Lawyers want provide value for their clients; clients want value commensurate with or worth more than the cost of lawyers’ services. One of the most effective ways to show clients the value of your work provided is to create invoices that testify to progress in pursuit of the client’s goals.
Today, computer programs and smartphone apps accurately capture task time as it happens. Digital programs can apply time to specific clients and tasks, organize the time for invoices and compute the appropriate dollar amount. And these digital assists are faster, cheaper and more accurate than the humans using them.
Invoices are more than a bill for services rendered. Think of them as a marketing piece. Many times, clients ignore typical marketing materials, but they read every invoice because it concerns their money. Question: Why do so many lawyer invoices consist of one- or two-word entries next to time increments of 1/6th (10 minutes), 1/10th (6 minutes) or 1/4th (15 minutes) of an hour? Answers: lack of time, hubris or tradition.
Let’s look at using a marketing approach to create billing statements that manage clients’ expectations regarding the money/value equation. The process begins with your retainer agreement.
Retainer Agreement Language
For many clients, attorney fees loom as large as their monthly mortgage payment, or cumulatively the cost of a car. Your fee feels like a budget-busting, once-in-a-lifetime expenditure, often requiring funds that do not personally belong to your client. The client needs to understand and buy in to your price and your pricing process in order to provide concise reasoning to their supervisor or family member who may be paying for the matter.
- Explain how often you bill, what time of month to expect the invoice, when payment from them is expected, how you handle late payments and any consequences for late payment.
- Explain how you track your time and what expenses are charged to them so there are no invoice entry surprises.
- If you charge your time in increments of an hour, explain how this translates into money and how you round up or down. Understanding your process mitigates the possibility that the client will accuse you of bill padding.
- If you use retainers, explain how you set the retainer amount and when and why they may need replenishment. This is very important, because clients usually know the cost of large purchases before they buy them, but in your case, you may not be able to predict total costs because of the many variables that can impact the matter.
- Tell them about your electronic and paper payment options.
Invoice Language
The invoice is a marketing tool because it is your main chance to demonstrate both progress and value. To do this you need to remind the client, in each invoice, of the context surrounding the month’s expenditures and the progress made toward your shared goal.
- Depending on the program you use to prepare invoices you can begin with a sentence on the invoice page itself or in your forwarding email, reminding the client of their problem and the resolution you are moving toward.
- Within the invoice explain not just what you did but why. Instead of “call with opposing counsel” say “call with opposing counsel to discuss deposition of Ms. Jones.” Instead of “trial prep” say “prepare questions for depositions of Ms. Jones and Dr. Truth.”
- List each activity separately either in chronological order or segmented by task or work stage. For example, put all trial preparation work under the heading “trial preparation” and then list, in chronological order under the heading, each individual task/time/cost entry.
Reinforce Your Brand
Invoices are also branding tools. Be sure to customize the look of your invoice with your logo and use of your website colors. Organize the content so that it demonstrates your brand promise to be diligent, efficient and informed. Use the clarity of your task explanations to reinforce your brand promise to be an open and honest trusted advisor to your client.
Ditch the Jargon
When people get to unknown abbreviations or words they tend to stop reading. To be sure your clients understand your invoice write in clear English. Assume executives and individuals unfamiliar with legal acronyms will review the invoice.
- Peoples’ memories are imprecise. Remind your invoice readers of the original problem, your promised scope of work and the desired solution.
- Tell the story of your progress.
- Use present tense verbs to show action.
- If you need to use a legal term, define it so it doesn’t detract from the reader’s understanding of your activities.
- Be courteous. End every invoice with a thank you for client’s trust, patience and understanding.
Invoices that use activity explanations to show progress and value get paid. It doesn’t take very long to add the explanations that demonstrate progress and value. Flip your thinking around so that you think “what does the client need to know,” instead of “what did I do.” Write for them.
The payoff for you is more than worth it. You will have a more satisfied client more willing to listen to your advice and buy into your solutions.
Enjoy prompt payments without arguments.