Should a law firm charge a client for the two bottles of water consumed over the course of a long meeting? Probably not – at least according to Keith Lee, an attorney who relayed this example, in a post on Above the Law called Do You Build Invoices Or Relationships?
For all the challenges of law firm billing it’s worth considering the unifying theme of Mr. Lee’s point: the very act of billing is and of itself sends a message. Creating invoices and billing clients is a crucial client communications vehicle – from the moment expectations are set – to the accuracy and detail of time-entry – to the format of a bill and rhythm of the billing cycle.
Here’s a roundup of solid tips for law firm billing and invoicing:
1. Get the money up front. Lee Rosen, an attorney in North Carolina, calls the moment a client opens a bill the “red zone.” If there’s a conflict between a client and an attorney, “it surfaces moments after opening the bill.” In a post titled, 13 Billing Tips for Keeping Clients Happy, he recommends getting payment in advance. “Clients making decisions about a fee before they owe it are happier than clients hit with a bill after the fact.”
2. Be methodical in billing. About 43% of small law firms say they have a standard billing process – though it is undocumented. Another 14% said they do not have a standard billing process at all, yet Jay Reeves of Lawyers Mutual hints having a process is a good way to manage past due bills. “Implement a billing cycle – and stick to it,” he writes in a post titled Nine Tips for Handling Unpaid Fees. “Bill methodically and regularly. Follow up. Deal with delinquent accounts consistently and quickly.”
3. Find the right balance of invoice detail. A Law360 article –5 Tips For Billing Clients Without Ticking Them Off – includes suggestions from Michael Rynowecer of BTI Consulting, among many others. Mr. Rynowecer says a “lack of explanation” can be the “biggest” source of contention about billing. It’s part of an attorney’s role to explain the charges, “not the clients’ job to figure it out.”
If the client still balks at the fee, decide if you really want this client — or if you desperately need the fee income.
4. Never cut the fee. Robert Denney, a consultant, lays out a suggested plan for defining results, quoting fees and presenting proposed steps along the process to clients, in an article on Attorney at Work titled How to Get the Fee You Deserve. He notes however even after setting clear expectations clients still sometimes object. “If the client still balks at the fee, decide if you really want this client — or if you desperately need the fee income,” he writes. “If you do want the client or need the fee income, never cut the fee. Instead, requote it! Indeed, Mr. Denny maybe onto something given research suggests law firms that discount tend to have more past due clients. Mr. Denney offers two ways to “requote” a legal fee in his write up.
5. Ask for a Referral. Most clients with accounts in poor standing simply don’t have the money, according to Miami-based attorney Scott Saul in an ABA Journal article titled, When letting a bill go unpaid can be good for business. Many lawyers seemingly agree with Mr. Saul’s sentiment given a survey of small law firm billing processes found more than 80% of respondents citing client financial hardship as the primary culprit behind past due legal bills. Mr. Saul indicated he does sometimes let unpaid legal bills go in exchange for referral business – though he’s careful to point out he usually also has a retainer in place to avoid a complete loss.
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What tips would you add? Please feel free to share in the comments.
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