One of the many challenges lawyers face when running a small law firm is getting paid. When clients fail to pay their legal bills, it can be incredibly frustrating. After all, you’ve worked hard on their behalf and deserve to be compensated for your efforts.
Clients avoid paying legal bills for any number of reasons. Some may not have sufficient funds on hand, but oftentimes there are other factors at play. Your client may disagree with the amount charged or may be confused about the billing agreement or the work performed. Unfortunately, many clients are typically reluctant to voice their concerns and instead try to simply avoid paying the bill.
The good news is that there are steps you can take to streamline your law firm’s billing and invoicing process and make it more client-centric. The fewer questions your clients have about the invoices they receive, the more likely they are to pay them promptly.
With that in mind, here are some legal billing tips to implement that will help you to establish more efficient and client-friendly billing and invoicing processes at your law firm. Follow these recommendations and you’ll find that the end result will be happier, more satisfied clients who promptly pay their bills.
1) Clarify fee and payment expectations in your retainer agreement
It’s important to establish and explain payment expectations at the very outset of a case. When you are first retained make sure to clearly explain the fee agreement and invoicing process to your client. Then, as explained in this ABA Law Practice Today article, make sure to memorialize these terms in your fee agreement using simple, understandable language:
Remember that your fee agreement is an important marketing tool in addition to an important legal document setting forth yours and the client’s responsibilities in the representation. Fees should be discussed at the beginning of the relationship and preferably at the beginning of each new matter.
When you take steps to ensure a clear understanding of the billing process and your client’s payment obligations and options up front, you reduce the likelihood of confusion later in the case. In other words, greater clarity about billing and invoicing at the start of the case ultimately results in happier clients who pay their legal bills.
2) Record your billable time immediately
Tracking billable time can be a tedious challenge for lawyers who bill clients on an hourly basis. Common advice from law practice management experts has always been to record time contemporaneously with a billable activity. As explained in this ABA Young Advocates article, it just makes sense:
The longer you wait to do your time entries, the less accurate you’ll be and (according to the research) the more likely you are to capture less time than you actually spent.
This has always been time-honored advice, but prior to the advent of mobile billing technologies, it wasn’t always a realistic option since many billable activities occur outside of the office. These days, however, using law practice management software or other standalone billing software, you can enter time no matter where you are using your mobile device. Mobile time-tracking tools make it possible for you to track your time and enter it immediately after it occurs. It’s one of the best ways to ensure that you capture – and charge for – all of your billable time.
3) Carefully consider descriptions used to describe billable time
Sometimes lawyers fall into a rut when describing billable activities and resort to using vague legal jargon. This is a mistake. Your goal in creating legal invoices is to clearly – and simply – describe the work performed. As explained in this Law 360 article, it’s important to choose your words carefully when drafting legal invoices:
Attorneys should use the bill as an opportunity to show the benefits that came out of the work they performed on behalf of the client, so they are better off avoiding certain words that have negative connotations in the business world…
So, as explained in the article, instead of charging a client for a “meeting,” provide a concise description of what occurred during the meeting. And rather than charge a client for revising a draft of a memorandum, explain that you updated the document to include newly discovered information. The more specific and detailed your descriptions are, the more likely your clients will understand what they’re paying for.
4) Send invoices to clients regularly
One way to avoid client confusion and frustration about your firm’s legal bills is to make sure that you send your client invoices on a regular basis. It’s up to you determine how frequently the invoices should be sent, but, as Lee Rosen points out, the general rule of thumb is the more often, the better:
(A)re you waiting three months to send a bill? Are you letting the billing process back up and grind to a halt? Are you then acting surprised when a client is upset by the amount of the bill? If you’re procrastinating about billing, then the upset is entirely predictable.
One of the most effective ways to ensure that you send invoices to clients on a regular basis is to use legal billing software. This allows you to automate your firm’s legal billing processes so that you’re automatically reminded when it’s time to send bills – or reminders about past due bills – to clients. When you automate your firm’s legal invoicing process, it’s one less thing you have to worry about.
5) Offer clients multiple ways to pay
Another very effective way to get paid promptly is to offer your clients multiple ways to pay their bill. The days of accepting only checks or cash are gone. Today’s legal clients expect to have lots of options and if your firm doesn’t provide them with a choice, they’ll either to choose to go elsewhere or may have difficulty paying for your firm’s legal bills. That’s why, as explained in this Oregon Law Practice Management post, providing your clients with multiple payment options, including credit cards, is so important:
It’s hard to imagine a law firm that doesn’t accept credit cards, but I know you’re out there. If you’re part of this group, and you’re also experiencing collection problems, start taking credit cards…
Not convinced? Statistics reveal that 43% of consumers prefer to pay by debit card, 35% with a credit card. Granted, legal fees are not a typical consumer purchase, but still: why would you disregard what many consider a preferable payment method?
Why indeed. If your law firm isn’t offering clients the ability to pay legal fees using a credit or debit card, then it’s about time you started. 21st century legal clients expect it and when your clients have multiple payment options, you’re more likely to get paid.
So what are you waiting for? Implement these legal billing tips today. Your clients – and your firm’s bottom line – will thank you.