Law Firm Billing Best Practices

Billing is a critical process for any law firm: It’s how you get paid, it’s how you leave an impression, and sometimes, it’s how we get in trouble if it’s not done right!

It’s a crucial function for any firm big or small, but many go on autopilot once a billing process is in place and aren’t reassessing the efficiency or effectiveness of their procedures.

Law Firm Billing Challenges

There are many challenges law firm leaders identified when in comes to improving billing practices.

Time Tracking

One of the biggest problems is getting time logged accurately. Not only is it important for the business owner to get their own time recorded, but they also need to ensure associates and other employees are consistently tracking their time.

Keeping an accurate record assures you’re billing the client the correct amount as well as accounting for any overhead costs of running a law firm.

Tools such as Clio or T-Sheets can save you a lot of time because they plug in with your case management or accounting software to streamline the billing process.

Even if you offer fixed-fee projects or use trust accounts, it’s important to clarify how you bill the project or when you pull the money.

Is it 50/50 at the beginning and end of the matter? How soon after the case closes do you send out the invoice?

One solution some law firm owners have found effective (depending on the state bar regulations) is paying their attorneys hourly instead of salaried. This incentivizes each attorney and their team to get time in consistently since it directly determines each paycheck.

Collecting Your Bills

Another problem identified by law firm leaders was collecting the accounts receivable after the invoice is sent out.

We dove deeper into that topic in the following Law Firm Leadership Collaboration Circle.

How Often Do Bill Clients?

Each law firm has a different cadence on how they bill. From our law firm owner participants, here are the varying answers we heard:

  • Within a week after incurred
  • By a certain day of the month
  • At the end of the project/case
  • Twice a month

No matter when you do your billing, it’s important to evaluate the process for its efficiency.

Do you have enough projects that it warrants doing billing twice a month? Are there certain times of the month that are busier with your case load and client work?

Reassess Your Billing Process

Even if you have an amazing accounting team, it’s important to have an active role in assessing your current process and always be on the lookout for ways to improve.

Some law firms are still sending out invoices via mail only. Moving to a digital billing system is one BIG way law firms can streamline the process and collect their receivables faster.

Many law firms wrongfully assume that their older or more rural clientele might prefer a physical bill in the mail. However, reports have shown this applies to less than half of your clients.

Why waste the precious time and money sending out physical bills to all clients, when around 56% of them would prefer to pay a bill online?

Ask your clients their preference and give them the option to opt-in to mail to save your billing staff time and resources.

Digital Vs Automated Billing

Even while some law firms may be digitally emailing out their bills, that doesn’t mean it is a streamlined or automated process.

Some attorneys will be sending out emails individually to each client and creating each bill from scratch. While this is digital, it isn’t automated!

Many platforms like Clio or MyCase or can batch send out bills. They even have a process for lawyers to review and approve each bill and automatically send after approval.

Problems With Digital Payments

Depending on where your law firm is located, access to internet or online tools may be an issue your clientele face.

Be sensitive to this potential and ensure there are options to send or receive your bills and payments via mail even if you have a digital system in place.

Another issue some attorneys identified is the 3-5% credit card fee when using systems like LawPay. Some attorneys pass that fee onto the clients while other law firm owners decide to eat that cost.

Not only does accepting credit card payments usually ensure a quicker recovery on bills, but it often saves you money (both in staff time and supplies) of sending out physical bills.

LawPay and other online platforms have options for recurring payments, ACH or online checks that won’t require a 3-5% fee.

Define Billing Parameters

So you’ve decided when to send your bills and how you send your bills. But what parameters do you give your clients?

Many law firms have invoices due within a month (30 days) of receipt. While it may be some firms’ policies to have bills be “due upon receipt,” it may engender a more positive client experience to give them a more lenient deadline.

Law firms should also determine their late fee policy and how much they will charge for late payments. Many state bar associations have guidelines for this practice.

Evaluate Your Billing Process Efficiency

If your law firm is having issues defining the best practices for your billing process, you should contact a law firm consultant or accounting service to help you define your process.

Legal Back Office can provide both operational consulting services or back office accounting services to law firms looking to improve their billing and accounts receivable processes.

Schedule a complimentary consultation today to learn more.

Note: Legal Back Office does not receive any referral fees for any online case management, time management or billing platform. We assess each tool based on client needs and have identified a number we recommend based on each firms’ unique circumstances.

Why Partner with us?

We exist to help attorneys and law firms achieve positive results. We are a strategic and operational business partner that will maximize your time, improve your financial performance and give you peace of mind that the business side of your practice is taken care of.

More time, more money, and less stress. You can’t afford not to schedule a free consultation with us!

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