Law Firm Budget Inaccuracy Comes At A Huge Price
While the content of the invoices that your firm prepares and the highly adaptable budget that you offer your clients are suitably attractive, there are many more factors that play a vital role in deciding whether your clients are going to continue retaining your firm on their outside counsel panel. Among these vital factors, there are two characteristics of your service that stand out the most: The Accuracy of the Invoices and Budgets that you prepare and your Timeliness, that we shall discuss in a later post.
The need for accuracy simply cannot be overstated. Perfection is supremely necessary and accounts for various traits of your firm, including credibility, reliability, and excellence. Accurate invoices submitted on time, in par with your firm’s motto of excellence and your accommodative budget guarantee that the companies you work for stay loyal to you as well as recommend you to others. Consistent accuracy helps build an excellent reputation for your firm, which surely other factors including time has contributed to. The effort that has led to the firm’s excellence is completely wasted if the invoices and budgets that are prepared aren’t entirely devoid of error. Moreover, errors in the invoices can lead to reduced profits for your firm should the client be undercharged by you. A lot worse is overcharging the clients.
More and more clients are now availing the services of bill review vendors whose responsibility is to ensure that your firm’s invoices are accurate and compliant with their billing guidelines.
This goes beyond just the invoices. Accurate budgeting is an inevitable factor that plays a major role in improving the law firm and client relationship. This works on many levels given that the amount of money they are required to place in their reserves account is based upon the law firms’ budget. The reserve fund is extremely valuable to the clients and shareholders as this could be directed towards other investments that will generate returns for them.
For instance, let us take the case of a law firm that submits a $1,000,000 budget on a claim. The client’s policy is to provide 70% of the budget, which means they will have to increase to or create a reserve of $700,000. However, suppose the actual legal spend is just $250,000. The law firm might think that they have saved their client a lot of money by billing them way under the budget. From the client point of view, the law firm has actually cost them and the shareholders a lot of money and this is how: assume that the client’s interest rate on all current investments is 5%. The amount client placed in the reserves was $700,000 (instead of $175,000). Let us say it takes a year for the case to be settled. The excess amount in the reserves would have been $525,000 which at 5% interest would have generated $26,250 for the client and shareholders. Not only would the client’s CFO be unhappy with the law firm, but I am also sure that they will be actively looking to remove such a law firm from their panel.
The need for accurate budgeting and invoicing is thereby of paramount importance for law firms and hence must be considered with due importance.
The best way for law firms to ensure that the invoices prepared and the budgets submitted are accurate is to avail the services of a company who has proven experience in this area and has a platform that will support law firms in getting their budget right the first time around. This results in the law firms preparing and submitting invoices that are 100% compliant with the client’s billing guidelines.
I welcome your thoughts, experiences and comments.
Check our website at www.accuratelegalbilling.com
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