How law firms can ensure efficient billing and speedy payments

How law firms can ensure efficient billing and speedy payments

Did you know that in 2020, the average lawyer billed just 2.5 hours of an 8-hour workday? That’s only a 31% utilization rate!

Clio’s 2021 Legal Trends Report attributes such a low utility rate to two causes. One, attorneys may not have enough clients to fill their day. Second, lawyers may be too busy working on time-consuming, repetitive, non-billable tasks, such as preparing and sending invoices. The report also found that the average collection rate for law firms was 89%, which indicates that law firms may have difficulty chasing down client payments.

To help address such challenges, this blog offers tips on how your law firm can bill efficiently and get quickly paid by your clients.

Read also: 8 Simple tips to run a more efficient law firm in 2021

Leverage time tracking and billing management software

Many attorneys charge by the hour. If you're manually tracking your time, you can easily make mistakes that lead to overbilling or underbilling your clients. These errors can negatively impact your firm's bottom line and sour client relationships.

With a time tracking and billing management application, you can easily track the time you spend on each task, project, or client. You can begin the timer when you start a task, pause the timer at any point during the task, and press stop once you're done. You can also add time entries based on your calendar events, communication logs, and other documents so you can record the time you spent working on each case.

The software's billing feature allows you to automate many tedious and repetitive tasks, including:

  • Generating, approving, and sending invoices electronically
  • Tracking payments
  • Sending payment reminders
  • Providing grace periods for payments
  • Charging interest to late payments
  • Applying discounts to certain bills

With automation, you can focus on more important tasks, such as those that can be included in your billable hours.

With automation, you can focus on more important tasks, such as those that can be included in your billable hours.

Finally, since billing management software helps you easily determine which clients have not yet paid, you can take immediate action to speed up payments.

Read also: 12 Tech tools law firms should utilize

Consider more straightforward billing methods

Aside from hourly billing, you can charge your clients in different ways that are more straightforward and require less input from your firm's lawyers. Flat-fee or fixed-fee billing is a great option if the scope of work is well defined and unlikely to change, such as with:

  • Preparation of wills
  • Real estate transactions
  • Uncontested divorces
  • Bankruptcy filings

You can also charge a retainer fee, which is an upfront payment that the client pays before any work is done. You can use this fee to cover the estimated costs of the project.

Both flat-fee and retainer fees are great alternatives to hourly billing because there are no surprises — clients know exactly how much they need to pay. Not only will they appreciate the transparency and predictability of your fees, but they'll also be more likely to pay on time.

Offer payment plans

Some clients may have difficulty paying a large legal bill upfront. To make your services more accessible and also improve your collection rate, offer payment plans. Such plans allow clients to pay in installments based on the agreed terms, such as:

Billing method (e.g., invoice sent via email)
Number of installments
Amount of each installment
Due dates of each installment
Accepted payment methods (e.g., credit card, check, PayPal)
Consequences of late payment (e.g., interest rate)

Allow different payment methods

A great way to improve your law firm's collection rate is to open multiple payment options. Aside from cash and check, consider accepting payments via credit card, PayPal, and other online payment solutions like Apple Pay. You can even automate bill collection by accepting recurring credit card payments.

By offering multiple payment options, clients can pay their bills using the method that's most convenient to them, helping you get paid faster.

Looking for more ways to free up your lawyers from non-billable tasks? Outsource your record retrieval needs to Record Retrieval Solutions. With our help, you can get medical records and other important documents quickly, allowing you to settle claims and cases faster. Contact us today to get started.