2022 is here! Take a moment to reassess your habits from 2021 and make your new year resolutions. You and your team are busy, and no one enjoys chasing after clients for payment of outstanding invoices. It’s time to develop and refine your collections strategy. You can make your bill collecting process easier by making a few basic adjustments to your client intake procedures, payment processes, and client communication.
This brief article will share some resolutions to help you get a better handle on your business practices.
10 Resolutions for 2022:
- We will vet our clients. We know that there is no one-size fits all approach to finding the best clients but interviewing potential clients carefully and thoroughly can help you avoid major pitfalls down the road. During your consultation process:
- Determine whether the client’s needs and expectations can be realistically met by your team.
- Give the client a road map of what steps come next. Framing out the correct expectations of both parties from day one will be integral to a productive attorney-client relationship. Engaging an attorney can be an intimidating process. When your client has a clear understanding of what happens next, they are going to be more comfortable with you, your team, and what needs to happen to help move their case along.
- Make sure your client understands the cost of their case and the timeline at which they will be expected to pay in relation to their case. Finding out someone’s ability to pay must be beginning of the relationship. Clearly lay out all fees. This should be explicitly addressed in your fee agreement. Be sure to explain to the client that a retainer is not the total cost of their case.
- Use your gut. If a warning bell is going off, there’s probably a reason for that. You’ve seen good and bad clients over the years and it’s possible you’re picking up on some similar traits between a prospective client and a past client you wouldn’t take on again.
When the consultation ends and the client decides to retain you, both attorney and client should be on the same page and confident in the integrity of the other party.
- We will be consistent in communicating with our clients. Don’t let your clients be the ones to complain, “my lawyer won’t return my call.” Protect yourself and your firm from potential liability by having good communication. Make it a habit to touch base with each client once a week. A simple, “Hi, I just wanted to remind you that XYZ are still needed to move forward” will go a long ways to helping you keep a confident and calm relationship with your client who is likely going through one of the most stressful periods of their life. Keep in mind, clients will get nervous if they do not hear from their attorney for a prolonged period of time. In addition to that, poor client communication can get you in trouble with your state bar and may also impact a client’s willingness to pay their bill.
- We will stick to our planned billing schedule. – Don’t wait until months after service is rendered to bill a client. People have relatively short attention spans. After too much time has passed, the client’s willingness to pay will decrease. Billing as work concludes or as work is progressing is recommended. If you are billing on a payment schedule, be consistent the frequency and timing of when you bill clients. Regularity helps clients to know what to expect and allows them to plan their finances accordingly. Using an online payment platform can help with this and make the process easier for your office as well. Allowing clients to pay online via a provider, like LawPay, means that your clients can pay you anytime from anywhere. The fewer barriers between clients and payment, the less likely it is that you will go unpaid.
- We will follow up on all unpaid invoices in a timely fashion. Your billing process should include scheduled follow up for any late or unpaid invoices. The longer a bill sits unpaid, the less likely it is to get paid. Get in the habit of following up. One week after invoices are sent out, schedule time on your calendar for a follow-up contact to confirm that they received their bill and check if they have any questions. Keep a running list of the clients who have not paid their invoice and how much each one owes. Each follow up should include a reminder of convenient ways to pay you by credit card, debit card, or eCheck to increase your chances of being paid.
- We will make it easy for clients to understand our bills! Be clear and concise with your invoices. Your clients need to understand what they’re paying for. This doesn’t mean that you need to give them a minute-by-minute accounting, but you should create separate line items for the larger tasks. Consider including a brief summary of each but do not use legal jargon to do so. The ultimate goal your invoice is to give the client insight into what you are doing for them and prompt payment. As lawyers, using technical terms and legal jargon is second nature, but for your client it can be confusing and distract them from the original point of your communication. Billing.
- We will let go of unprofitable clients. This may be the most difficult resolution to keep. People seek out attorneys because they need help with a problem. Your desire to help, can lead you to shy away from firing clients. That being said, if a client is more than a month behind on paying anything towards their invoice, you should consider taking that step. Small and repeated non-payment can easily snowball to a large deficit for your firm if you are not careful. Client termination for non-payment should be outlined in your fee agreements and should be discussed during your consultation process.
- We will take digital security seriously. Unfortunately, due to the inherently sensitive nature of the information that is housed in your files, law firms are a frequent target for cybercriminals. By gaining entry into your firm’s data base, cybercriminals can access sensitive payment information for multiple entities in one single instance. External threats should not be your only concern when it comes to client data security. Each of your firm’s employees have the ability to compromise your clients’ information, either by accident or intentionally. As the owner, you must take a proactive approach to maintaining strong cybersecurity protections, especially with your billing. A matter of equal importance is your firm’s compliance protocols for trust or IOLTA accounts. Make sure your practices and technology keep you inline with BOTH cybersecurity and compliance requirements. Here are three basic steps to help you get started:
- Draft an Acceptable Use Policy – What is an Acceptable Use Policy? An Acceptable Use Policy explicitly outlines the rules employees must follow when using the firm’s network, software, computers, laptops, and mobile devices. It lays out how employees should and shouldn’t use both employer-provided technology and personal mobile devices like smartphones and tablets. The policy helps make sure your team understand their responsibilities in regards to technology use and educates them on identifying possible cybersecurity threats.
- Adopt Cloud-Based Technology- While at first glance, having your server locally situated rather than cloud-based seems more secure, this is not the case. Cloud-based solutions are considerably more secure than on premises or hosted software. Cloud-base solutions, update regularly to make sure that the latest patches and security techniques are in place. In the long run, they’re also typically less expensive than a hosted server or on-premise options.
- Have a Plan for Data Breach- Don’t wait until after you’ve had a data breech to try and figure out how your firm will handle it. An incident response plan should be a part of your firm’s cybersecurity program. We recommend including the following steps:
- Designate an incident response planning team
- Classify the type/extent of the incident
- Complete initial reporting
- Escalate the incident, as appropriate
- Inform affected individuals and organizations
- Investigate and collect evidence
- Mitigate further risks
- Execute recovery measures
Keep in mind, as your systems change, you will want to re-evaluate your plan and make sure it is updated accordingly. You should always be proactive in maintaining strong cybersecurity protections. know your requirements, your risks, and your resources.
- We will be intentional with handling our Trust Accounts and take advantage of the digital tools available. Law school does not adequately prepare you for the day-to-day business of a running a firm. One of the key things you must pay close attention to is the handling of your trust account (aka IOLTA). With these accounts you’re accepting advance payments from your clients, or receiving money on their behalf. How you handle your client’s funds cannot be compromised. State bars are not shy about enforcing their rules concerning trust account violations nor should they be. Trust account violations are the #1 cause of lawyer disbarment in the U.S. It is your responsibility to understand your trust accounts and treat them appropriately. To get started, check out the e-book, A Complete Guide to Trust Accounts, from TrustBooks and LawPay. It provides you with a complete step-by-step outline of what you need to do to open and operate your own trust account, from choosing a bank to developing proper trust account management procedures.
- We will make time to market our firm. Marketing is a key element of any business. A law firm is certainly no exception. Your firm should have a clear marketing strategy in place and a budget to match. Be intentional about where and how you spend your marketing dollars and they will pay dividends. Before you pay for third party research and contacts, check your own records- Data is a crucial element for any marketing strategy. For established firms, start by really analyzing your existing client database. The best retention rate for any client lead has historically been by referral. You have list of potential advocates in your files already! Get your contact list of past clients into an email marketing system and start engaging. Try to reach out with tips and tools once a month. Give them an extra reason to share your name with family and friends.
- We will regularly evaluate our firm’s financial reports. Your firm’s books contain your formula for success. Spending real time reviewing and understanding your metrics and reports each month can go a long way towards helping you see the big picture. Be aware that your financial reports alone may not give you the full picture. There are other Key Performance Indicators or KPIs that you should consider tracking. Utilization, WIP/Inventory, Billable Hours, and Collection Realization Rates can all help you determine whether your firm is working efficiently. For example, you could be working a ton of billable hours but if your collection rates are low, you are leaving a lot of money on the table. The same is true of utilization, if you aren’t using your team to its fullest potential, then your Cost of Goods Sold automatically goes up. Make no mistake, even if you do not sell a physical product, there is always a cost to the firm associated with each case. Some costs are easy to see, like court fees or billable hours for attorneys or paralegals. But for other team members like salaried support staff, the costs are not. If a salaried staff is only assisting 3 clients, your is higher per client than if that same staff member were assisting 5 clients.
BONUS RESOLUTION: We resolve to call CPN-Legal if we get stuck with our billing, books, or invoices.
Making updates to your law firm’s operations, is always a process. Take a step back and recognize the sheer number of moving parts. If you try to tackle too many initiatives at once, you will not achieve the results you were hoping for. Prioritize. Rather than making broad sweeping changes, focus on opportunities for optimizations in your billing and payments processes, security and compliance safeguards, and marketing before re-inventing the wheel. Don’t forget to take advantage of technology designed specifically to make running a law practice easier — like LawPay, Clio, and others. You’ve got a whole year of success to build!