Every law firm can do the work. The smart firms also make sure they make money for that work. It’s estimated that about 20% of all legal invoices never get paid. Let’s do the math on that.
The average lawyer in a large firm is expected to work about 2000 billable hours per year. The most productive lawyers typically can only bill for about 75% of the hours they work because breaks and administrative tasks, like office meetings and billing, are not billable time. Lawyers who have these high hourly targets are already working 60-70-hour work weeks. To then lose 20% of that work because the client opted to not pay can feel crushing.
How are firms getting smart about collecting the fees for the work they’ve done? The answer is technology. There are some excellent software solutions for tracking billable hours and producing understandable bills. Banking and alternative banking options have expanded to give clients so many ways to pay, it couldn’t be easier.
Track Billing Accurately
Lawyers who have combed through emails, phone logs, and documents to try to piece together every billable minute from the previous month know that the task is daunting, exhausting, stressful, and a huge time sink. The worst part of trying to retroactively piece together billable time is that you are virtually guaranteed to miss some of the time you worked. It also creates the ethical hazard of potentially overbilling a client, if you think you worked more hours than you actually did.
Tracking billable hours in real-time is the easiest, safest way to ensure that the data of your firm’s work is captured correctly, fully, and accurately. Good legal billing software will make it easy for all employees to meticulously track their work as they go.
Bill Efficiently and Clearly
Even if all of the employees who worked on a case kept track of their time to the minute, that still won’t be enough to demonstrate to the client that you deserve to be paid. Clients want to know not just how many hours you put in, but also who was doing the work and what they were doing to advance the case. Bills should contain enough detail to reassure the client that the work was essential, but not so detailed that they betray attorney-client confidentiality.
On top of that, a firm’s bills should look attractive and professional. A reputable, reliable, honest bill is a form of marketing. Clients, especially sophisticated clients, will review and scrutinize legal bills prior to paying them. They will look for reasons to challenge what’s in them, to negotiate for a reduced price. When a firm has solid documentation behind precisely what is contained in its bills, it prevents clients from poking holes in its bottom line. Again, the right legal billing software will ensure your firm checks all the boxes in assembling a bullet-proof bill.
Make Paying Easy
Once you have assembled the perfect bill, precise and indisputable, the next hurdle to leap is in ensuring your clients pay their bills. Technology is making banking and money movement easier and easier. That’s a boon for accounts receivable departments.
Traditional methods of settling up accounts, such as wire transfer and check, remain standard options. Although credit card payments have been around for decades in the form of merchant payment machines, recent banking accessories and platforms, like Paypal and Square, make accepting card payments more accessible to small businesses. Many clients really appreciate being able to pay on credit and are able to pay their bills on time, right away, when given that option.
Younger clients and those who are more technologically sophisticated may prefer payment methods such as B2B money transfer, like Cashapp, Venmo, or Zelle, or cryptocurrency payments. The firm has to weigh the risks and rewards of transacting in these formats, however, because they are not as straightforward, nor as secure, as traditional banking methods. Firms that conduct business with advanced technology and banking companies may benefit from researching the advantages of blockchain transactions.
Synopsis (News - Alert)
When it comes to billing, there are three simple rules. Do it right the first time. Make it easy for the client to understand. And finally, be sure to accept enough kinds of payment methods that it’s extremely convenient for clients to pay.
