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7 Tips for Effective and Ethical Billing in the Law Practice

— January 4, 2022

Demanding a portion of these costs upfront will help you immediately establish a professional and mutually respectful relationship with your client.

Looking at the business world as a whole, we can easily observe that law firms are in a unique position when it comes to relationships with their clients. Although they operate much like all other firms in all other industries, the nature of services provided by law firms puts them a bit off their clients’ radars compared to other more billing-conservative businesses.

This situation can create a lot of uncertainties, delays, ghosting, and strained relations when the time comes for these bills to be charged. Keeping in mind that in the law practice, good CR and customer experience are just as crucial as in any other industry, this is something you should prevent at all costs.

So, let us take a look at a couple of ethical billing tips that should help your law firm maintain a steady cash flow without disturbing relations with your established and fresh clients.

Define the terms of the agreement during the initial meeting

One of the best ways to eliminate any uncertainties in the relations with your clients is to simply lay everything out in the open during your initial meeting. This expectation management will be important for all facets of your future relationship, but when it comes to the financial aspects of your company, the clients need to be informed about the terms of the attorney-client fee agreement, the process of billing, and all expected costs associated with legal representation. These initial terms need to be precise, concise, set in stone, time-limited, and leave nothing to free interpretation.

Put more effort into time management

Clock face; image by Age Barros, via
Clock face; image by Age Barros, via

This is especially important because not all billing issues you will have are the result of clients’ mistakes. Sometimes, law firms simply have a hard time sending all the invoices, following up with feedback, and effectively using billable hours. But, what can be measured can also be managed. So, if you want to perform some innovations in your law firm, you can start using some of the latest time-tracking tools like Timekeeper and try using your productive billing hours more effectively. Delivering invoices and charging them in time will get you half of your cash flow duties instantly done.

Do not deviate from your billing schedule

Being in the law business, you should be aware of the power of precedent. Once you make it, each following time it becomes easier and the more people become aware of it, the more of them will expect you to make similar exceptions. The simplest remedy for this common disease is to not make precedents at all. Like we mentioned in the first example – lay down the billing rules in front of your clients and once you do that, do not deviate from your billing schedule even if that potentially damages immediate relations with the clients. You will be able to reap the benefits long-term.

Find a streamline to process payments

Even with your time management skills in store, it is hard to escape the feeling that most time you will spend on processing the payments will be lost because the very process is often slow, complicated, and clunky. Fortunately, these issues can be easily remedied with specialized third-party help. Namely, with the use of various present-day online invoicing services clients get a streamlined and impartial way of settling their fees in the form of interactive email and lawyers can process payments in just a couple of clicks. This streamlined process benefits both parties and takes a lot of questions out of the equation.

Ensure that different teams follow the same unified procedures

Once again, your goal is to eliminate the room for precedents but also to allow your finance teams to operate under the same set of procedures and thus work faster with fewer mistakes. This, admittedly, can be hard, especially if your law firm specializes in different areas of law (criminal law, corporate law, etc.) and works with different types of clients. But, if your billing, accounting, information input, and recovery procedures are thorough enough and you provide sufficient training to your staff, you can make your financial cogs largely automated and more efficient.

Conduct a diligent investigation of new clients

In some cases, in spite of their best intentions, your clients may not be able to financially sustain drawn-out trials. You need to be aware of such cases before you even accept to work with them so it is highly recommended to perform a diligent investigation before you commit to any case. Even if you are not able to spend so much time and effort on new clients, doing a quick SEC search (Securities and Exchange Commission) will give you a good idea about the previous transactions of your clients and history of eventual fraud cases – not entirely ideal but it gives you a lot to work with.

Collect the initial costs upfront

This may cause some resistance but it is far from an unorthodox legal practice. While, in a lot of cases, you can’t assess the total costs of the overall legal representation, you should have an idea about some minimal trial expenses stated in the attorney-client fee agreement. Demanding a portion of these costs upfront will help you immediately establish a professional and mutually respectful relationship with your client as well as fill in the eventual gaps in your company’s cash flow. If the client feels hesitant to make upfront payments, you can offer some perks in the form of discounts and flexible rates.

We hope these few suggestions will help you to always get paid in time breaching some of the common ethical practices or straining the relations with your clients. Healthy finances are the foundation for a successful business and law practice is no exception. Even though putting a functional and effective billing system takes some effort, this is the single best way to keep your firm viable.

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