Steven Best and Peggy Gruenke presented an excellent session titled Bills in – Money out. The speakers opened by pointing out that calling up a client that’s late on bill is an unpleasant task. From the speakers’ vantage point the best way to avoid that scenario is to manage expectations from the outset. Here are five tips from their presentation that stood out for us:
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1. Time a law firm’s “inventory.”
Even if a law firm doesn’t follow the billable hour model – a straw man poll of the audience indicated a trend for flat fees – it should account for time is spent on tasks. The purpose is to have a baseline for evaluating how the team is spending it’s time and a path to process improvement and what the speakers called “non-accidental success.”
Nothing falls in value like services already rendered
2. Make bills easy to read.
Nothing falls in value like services already rendered, so it’s important to get invoices out on a schedule and make the bills easy to read. Clients should be able to understand the value delivered and the associated cost at a glance. We’d add that even billing is a chance to do good law firm marketing.
3. Worth the credit?
Should a law firm accept credit cards? After all credit processing costs money. The speakers point out that in many cases, credit processing is a cost of business and another way to look at a $30 fee on a $1,000 bill is that it puts $970 in a bank account sooner rather than later. In addition, if local bar association rules permit, tacking on a 3% charge to an invoice for accepting a credit card is one technique for mitigating the expense.
4. In the interest of interest.
Several members of the audience noticeably cringed when the speakers brought up the topic of charging interest on overdue accounts. However, by tacking on interest, the law firms gains negotiation leverage to cut that interest, rather than discount the core service, as an incentive for payment.
5. Are flat fees the future?
The speakers were optimistic about flat fees and argued the flat fee model shifts the focus from hours billed to work flow and execution. Flat fees simplify the budgeting and billing process and provided these value propositions: predictable, transparent, shared risk, build trust.
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