October 23, 2012


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Shape Up! Practice Management Tips for 2010

 Table of Contents | Features | Frontlines | Technology | Business

November/December 2009 Issue | Volume 35 Number 7 | Page 48



Even if your firm has never had a problem attracting good clients, that doesn’t mean you don’t have to stay on top of collecting payment for your services. If your firm’s billing and collection procedures aren’t in tip-top shape, now is the time to get them on track.

Keeping accounts receivable under control does not have to be an overwhelming chore, or lead to barriers between a law firm and its clients. On the contrary, clearly articulated policies can lead to better and more profitable relationships. By establishing a few straightforward procedures, you can help ensure that your A/R doesn’t spin out of control and you keep that all-important cash flow coming steadily through the door. Here’s a plan to help keep your firm’s A/R in shape.

1. Start with a clear engagement letter. Before providing services, secure signatures on engagement documents with procedural ground rules and payment parameters clearly laid out. Clients will find it much harder to dispute bills or skirt payments altogether if you’ve established clear expectations up front.

2. Capture billable time every day. Make sure all the firm’s lawyers submit time records on a daily basis, thus minimizing the amount of lost billable time. Firms that do not keep contemporaneous time records can lose as much as 40 percent of their billable inventory. Also, using your electronic calendar to track and document appointments and conversations with clients can increase the effectiveness of timekeeping efforts. Do everything you can to capture all billable time.

3. Set standards early on for billing and collections. Bill promptly, and be sure to send your bills in a reader-friendly format that reduces the client’s review time. Doing otherwise will only delay payment. While there is no hard-and-fast rule that states you must bill monthly, if the client has received a positive result from your firm’s efforts, then you should go ahead and generate the bill. Keep up with the paperwork and stay on top of payment status. Do not allow unpaid bills to accumulate.

4. Assign the follow-up to one person. Put a trusted staff member in charge of following up with clients when their bills fall past due. This will help centralize information on the day-to-day status of the accounts. This should be someone who understands the billing process, is familiar with how paid and unpaid receivable records are kept and has ready access to copies of unpaid bills. Because this person will be a point of contact for clients, good people skills should be a priority, too.

5. Personalize client communications. Make every endeavor to build strong lawyer-client bonds throughout your engagements. Establishing trust and mutual respect with clients may well be the most surefire way to ensure that they will pay your bills as promptly as possible. Regular communication regarding their matters is essential, of course, but seek to personalize the relationship during the billing process as well. Avoid using canned form letters and, instead, jot handwritten notations on letters and bills sent to clients. This will go a long way in building profitable long-term relationships.

When All Else Fails
Enacting these strategies should help improve your billing and collections processes. However, despite your positive actions—and regardless of the services rendered or the supporting documentation procedures you have in place—there may still be times when clients are slow to pay or won’t pay at all. When this happens, you may be able to discontinue services, but there are specific guidelines that must be followed. Be sure to seek counsel before withdrawing and check your state’s rules, including those governing letters of engagement. Among other things, these rules may address the right to arbitrate fee disputes.

About the Author

Frederick J. Esposito, Jr., CLM, is Director of Administration at Meyer, Suozzi, English & Klein, PC. He is a Regional Officer with the Association of Legal Administrators.

An earlier version of this article appeared in the October 2009 Legal Management.