As a solo lawyer, you are responsible for business operations, marketing and billing, as well as legal matters. Clients expect accurate billing, and a well-organized process can create loyal client relations, resulting in repeat business and profit.
For some, billing can be one of the most difficult challenges. From tracking down payments from clients to managing invoices and monthly reconciliations, billing can consume most of a lawyer’s work. We’ve put together a few suggestions and resources to improve the quality of your billing for your solo law firm to reduce your accounts payable and eventually receive your money faster.
1. Set Client Expectations
When potential clients are searching for a lawyer, they need an open and transparent method of discussing the billing process. This establishes expectations for both parties and helps reduce the possibility of discrepancies. Each law firm must draft a written agreement for fees with specifics of the billing procedure, expectations for the tasks to be completed, and the costs associated with those jobs. The contract should also include penalties for late payments.
With a transparent process like this, a law firm’s legal billing procedure results in lower disputes and less confusion and satisfied clients.
2. Streamline Time Tracking
There’s no room for errors when time is recorded so lawyers need to be meticulous with timekeeping.
Many lawyers still employ manual methods for tracking time, whether using pen and paper or even those margins on the legal pad. This lack of discipline could lead to inaccurate data mistakes or even incomplete records that could cost the business.
Innovative solutions for managing legal practices such as PracticePanther permit an individual lawyer to access time tracking tools online or remotely from various devices. Time tracking is made easier to ensure that lawyers get paid for the entire hours they work on a case.
3. Ensure Billable Time is Accurate
Inaccurate invoices could cause issues such as customer disagreements and lead to a bad reputation. If a lawyer fails to deal with something as simple as billing, clients might doubt whether they have the experience required to handle their matter. Clients put their confidence in lawyers to keep track of their billable hours meticulously, so any problems with invoices may call credibility into question.
For a solo lawyer just starting out, errors in billing could cause a loss of money. If hours that can be billed are not recorded, this can lead to lower profits.
Timekeeping software will allow lawyers to create accurate, detailed invoices that reflect the time spent and the amount each client will be invoiced for. The tracking process is automated and occurs in real time to ensure the highest level of accuracy.
4. Utilize Online Payments to Avoid Late Invoices
When the billing and tracking procedures are improved, Solo law firms might have to contend with unpaid balances. Clients are sometimes late to pay invoices which can cause cash flow issues for law firms. There are a variety of reasons for a client not to be able to settle an outstanding invoice. Legal professionals have to make sure that the invoice is paid on time. One of the best methods is to establish expectations ahead of time and include the penalty for late payment in the written contract at the beginning of the relationship.
Another option is to offer payments online that are safe and easy for the customer. Panther Payments, built-in by PracticePanther, allows clients to pay invoices in one or two seconds. The feature is compatible with most credit card brands, including Visa and American Express, and can deposit the retainer payment directly into an account in trust.
5. Ensure Legal Compliance
It is essential that legal billing complies with American Bar Association requirements and the Interest on Lawyers Trust Account rules. Often referred to by the name IOLTA, this is a valuable instrument for expanding representation for charitable organizations and those under-served.
Solo law firms might struggle to ensure compliance because of the work and time required to comply with IOLTA regulations. Penalties for poor management could be severe and affect your license.
Lawyers may make several crucial mistakes concerning compliance, like commingling client funds, failure to ensure three-way reconciliation, and inaccurate recording. Reducing errors requires time and focus and isn’t always available when a solo lawyer is in charge.
6. Implement Custom Reporting
A solo lawyer or small law firm may still be focused on expansion even when there is a shortage of time at the moment. It requires planning. However, there are a handful of billing options that can provide sophisticated reports.
Law firms seeking to expand need to monitor the performance of their business beyond a simple statement. Effective reporting should be able to track several indicators to provide a comprehensive overview of the company’s overall performance.