Solo and small firm attorneys should be using their client invoices as a law firm marketing tool.There’s one part of practicing law that is dreaded by both the attorney and the client: billing. So often, this is where the lines of communication start to break down and client relationships begin to suffer.
You must discuss money with your clients, and it should be done in an open, timely manner. It’s not something you have to dread. On the contrary, think of billing as a marketing opportunity. Invoices are a critical aspect of client communication and a platform upon which you will be judged. If you shine, clients will return to your practice in the future and potentially refer their friends and family to you.
Check for Mistakes
Any mistake on an invoice will be cause for concern and may result in the client’s loss of confidence in your abilities. Don’t do anything that may call into question you’re a potential oversight, lack of attention to detail, or your honesty. Many clients already have a negative perception of lawyers. An erroneous invoice will only help to cement this viewpoint.
Many invoice generation computer programs, such as Quickbooks, provide a one-size fits all template for a small business’ billing needs. If you’re using an invoice that could also be used by an auto-repair shop, it’s probably not your best option. You should think about what information you want to give to clients and what’s unnecessary. Then, customize your template to reflect these changes. Don’t forget to proofread and double-check everything that leaves your desk.
Be aware of your itemizations and the message they send to clients
Clients want to know what they’re paying for, and they only want to pay for what they feel is necessary. Be very careful how you list itemizations on your invoice. Even the most basic charge might seem superfluous to a client if you don’t use descriptions the client can understand.
Every time you refer to a task, it should be described the same way to avoid confusion. Provide details for each itemized item. Don’t charge clients for a “conference call.” Instead, charge for “negotiation with the plaintiff’s lawyer regarding potential terms for settlement of suit.” This way, the client is informed of exactly what services you are performing on their behalf.
Avoid any other non-specific terms that the client may perceive as excessive. We’ve listed a few here:
- Conference. (With whom?)
- File Review. (Shouldn’t you be up-to-date?)
- Phone Call. (With whom?)
- Left Voicemail. (How long did the message really take to leave?)
- Attempt to contact. (Why was it an attempt? Whose ‘fault’ was that?)
Also beware of the following itemized expenses:
- Clerical work. (If the work is administrative in nature, it should not be charged the same as attorney work.)
- Routine overhead. (Don’t try to sneak this in. These costs should be absorbed.)
Your value should be communicated through your invoice
Charging for excessive disbursements and administrative tasks raises a red-flag to your clients. They will begin reading your invoices more carefully; looking for ways you might be overcharging them. Your itemized bill should also match court records. Every charge for drafting pleadings or preparing correspondence should be reflected in all filed pleadings and correspondences related to the case.
Finally, you should show progress with each itemization. If you’re doing a lot of work for a client that may seem redundant, show your progress in each line item. Instead of two entries labeled “Review of corporate finances,” list them as “Review of corporate finances: 2020-2021” and “Review of corporate finances: 2021-2022.” This issue can be avoided by concentrating your time. Clients would rather pay for larger blocks of time than a few minutes here and there.
Use the billing process to market
Clients want to know when you’re making progress and when you’re not. Invoicing shouldn’t be their only source of information. It’s best if you can show the value you’ve provided before sending the client a bill. No one wants to pay for services they haven’t yet received, and that’s what billing-before-informing feels like to the client. Within correspondence to the client, you can continue to sell your services even after you’ve landed the contract. Don’t forget that you’re selling your future contracts with this client, as well as any referrals the client may send your way.
The best way to provide information to your clients and to market to them during the billing process is to provide a cover letter with your invoice. This cover letter should detail the value you are providing to the client. The information you provide is the only way your client will know how you’re spending your time and their resources.
Explain the research you’ve done and what it takes to do your job. Tell the client about the progress you’ve made on their matter. If you wrote off or discounted time, inform the client exactly why he or she does not have to pay for it. Include on the invoice an itemization of all of the time you worked, along with a redaction of the time you’re writing off so that the client can see what the total was before the write-off.
The bottom line about invoices.
You might not know when a client is dissatisfied. A client might feel that he or she is being overcharged for your services even when that’s not the case, and the client might not bring this up with you. Most clients don’t want to cause trouble and are afraid of what will happen if they dispute bills.
The consequences for you may not be so subtle. The client will simply stop referring you and will no longer use your services for their next matter.
It’s better to have a potentially difficult conversation over the phone discussing additional costs than sending a higher than anticipated invoice without explanation. The client may pay the bill without complaint, but then choose to never use your services again. A loss of a client is also a loss of future referrals.