A recent survey of 309 small law firm billing practices in the U.S. found that about 80% use software for legal billing. That’s great news and as a legal technology vendor we are, unsurprisingly, big advocates of using software.
About 67% – still a wide majority – say this software is “legal specific software” meaning it was designed for law firms. Again, we think this is smart law firm decision making; bear with us, there’s a point (and some tips) coming.
Finally, another 65% said their software had integrated accounting and billing and then came the derailment:
Do you or does your firm analyze client billing to identify trends and themes among clients in good standing or root cause analysis among habitually late paying customers?
Seventy-two percent said “no” in response to this question.
In their own words, small law firms openly admit that law firm billing and collections are a challenge – and while most already have software that can help solve this problem, the majority aren’t using the features and functions to solve the business pain point.
What Billing Reports Should Law Firms Run?
1. Time-to-pay. Identifies which clients or types of clients are fastest to pay invoices.
2. Outstanding accounts receivable (AR). Analyzes which clients, or types of clients, have bills outstanding and for how long.
3. Time tracking analysis. Comparing work invoiced vs. actual work performed (this is useful for understanding the profitability of a flat fee).
4. Client profitability. Distinguishes which clients and what types of cases are most profitable.
5. Top clients. Characterizes a law firm’s top clients by fees billed vs. fees collected.
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What reports – or process even – would you add? Please feel free to share in the comments.
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5 Solid Tips on Law Firm Billing and Invoicing