It’s a fundamental truth. Running a business takes money. As a small business owner, you’re well aware of the cost of doing business. As a busy attorney, how aware are you of your firm’s cash flow? Q1 is almost over. Are you on track to meet your financial goals? If you are not where you’d like to be, it is not too late to make a few changes.
Yes, you and your team are busy, you cannot put off making these simple changes to protect your firm’s cash flow. Taking the time now to implement these tips can help streamline your workflow and make things smoother for your team in the long run.
Tip #1: Evaluate your consultation process. Even if you do not charge for a consultation, this is a crucial step in developing the foundation for quality client relationships. During your consultation you should always:
- Determine whether the client’s needs and expectations can be realistically met by your team.
- Clearly define how you will meet their expectations. One way you can do this is by giving the client a road map of what steps come next. Engaging an attorney can be an intimidating process. When your client has a clear understanding of what happens next, they are much more likely to work with you throughout their case.
- Clearly lay out all fees and expectations you have of the client. Doing so helps ensure that your client understands the cost of their case both monetarily and time-wise. Finding out someone’s ability to pay and participate in the process must be done beginning of the relationship. Financial details and billing schedules 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.
- Listen to your instincts. If a prospective client’s case seems off to you, there’s probably a reason for that. As an attorney, you’ve seen good and bad clients over the years and you may be picking up on some similar traits between the prospect and a past client or case you wouldn’t take on again.
Tip #2: Keep your lines of communication clear. No client wants to feel uninformed or confused about the status of their case. A good way to protect yourself and your firm from potential liability is to have consistent and transparent communication with your clients. Do this by:
- Setting a goal to touch base with each client once a week. Never let your clients feel forgotten. A simple, “Hi, I wanted to check in with you and let you know that we’re still waiting for XZY” will go a long way towards helping you keep a confident and calm relationship with your
- Taking clear notes and make sure your team knows how to access them in your Client Relationship Management System. Have your team be in the habit of referring to and updating client notes anytime there is new information or client interaction. This helps minimize the risk of miscommunications.
- Keeping in mind poor client communication can get you in trouble with your state bar and may also impact a client’s willingness to pay their bill.
- Sending clear and concise invoices. Your clients need to understand what they’re paying for. Clients do not need a minute-by-minute accounting, but you should create separate line items for the larger tasks. If you do feel going more in-depth is necessary, consider including a brief summary of each but do not use legal jargon to do so. The ultimate goal of 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.
Tip #3 Bill like Clockwork. Stick to a regularly agreed-upon billing structure. For those one-off bills, bill promptly. Don’t wait until months after service is rendered to bill a client. In general, have short attention spans. After too much time has passed, the client’s willingness to pay will decrease.
- Set up automatic billing. 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.
- If the client prefers not to pay online, billing regularly as work concludes or as work is progressing is recommended. Be consistent. Regularity helps clients to know what to expect and allows them to plan their finances accordingly.
- Don’t wait to follow up on unpaid invoices- As part of your billing processes, schedule time on your calendar a week after invoices are sent out for a follow-up contact to any unpaid clients. During this call take time 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.
Tip #4- Be willing to walk away. Non-paying clients are taking resources away from your firm and clients who are paying for your help. If a client is more than a month behind on paying anything towards their invoice, you should consider firing them as a client. 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.
At the end of the day, making updates to your law firm’s operations is always a process but following these tips can make a tangible difference in your firm’s monthly cash flow. To get started implementing these changes, take a look at what your CRM can do to help your firm. Don’t forget to take advantage of technology designed specifically to make running a law practice easier — like LawPay, Clio, and others.