Legal professionals battle with billing. Whether it’s reviewing and sending out invoices, following up on collections, or making sure that operational funds and trust funds are not commingled, billing (and correspondingly handling payment) can be the bane of a lawyer’s existence. It doesn’t have to be that way. Legal billing and legal-specific electronic payment processors continue to refine these processes. Yet many lawyers are unaware of the newest tools that may help, so we’re offering a few tips.
Practice management advisors routinely tell lawyers to contemporaneously record their time—regardless of the type of fee they are charging. Studies have shown that lawyers who fail to do so don’t bill for all their work. For some reason, lawyers avoid recording their time and try to recapture it in retrospect. This becomes even worse if the lawyer doesn’t establish a schedule, such as billing at the same time each month. Avoiding contemporaneous timetracking and regular billing is inefficient and ineffective, and yet the practice continues. But it doesn’t have to be that way.
Automated Time Capture
Most law practice management (LPM) systems have features that make capturing time easy; whether it is asking you if you want to record time or capturing unrecorded time, it takes no more than a click or two to be sure you are creating a contemporaneous time record within the case on which you are working. Many systems allow you to have multiple timers up at one time so you can switch back and forth—starting and stopping timers as needed. Of course, you will still have the no charge option if you wish, or you may adjust your time to consolidate entries.
The increased use of client portals is making it simple to capture communications as billable time. For example, some systems allow you to automatically capture text messages as billable events or automatically capture time spent within the system app and generate that as a billable time entry.
Some systems offer automatic time capture; for example, Smokeball’s AutoTime feature. Such features automatically compile billing entries and eliminate the need for manual time entry. This is highly efficient as it tracks every minute worked within the system, while still having the flexibility to edit the detailed automatic time entries.
Using these kinds of features can eliminate the frankly time-in-efficient practice of going back to recreate time entries, making billing for the time you’ve worked a snap.
Streamline the Billing Process
Law firms used to, and maybe still do, spend hours manually compiling, reviewing, editing and following up on law firm invoices. This isn’t necessary, though, now that LPM systems can generate invoices, share invoices electronically and enable the electronic collection of payments. How, you ask? Let’s examine how these actions work.
Tech has simplified workflows to enable you to easily generate invoices. LPM systems can automatically pull the time entries for each case and apply them to invoices; this can be done individually or in bulk. When choosing your product, look for features that let you easily add expense tracking, customize invoices, and employ LEDES billing and UTBMS codes, if that’s what your firm needs.
You can also set up invoice templates. For example, many plat- forms come with a handful of preset invoice templates that can be personalized, including by adding your firm’s logo.
Beyond generating invoices, tech allows you to more easily share and deliver the invoices to clients. Secure client portals are built into most LPM platforms now—and if not, there are stand- alone versions that offer the same security. No more printing, no more envelope stuffing, stamping and mailing; automated payment emails with generated invoices and links to secure online payment are the modern delivery method.
Legal Billing: Simplifying Collections
So now that the bills have been generated and delivered rapidly and securely to clients, how can you make it convenient for clients to pay you? Having a variety of options for payment facilitates faster collections. Furthermore, following up faster on accounts receivable means that the firm is more likely to collect on a bill. Did you know that bills that are over 90 days past due are statistically less likely to be paid in full?
Fortunately, tech solutions make it more convenient for clients to pay. Depending on the product you use, automated workflows can even remind clients to pay, substituting for a call from you. For example, you can set reminders to go out to clients a week before the bill is due, on the due date and a week following the due date if not yet paid. If needed, you can reshare the electronic link to the invoice in seconds, and also track and audit whether the client is opening your messages. In some systems, you can run reports for all accounts that have outstanding balances within 30 days (or 60, 90, 120 days, etc.) and send out reminders to these groups that the bill is overdue.
Discuss the ramification with the client before setting up an evergreen retainer in order to have informed client consent. Include a clause in the fee agreement to have the client explicitly agree to the evergreen retainer and have them initial that clause to signify their agreement. If you have an “evergreen retainer” you can have a credit card on file with your electronic payment processor and then have your clients sign consent to bill their card at predetermined intervals.
Electronic payment processors offer a variety of methods for payments; think credit card, eCheck or ACH debit. Legal-specific payment processors have excellent efficiencies and built-in safeguards. Because they have been built to accommodate funds deposited to both operating and trust accounts, you are less likely to accidentally commingle funds. With these processors, you can also have your bank fees paid from your operating account, rather than your trust account, and avoid an inadvertent negative balance.
There are quite a few legal-specific payment processors these days. Cost and their ability to integrate with your LPM platform may vary, so be sure to shop around. Some platforms have already-integrated payment processing, while some have optional integrations. For example, there’s LawPay, which integrates with most platforms. Headnote integrates with several practice management, billing and accounting systems as well. For examples of payment processors built into practice management systems, Clio has Clio Payments, MyCase has MyCase Payments, Zola Suite has Zola Payments and CosmoLex has CosmoLexPay. Some payment processors even have a hybrid model; for example, Rocket Matter has LexCharge, though LexCharge may also be used separately.
Benefits of connected systems include simplicity of the automatic connection between timetracking, billing and legal payments. It’s also easy to avoid commingling funds if you can toggle between your operating and trust accounts.
Payment Plan and Financing Options
Beyond offering a range of payment options, some electronic payment processors also make it possible to structure payment plans. Some products now allow options to set a payment sched- ule to pay outstanding balances by billing a preset amount per month. This may be a convenience clients appreciate.
Some platforms have expanded into payment financing with “buy now, pay later” systems. These vendors provide advance financing (loans) to legal clients—the lawyer is not the go-be- tween. For example, LawPay’s ClientCredit allows clients to take a loan to repay in installments. Lawyers and firms get the benefit of getting paid upfront. Of course, check your local ethics rules to be sure the way these arrangements are structured is compliant.
Remember to Stay Current
To stay abreast of continuing advances, set a calendar appointment to check in on feature updates within your LPM and legal billing systems at least annually. Many systems’ websites have excellent training videos and articles that are often underutilized. These trainings can give step-by-step instructions for how to utilize the features within that system so that you’re making the most of the tools available to you.
While legal billing is never destined to become fun, if you’re aware of—and utilize—recent industry advances, you’ll find that it’s much less time-consuming, less stressful and can lead to higher collection rates.