Use these three strategies for a more profitable law firm in 2024 and you’ll be on your way to making every year better than the last.
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It’s easy for law firm owners to get caught up in client emergencies and push aside business management tasks until “things calm down.” We know what happens next: Invoices are sent late, leading to late payments and cash flow issues. Then bills pile up — and you find yourself spending more time after hours struggling to catch up.
Focus on the following strategies for managing your business, and instead of falling behind, you can be well on your way to making every year more profitable than the last.
1. Reevaluate How You Start Client Relationships
Attorneys have ideal clients and those who are not so ideal. Some clients simply take up too much time, balk at your fees, or aren’t a good personality fit. You need a solid client intake process to screen out the bad fits.
Your pre-screening process relies heavily on self-reflection and asking tough questions, including:
- Can your firm meet the client’s expectations?
- Did the client balk at your fees and potential expenses?
- Do you notice a potential personality mismatch?
Clients have goals they expect you to meet. If you can’t do that, accepting them as a client can do more harm than good for your firm. It’s better to turn a client away if you know your firm isn’t a good fit.
Even if you are well-matched to meet their expectations, be 100% transparent about your fees and expenses at the start. If they push back, it may be a sign they will be a problem client who doesn’t pay or who pays late.
Client relationships are all about communication. If you don’t feel a prospective client will appreciate your approach, or there’s a personality mismatch, go with your gut and say no.
Clients come to you with problems they need you help to correct. To lower their stress and anxiety, take a proactive approach to keeping lines of communication open. Otherwise, you can expect random calls or emails at all hours. Here are tips:
- Allow time every week to reach out to each client using some form of communication.
- Put systems in place to send automatic reminders.
- Always reach out to the client before a meeting to confirm.
Attorneys can lean on their staff to help with communication. At the start of the year, review and clearly outline how and when you’ll communicate with clients and the role staff will play. If you have clear policies in place that everyone agrees on, you will save a lot of time.
2. Bill Clients Regularly
How do you bill your clients? Are you consistent, or do you find yourself constantly playing catch-up with invoices? A recent survey found that 30.5% of firms send invoices within one to two weeks, while 28% of firms wait two to three weeks before sending invoices. When invoices aren’t sent out promptly it can lead to cash flow issues.
Adopting consistent billing practices will make this a more profitable year. Here’s why:
- If you bill on the first Monday of every month, clients can plan their funds.
- When clients know when to expect their bills, they are more likely to pay in a timely manner.
Many of your clients receive funds at the end of the month. If you bill at the start of the month, funds are more likely to be available. Cash flow is the lifeblood of your business, but it’s just as important to your clients. Consistent billing will help ensure that you get paid on time.
Consider offering auto-drafting options and using automated billing options to save time.
Other Best Practices
Consistent billing is just one piece of the puzzle if you want to be more profitable. Make sure that you’re also following these best practices:
- Simplify your invoices. Be clear and concise. Clients should easily understand their payment options, what they’re being billed for and how much they owe.
- Be prompt. Send all bills within 30 days of services rendered. The longer you wait, the less likely your invoice will be paid.
- Stay on top of outstanding bills. Don’t let outstanding invoices sit on the back burner. Stay in contact with clients who are late on their payments. Staying in touch will reduce the risk of non-payment.
- Know when to part ways. If a client isn’t valuing your time and paying invoices in a timely manner, it may be time to let them go. Although difficult, this will free up time to serve clients who are happy to pay for your time and attention.
In addition, make sure that your team is well-trained in handling trust accounts and IOLTA. Mishandling of trust accounts is one of the leading causes of disbarment in the U.S.
3. Make Cybersecurity a Priority
Many firms overlook cybersecurity, but failing to follow best practices could prove to be a costly mistake. Make sure that:
- Trust accounts are being handled correctly. All funds (digital and physical) must be allocated to their appropriate accounts. Remember: These funds belong to the client until after the work is done. Mismanagement can lead to disbarment.
- Credit card information is not stored digitally. Any third-party billing systems that you use should maintain strict PCI-compliance protocols.
- Remote teams use secure connections when handling any firm business.
- Your firm has a data breach response plan. Having a plan allows you to act quickly if your system is compromised.
Consider investing in cybersecurity training to help your staff learn how to recognize phishing attempts and spot breaches before they spiral out of control.
Happy Clients Pay Faster — and They Send Referrals
You’ve helped a client with estate planning, and you had an amazing time working with them. Service is complete, but this doesn’t mean that the relationship is over. Word-of-mouth remains a leading way for firms to drum up business. Ask your clients to:
- Leave reviews.
- Provide a testimonial.
- Refer friends.
Happy clients pay faster — often on time — and will send new clients to you. If you take the time to focus on existing clients and their pain points, this could be your most profitable year ever.