REALIZATION
Law firm performance has been strong in recent years, riding a wave of demand for legal services across most practice areas. Even with expanded demand, busy lawyers will not be reflected on the bottom line for firms without clients paying bills on time and with minimal disputes. Doing high-quality work for clients is all well and good, but if a firm cannot collect fees, the practice will not be sustainable. Utilizing software, like Accurate Legal Billing, can help law firms issue bills that are quickly approved and paid by clients, maintaining regular cashflow while protecting valuable client relationships.
Accurate Bills. It may seem slightly flippant to say that billing with accuracy is advantageous to law firms, but many firms run into realization issues because of messy billing practices. As discussed in another post on this blog, avoiding write-offs should be a major priority for law firms as they quickly erode profits. Firms can avoid write-offs by requiring contemporaneous timekeeping practices, careful monitoring of time as it is kept, and most crucially, proper staffing of matters with the best-fit attorneys or other legal timekeepers. Also critical to accurate billing is ensuring careful adherence to any client billing guidelines. Accurate Legal Billing (ALB) is designed to assist law firms with this critical and potentially time-consuming task of assembling customized bills for clients. Clients and in-house law departments will reject bills, even for small errors. In-house law departments are under pressure to keep legal-spend low, as a cost-center for the company. It is advantageous to law firms to implement systems that will ensure that bills are accurate and to avoid client rejection, resulting in negotiations where the law firm will almost always end up discounting its services.
Through a variety of ALB’s features, your firm can be confident that client bills will be generated using the right rates, description of work, and format. Client billing rates can be set in ALB so that there will be no confusion on what the rate was negotiated when it is time to generate the bill. This allows for in-matter tracking, helping matter teams stay within budget, reducing write-offs. ALB also allows for a variety of billing methods, custom work descriptions, task codes, and other work categorization functionality that clients often require in their bills.
Realization Economics. It bears repeating in this blog that discounts and write-offs come directly from a law firm’s profit on a matter. What seems like a small discount often does real damage to the bottom line. A 10% discount on a matter quickly amplifies into a much larger number after set costs for overhead are considered. The goal for law firms is to increase the number of hours that are actually billable, as opposed to those that must be written off due to inefficiency or because a client refuses to pay for certain tasks. Understanding what a client will pay for and reducing write-offs will result in higher profits for firms. The trend in law firms has been to bill clients for fewer hours, writing-off more and more. While there are many reasons for this (e.g., inefficiency in work patterns) the headline comment is that clients are requiring firms to reduce their bills significantly – how firms choose to manage those reductions is their business. For firm managers, investing in technology, like ALB, can help better track client billing requirements and enable them to better price and manage attorney assignments, streamlining the billing process and removing the mystery around how to align profits and quality client service.
A Little Help from Technology. Busy lawyers and their teams are focused on client legal issues and do not have much time or desire to chase clients to pay bills. Removing the barriers for lawyers to bill and for clients to pay the bill will result in happier lawyers and happier clients, who see their billing requirements respected and who will appreciate the transparent details of what attorneys are doing on their behalf. Accurate Legal Billing can help streamline the billing process in several key ways.
Make it easy to track time. Any technology tool used by law firms should ensure that contemporaneous timekeeping is easy and free of any burdens on the timekeepers. Good timekeeping practices are the most important factor in accurate bills. Trying to reconcile time at the end of the day or the end of the week will yield inaccurate bills riddled with errors. Simple timekeeping systems built into attorney workflow and backed up with firm incentives (and, conversely, penalties) will enshrine timekeeping as a priority for the firm. Timekeeping software should be available wherever attorneys are working through desktop widgets and mobile apps. Accurate Legal Billing has built-in timekeeping functionality and is available wherever lawyers work. Timekeeping records flow directly into the invoicing module for easy bill generation. Firms should remove any potential barrier for timekeepers to ensure that this critical information is entered consistently and in a timely manner.
Make it easy to generate invoices. Generating bills should not be a bottleneck for law firms. A billing management tool should allow for seamless bill generation. Accurate Legal Billing can take timekeeping data and generate bills tied to client specifications with task code information, billing rates, and work descriptions all included without any additional steps. Many lawyers spend too much time on this bookkeeping exercise and choosing the right tool will eliminate this process from your firm.
Make it easy to pay. Allowing clients to pay bills electronically can speed up payment by reducing processing time. Invoices can be automatically linked to client invoice management systems, streamlining the approval process. Accurate Legal Billing partners with LawPay, the leading law firm payment processing service, offering firms, and clients a secure payment method that complies with all ABA and IOLTA account requirements.
Future-proof Your Firm. More than ever before, law firm leaders need access to key information about how the firm is operating. Law firms must operate more like the businesses that they are and lawyers need tools to help them make smart decisions. By using Accurate Legal Billing, firm management will have access to critical reports allowing them to track client relationships, performance metrics, financials, and much more.
ALB can quickly generate reports automatically or on an ad-hoc basis, focusing on key data points such as outstanding bills by the client and by the lawyer, employee-focused reports highlighting performance, and task-related reports highlighting how time is spent on matters. ALB also offers custom reporting options and a support team that can help your firm achieve its performance and financial goals. Using data to drive decision making is critical in managing your firm’s future. Investing in technology today can equip your firm to be ready for whatever the future has in store.
Implementing a firm management solution that has robust timekeeping and billing functionality can help your firm bill more efficiently and collect a higher percentage of billed fees. While the statistics show that clients pay their bills more than 95% of the time, fewer and fewer hours worked are actually being included on bills because of discounts and write-offs. Firms must take steps to increase efficiency, accurately capture time worked through an easy-to-use timekeeping tool, make generating bills quick and easy, and remove any barriers that make it difficult for clients to approve and pay bills. With these processes in place, firms must monitor performance through reporting and analysis tools. Firms have taken many steps to become more profitable from re-thinking office space to reducing personnel. These changes function as a one-time boost for bottom line profits. Instead, investing in the long-term by implementing a tool like Accurate Legal Billing will help firms boost their realization rates and make them more profitable.
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For more information regarding ALB, please visit: www.accuratelegalbilling.com
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