Where’s the Bill? 6 Top Tips for Improving Your Legal Billing Process

The lifeblood of a law firm is the legal billing software used to keep it financially afloat. Salaries, hourly wages, fees, taxes and other overhead expenses are paid by billable hours charged to and paid for by clients. Any delay or inefficiency in that system can cause a disruption in that cash flow which can lead to expensive consequences and repercussions over time.

Here are our six top tips to improve your legal billing system – allowing you to reduce the amount of time it takes to bill your clients and (more importantly) the time it takes for them to pay their bill.

1. Record Billable Time Daily

As mentioned, billable time is the cornerstone of your firm’s financial foundation. Like with any cornerstone, it is vital to make sure it is in place at all times. Billable time is not something that you (or any staff member, associate or partner) should put off documenting for any reason. Procrastinating when it comes to billable time can backfire in a number of different ways. In addition to forgetting pertinent details that should be added to the invoice, you also run the risk of forgetting accurate hours and durations to add to the bill.

Each hour that you forget to add is loss revenue; each hour that you mistakenly add jeopardizes your established rapport and relationship with the client but also tarnishes the integrity and reputation of your entire firm. It has been estimated that roughly 20% of the time lawyers work goes unrecorded.

There is a wide variety of tools and even mobile applications that you can use to track and document billable time on a daily basis. Train your staff and fellow associate or partners to be on the same page when it comes to how and when billable hours are recorded.

Do you find there is never enough time in the day to get everything done? Find more time in the day to properly document your billable hours with our seven time management tips for new lawyers.

2. Avoid Vague Descriptions of Billable Time

When working on your invoices, avoid using vague descriptions and terms when expressing the reasons and justification for each charge. Your objective must be to ensure that your invoice is as clear and simple yet detailed as possible. You should want your client to see the value of the services rendered by focusing on the benefits that came from it. According to Law 360, this will prevent you from using specific words that have negative connotations or that may cause a client to dispute the charges or ignore the bill entirely.

For instance, instead of charging a client for a “90-minute phone conference,” highlight what was discussed during the conference. Perhaps you can reference the title of the meeting agenda and include it with the invoice as backup documentation. This is imperative, especially when sending a final bill at the end of a pursued case to provide a recap of everything that was done for the client from beginning to end.

3. Maintain a Consistent Billing Schedule

If you send bills to your clients haphazardly, do not be surprised if they send payments in the same way. Conversely, if you have a structured, scheduled and consistent approach to sending bills to your clients, you establish a pattern of expectation for your clients to follow. This will also help you to reduce the frustration and confusion that comes from the billing stage of client interactions, because you will have a structured system in place that everyone can follow with ease. The overall frequency of your invoices is up to you and your team. However, the general rule of thumb to follow is the higher the frequency, the better the results.

Why is that? Think about the math behind it. For example, say that you send a $300 weekly bill – highlighting detailed line items that cover everything that you worked on related to the client’s case during that time. On the other hand, say that you decided to hold off on billing until 3 months later after completing the case. You are more likely to get a quicker response from the $300 bills sent out weekly than to the $3,600 12-week bill sent out when the case is over. In addition to possibly confusing your client with such a large “unexpected” bill, you may also make it harder for your staff to provide details and supporting backup documentation covering the entire 12 weeks all at once. As you can see from this hypothetical example, following a structured billing schedule not only makes it easier for your clients to pay your bill but also for your staff to create the bill in the first place.

4. Offer Your Clients Multiple Payment Options

Another way to improve the efficiency of your legal billing system is to offer a variety of payment options to your clients. Traditional law firms may have become overly comfortable with “traditional” payment methods: mailed or hand-delivered invoices paid by cash, credit cards and checks. However, with the advancements in mobile technology and eCommerce, there are many other ways in which clients can conveniently pay their invoices. For instance, you can add an eCommerce option to your law firm’s website or social media page that allows your clients to pay their invoices online. You could also explore such online payment solutions as Payoneer, ClickBank, Square and PayPal.

Some clients may even be comfortable with wiring you their payments (especially for high-value invoices) through such services as MoneyGram and Western Union. You should also consider accepting money orders and cashier checks along with the other forms of traditional payment methods that are already accepted.

5. Educate Your Client, Educate Your Staff

The key element to improving the quality and efficiency of any procedure or system within your law firm is proper education and training – especially when it comes to accounting and legal billing. First and foremost, you need to make sure that your staff is properly educated and trained on how the legal billing system works from start to finish. If you are replacing traditional methods with modern ideas and concepts, it may take some time for your staff to become acclimated to the changes. Allow enough time for a safe and smooth transition. Once the law firm’s staff has mastered the legal billing system themselves, it will be much easier to educate your clients on how the system works for them as well.

Getting co-workers and employees onboard with new software programs in the legal industry is easier said than done. Read our “4 Secrets to Implementing New Legal Industry Software In Your Law Firm.”

6. Consider Newer Legal Industry Software for Billing

How outdated is your legal billing system? 40% of lawyers don’t even use time and billing software in their firm. If your are working with old or non-existent legal billing software, then it’s time to consider the several software programs on the market.

The best legal billing software will allow you to generate several bills in the click of a button, will have an easy and intuitive interface, work on any device (phone, laptop, tablet), deliver stats in real-time, integrate with several different programs, and essentially keep track of all your important billing informations security. Ask yourself if it is worth sticking with the billing and time tracking model your firm currently employs and if it’s time to consider new legal office software.

The work/life balance wouldn’t be such a struggle for lawyers if they started to take full advantage of all the recent advancements in legal technology and software. Read our article “6 Essential Investments in Tech and Software For Lawyers” to see how you can take your law firm to the next level.

For more insight into how you can improve the productivity in your law firm with new practices and legal industry software, follow the Infoware Blog.