It’s a fact. We like getting paid for our work.
Unfortunately, the time and effort attorneys and their teams put in isn’t always compensated. The good news is, there are changes you can make to help your firm reduce the number of invoices to clients that go unpaid.
Consider these aspects of your business as we move forward together:
- Technology and tools that facilitate a smooth billing cycle
- Retainer management
- Tech tips and resources for billing time efficiently
- The economics of flat fee billing, invoicing and payments
- Creating and adhering to a billing schedule
- Billing metrics and what data to focus on
Build a Strong Foundation: What does it mean to build a strong foundation for billing? It refers to creating a sustainable infrastructure that allows your team to implement and maintain a smooth and consistent billing cycle.
To build your firm’s foundation, start by evaluating how your Client Relationship Management software tracks workflow and billing. Pay close attention to how you set up a new matter or case. Making sure your team is correctly defining the case billing and inputting the necessary information in the appropriate locations can make a huge difference in your billing.
Keep in mind that how you define your billing at the beginning of the matter (Hourly (with rates), Flat Fee, Contingent, Pro Bono, etc…) will impact how your bills are generated within a quality CRM like Clio. The same is true for how the matter is identified and the necessary contact information, be very clear about who is to receive the invoice and their preferred method of communication. In short, the one with the funds can’t pay you if they don’t know they have a bill due.
Having invoices that are clear and easily read by clients is an important step in your billing process, if you can lay the groundwork for that to happen automatically, you are setting your team up for success!
Pro Tip: Be as detailed as possible when you are creating a new case setup checklist. Make sure to identify any special needs like hearing impairment or preferred times of day to contact. These items make it easier for your team to address any billing concerns.
Talk About Expectations: The key to any aspect of professional service is the management of expectations. Let’s face it, a lot of first-time clients have a misconception that once they’ve hired an attorney, POOF their problem is gone. We know better, quality legal representation takes time and collaboration. Make sure your clients know what to expect going into your relationship. If they know what fees, timelines, and potential outcomes to be aware of, then they will be more likely to pay your bill at the end of the process.
A few items to keep in mind as you discuss the client’s upcoming experience with your office:
- Include your fee agreements from the onset and make sure to discuss trust accounts. While your team may be used to how the process works, the client likely will not. It’s better to make sure they’re on the same page from the outset.
- Get enough of a retainer to cover projected fees for 2 months. This gives you time to get the ball really rolling on the case before the next time the client sees a bill.
- Set up “Evergreen” Retainers. These can be automated to prompt a client when it’s time to refill their retainer. Make sure to explain in detail how it works and get the client’s confirmation that this is okay in writing.
- Pro Tip: Consider sharing sample email text the client will get when being asked to replenish retainer after a billing cycle
- Be intentional with your handling of client billing information, especially credit card information. Do not collect and store credit card information unless you are prepared to follow some seriously stringent PCI compliance guidelines. Instead, allow your credit card processing system, which has these compliance elements built-in, to take on that liability for you.
Capture All Time in The Moment: Get in the habit of recording your time immediately. Don’t wait to record your time. Relying on your memory or notes alone at the end of the week is a sure-fire way to misreport time spent. Instead, try implementing these steps to make the most of the tools around you.
- Use your calendar meeting blocks and phone calls to convert to time. Some CRMs have ways you can automate this process.
- Did you know, you can even connect Zoom to Clio?
- Composing and Responding to Emails is one of the more difficult tasks to time. As you start your draft, put a time in the send line of your email (as it’s best not to have any to addresses, until you are 100% ready to send!) and use it as a reference point for when you complete your email. Record the sending and message as appropriate.
- As you build out your daily to-do list as activities for the day and plan to use your timer for each one! Try to get in the practice of writing down your time in the margin next to each item you cross off.
- Review your time at the end of each day! Don’t wait until Friday.
Stay in the habit of recording time with all of your cases. Yes, even Flat Fee and Contingent Cases. This is important because it allows you to evaluate your fees after the case has been completed to make sure you aren’t selling yourself and your firm short with your rates.
Consider Your Fee Structure: Flat fees are right for some firms but not others. Here are some quick tips for how to tell if they are right for you. If you answer “Yes” to all of the below questions, Flat Fees might be your answer.
- Will flat fees improve profits?
- Pro Tip: Use your historical data to help you determine how flat fees have impacted your firm’s bottom line. Metrics to consider: Number of flat fees, Cost per flat fee matter, revenue per flat fee, Flat Fee paid ratio vs. Other structures paid ratio.
- Do they expose you to a new set of desirable clients?
- Do you have a marketing platform for flat fee services?
- Do you have the right metrics in place to measure the financial performance of flat fee cases?
Get Regular With Your Billing: We know you’re busy. Don’t make the mistake of putting your billing on the back burner. Clients are more likely to pay regularly received bills than sporadic bills. Stick to a once or twice a month billing schedule and make sure to provide progress updates after big events. Get your team involved by creating an invoicing workflow checklist. Here’s a quick example of what that might look like.
Keep your invoices clear and concise. Everyone appreciates understanding what they’re paying for. Make sure your bills clearly state what each line item is but don’t get too technical. Our goal is to not distract them from the point of this communication: They owe you money.
When putting together your invoice, make sure:
- Every entry tells the story about how you are moving the ball forward.
- There are separate entries for the time you intend to zero out looks pretty at the end of the invoice and the client gets a warm fuzzy feeling.
- Each invoice should have info regarding the past due balance and the remaining trust balance.
- Have payment options clearly listed and directly linked if online billing is available. Your goal is to make it as easy as possible for your clients to pay you.
- Pro Tip: Pay attention to how you handle credit card information! Clio did a great post about this that you can READ HERE.
Keep Yourself Accountable: Make time each week to create and review your cash flow report. This is such a great troubleshooting tool. By getting into the habit of reviewing your cash flow, you are continually keeping an eye on your Accounts Receivable, Accounts Payable, and potential areas of concern. If you’re not aware that clients aren’t paying, you could be giving away your valuable time for free.