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Lawyers may practice in different areas of the law and serve a wide range of clients, but most seem to share a common aversion: They hate doing timesheets. Despite this near universal resentment toward tracking time, most lawyers eventually learn that they need to be effective in billing clients to have a thriving practice.
Here are seven important steps to help make your billing more accurate, client-friendly and effective.
The best way to bill accurately is to immediately record your time after completing a task. Trying to remember the details of billable activities after the fact is not easy and can lead to overestimating or underestimating actual hours worked.
Tech-savvy law firms have systems in place that encourage prompt timekeeping. Some enable lawyers and staff to record both billable and nonbillable time in the office and on the go. Time-tracking systems help you provide accurate and detailed information in client invoices. Without this kind of support, you may end up spending more (unbillable) time later on editing your clients’ bills.
It is important to learn your clients’ billing policies and practices at the beginning of a business relationship. Clients usually include this information in their retainer agreement, explaining expectations concerning staffing, budget and timekeeping practices. It is critical to know these rules so you can successfully account for hours worked and meet the client’s expectations.
Corporate clients are increasingly requesting task-based billing, which tracks a firm’s billing by each litigation task. Each activity is assigned a computer code that is preselected by the client. The client can then electronically sort items and analyze an invoice. These clients expect outside counsel to learn and understand these unique task-based billing codes.
You do not want an invoice that leaves you open to questioning but you also want to make sure that it is easy to understand. You need to include detail that justifies the need for the specific completed task without being too wordy or confusing.
Don’t overuse general terms that do not sufficiently explain the level of work completed or the necessity of a task. Simple phrases such as “document review” or “deposition preparation” are not sufficient for today’s demanding corporate clients. You need to be more specific in your billing descriptions. The invoice is representing how well you work to get the job done.
You also want to itemize each activity and the amount of time worked. Stay away from “block billing,” which is when lawyers group a series of tasks under a single time entry. Many clients object to this type of billing practice and it also makes it difficult in the future to fight for wages not paid by clients if necessary.
It is important to realize that more than one person will likely review your invoice. The review may begin with the in-house counsel assigned to the case but then it may be looked at by other legal and support staff, accountants and third-party auditors. While you want to use appropriate legal language, you need to remember that people not trained in the law may also be assessing your performance. A client who can easily understand the work you completed is likely to approve and promptly pay your invoice.
Whatever your fee arrangement is with your client, promptly send your invoice after completing client work. This means making the invoice processing a priority as soon as the work is done. Online payment options can also make it easier for clients to pay than traditional methods, but many companies issue payments periodically in batches, or in specific billing cycles. If you delay invoicing, you may miss a cycle and then payment will be delayed, potentially impacting your cash flow.
Invoicing promptly creates an impression of thoroughness, and is another way to market your professionalism to your clients.
A law firm’s culture is key to boosting billings and collections. Most lawyers are self-motivated and want to succeed. It is important to encourage personal responsibility with young associates when discussing the business practices of your law firm. Lawyers should want to accurately track their time to demonstrate their contribution to the firm, whether it is chargeable hours, client development, firm marketing activities or pro bono work. Creating a culture where all staff understand their vital contribution to the firm’s bottom line will help move the billing process to the top of everyone’s to-do list.
Every hour counts in a law firm, but you want your clients to appreciate your intellectual capital and experience. Effective timekeeping and invoicing helps accurately reflect work performed and will demonstrate your value to your clients. When the billing process is done well, your clients will understand the true value of having your law firm as a business partner.
Jeremy Diviney is President and co-founder of Bill4Time, web-based time billing software serving both small and large professional services firms. With offices in New York, Seattle, and Pittsburgh, Bill4Time creates simple-to-use, intuitive and user-friendly software.
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