YourABA: June 2013
YourABA October 2013 Masthead

Small firms: 7 ways to boost your billing efficiency

For solo and duo law firms, billing research shows that for every hour spent sitting in an office, 24 minutes is not billed, and according to the research, small-firm and solo lawyers work a nine-hour day on average. This equates to 3.6 hours, or 40 percent of your time, that doesn’t add to the bottom line of the law firm.

Here are seven actions that solo and small firms can take to improve billing efficiency, as reported in a recent edition of GP Solo eReport.

  1. Require all time keepers to bill for all hours. It’s hard to manage time if you are not measuring how you’re spending that time. Certainly, this will enable decision-making about priorities, and as the business grows, you’ll know when it makes sound business sense to hire additional support staff or bring in a partner.

  2. Require non-timekeepers to account for hours, too. By tracking this, attorneys can see how support staff contributes to nonbillable activities, enabling attorneys to focus on billable work. In addition, this can lead to the business justification of new tools, technologies or a reset of priorities that can help reduce expenses.

  3. Set categories and codes for nonbillable hours. Law firms often have precise codes to associate with billable hours. For example, document preparation on behalf of a client is coded differently than a phone call or email communication. Likewise, it’s a worthwhile endeavor to put some thinking into nonbillable codes. Professional development, operations and marketing are examples of high-level categories that can be further broken down into subcategories. As a case in point, marketing might be broken down further into networking at events, presenting at a local bar association and content marketing if you’re contributing articles for journals.

  4. Look for ways to hand off nonbillable tasks. With good timekeeping records and a solid understanding of how time is being spent, you’ll begin to see other ways to hand off nonbillable tasks to support personnel. Indeed, this is the value proposition behind support staff: to keep you focused on billable work.

  5. Use clear and simple invoices. Complicated invoices that are too hard for the client to understand or bills that don’t match up with client expectations all can create resentment in the client’s mind. This increases the likelihood of a bill challenge, which usually means that a client is less likely to pay in a timely manner.

  6. Avoid habitual write-downs. It’s easy for lawyers to slip into a habit of writing down bills, even without client prodding. Whether it’s merely goodwill or efforts to curry favor with clients, making a regular habit of credit memos or write-downs not only creates client expectations of more write-downs but also devalues the importance of the firm’s work.

  7. Seek out legal technology. Look for billing and accounting tools designed for lawyers. From trust accounting to e-billing compliance, attorneys have unique needs (and ethics) that generic tools are simply not designed to handle.

GPSolo eReport is a publication of the ABA Solo, Small Firm and General Practice Division.

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