, then you’re missing out and are likely struggling to collect the legal fees owed to your firm.
Today’s legal clients expect to have lots of payment options and if your firm doesn’t provide them with a choice, they’ll either to choose to go elsewhere or may have difficulty paying your firm’s legal bills. That’s why providing your clients with multiple payment options, including credit cards, is so important. 21st century legal clients expect it and when your clients have multiple payment options, you’re more likely to get paid.