January 30, 2020 4 minutes to read · 1000 words

Six Billing Reports You Should Run Every Month

By Dan Berlin

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It’s a common scenario: You start the year optimistic, determined to take your billing productivity and practice to the next level. But as the year progresses, you ask yourself, “How am I doing?” Maybe you started out great, but you didn’t quite know what information would help. If this sounds familiar, then a monthly report “six-pack” is what you need. Reports give concrete data for decisions. While qualitative data, or thinking with your heart, is helpful in some circumstances, quantitative data, or thinking with your head, often leads you to the best decisions. By evaluating your monthly performance, over time you can use it as a means to consistently improve your firm’s productivity and profitability.

Remember, even the most experienced attorney is able to find areas to improve or adjust.

Your billing and practice management software should provide built-in reports that you can customize to fit your needs. Many legal billing systems provide dozens of built-in reports so you can have full reporting capabilities from the beginning.

To help you start evaluating your firm’s performance, here are six areas you should be monitoring monthly by using reports available in your software:

1. Billable vs. Non-Billed Activity

You find out how much of your work you bill when sending out your statements to your clients, but do you know how much billable work you actually did? In other words, how much work did you do that either is not billed or is non-billable? The ratio of actual billed time to non-billed time can determine how productive you have been during the past month. Use this ratio to improve the next month and focus on how you can limit non-billed activity. When comparing month-to-month and year-to-date, you can see how you’ve improved over the course of the year and where you could still make improvements. Evaluating your billable, billed, and non-billed time allows you to assess your overall productivity for the month.

In most billing systems, you will use an Attorney Productivity Report to get your answers.

2. Know How Much Your Clients Owe You

Your practice cannot make money if you do not get paid. This is why it is important to monitor how much is due from every client each month. Imagine if you only checked in on your accounts receivable on a quarterly basis and you realized you have not collected on an invoice that was due three months ago. Because so much time has passed since you last checked in with your client, the uncomfortable conversation that you could have had a month or two ago is even more uncomfortable now. Chances are, your client won’t remember details of your bill or what a fantastic job you did. By checking on your accounts receivable monthly, you can talk to clients sooner and avoid walking clients through the details of your efforts months later.

To know what your clients owe you, use a Summary Accounts Receivable Report.

3. Time Spent for Flat-Fee Services

If you work with flat fees, you should still be monitoring your time to ensure that your fee covers the time you are spending. Let’s say you charge a flat fee of $1,000 for a standard will, but by tracking your time you determine that you are actually spending an average of $1,400 in billable time. Evaluating your billable time can help you make smart changes such as rate adjustments for future flat-fee clients.

Review how your flat fees compare to calculated hours by using a Client Realization Report.

4. Make Sure You Are Not Undercharging for Certain Areas of Practice

Many attorneys find it is easier to use the same rate for every area of practice. However, as you gain more experience and knowledge in a certain area, you may find that your time is more valuable in one area than another. One simple way to determine if your rates are a good reflection of your time spent is to compare your billed hours with the amounts invoiced for each area of law you practice. For example, if you realize over time your amount of work has increased for family law, but your billable time has remained stagnant or even decreased, then you could be losing out on thousands of dollars a year by not considering a rate increase.

Consider reviewing this information by using an Attorney Productivity Report by Area of Practice.

5. Know Who Your Most Profitable Clients Are

In most businesses, the best clients get special treatment. That might mean an invitation to lunch or an event, or even a discounted rate. But you can’t give them special treatment if you don’t know who they are. Running a report that identifies your best clients by hours worked or amount paid can make sure you know who should get special treatment. Running those reports can also help you identify which clients might be holding the growth of your practice back, especially if you look at clients with the most write-offs or a lower effective billing rate.

To get this valuable information, use a Top Client Report.

6. Recognize Which Area of Practice Accumulates the Most Unbilled Time

By analyzing an area of practice’s billable time, you can see which area is bringing in the most money and which burns the most time. For example, if your estate planning work has an effective billing rate that is 30 percent lower than your rate in family law cases, you may need to consider raising your rates on estate planning work.

Dig into an Area of Practice Productivity Report to get your answers.

Keep Your Practice in Shape with This Six-Pack

Now that you have this “six-pack” of reports at the ready (and all these reports should already be in your billing system), you have a great head start on improving your billing productivity and your practice. Set a reminder on your calendar near the beginning of each month to evaluate the previous month’s performance and discuss possible changes, good and bad, with your staff and other attorneys at your firm. Determine areas of improvement and create a progress plan to outline what you have to do to take your billing productivity and practice to the next level.

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Dan Berlin is president and CEO of Software Technology, LLC, the maker of Tabs3 billing and practice management software (www.tabs3.com). He has more than 35 years’ experience working with and developing software for lawyers. He has had numerous articles published, sits on the Vendor Advisory Boards for ABA TECHSHOW and LegalTech, and is a past advisory board member for ALA and ABA Expo.

Published in GPSolo eReport, Volume 9, Number 6, January 2020. © 2020 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association or the Solo, Small Firm and General Practice Division.