Lawyers at solo law firms often wear many hats to manage their practice. They’re responsible for business operations, marketing, billing, and more, leaving little time to practice law. Clients require predictability in their billing, and lawyers have to generate cost-effective business to keep their firms afloat. Efficient processes can build loyal relationships with clients which could lead to repeat business, and profitability.
For some, billing for solo law firms is one of the biggest challenges. From chasing down client payments, managing invoices, and monthly reconciliations — billing can quickly eat up a large portion of a lawyer’s day.
We’ve compiled a few tips and resources to help improve your solo firm billing, reduce your accounts receivable, and ultimately get paid faster:
- Set Client Expectations
- Streamline Time Tracking
- Ensure Billable Time is Accurate
- Utilize Online Payments to Avoid Late Invoices
- Ensure Legal Compliance
- Gain Billing Insights with Custom Reporting
1. Set Client Expectations
Lawyers should have an upfront and transparent process for discussing billing with clients. This sets up expectations for the client and reduces discrepancies.
All law firms should produce a written fee agreement with details of billing procedures, expectations of the tasks that will be completed, and the fees related to those tasks. This agreement should also state the penalties for late payments.
With a transparent process like this, a law firm’s legal billing process generates fewer disputes and less client confusion. The clients will be happier overall, and the law firm can collect the money owed.
2. Streamline Time Tracking
Time tracking can be a mundane and tedious task for lawyers charging by the hour. There’s no room for inaccuracies if time is logged immediately and the time entries are detailed, but plenty of lawyers still make mistakes when it comes to accurate timekeeping.
Many lawyers still use manual methods to track time, whether it’s a pen and paper, a notebook, or the margins of legal pads. These poor habits can lead to inaccuracies, errors, or missing records that can cost the firm.
For lawyers who have adopted technology like legal billing software, they may be dealing with outdated or clunky systems with limited internet access or difficult features. These issues prevent them from getting the most out of the technology.
Innovative legal practice management solutions like PracticePanther allow a solo lawyer to access time tracking tools online, or remotely from different devices, and just about anywhere that has an internet connection. Time tracking is simplified, ensuring that lawyers are paid for all the billable time they spend on the case.
3. Ensure Billable Time is Accurate
Inaccuracies on invoices can lead to many problems, including disputes with clients and a poor reputation. Clients have expectations with billing, so errors or inaccuracies can cause them to wonder if they’re dealing with a dishonest lawyer or an absent-minded one. Neither of these options looks good for the firm.
If a lawyer is unable to handle something as simple as billing, clients may question if they have what it takes to handle their case. Invoices should be accurate at all times. Clients put a lot of trust in lawyers to track their billable hours honestly and carefully, so issues with invoices can call integrity into question.
On the firm’s end, inaccuracies in billing can leave money on the table. Billable hours may not be accounted for, leading to lower bills and fewer profits – not to mention the long-term damage of a negative lawyer-client relationship.
Having a technology tool for timekeeping can help lawyers generate accurate, detailed invoices that account for how time was spent and what the client is being billed for. Tracking is automated and happens in real-time, ensuring the highest accuracy.
4. Utilize Online Payments to Avoid Late Invoices
Once the tracking and billing processes are shored up, solo law firms may still struggle with unpaid balances. Clients often leave invoices unpaid, disrupting the cash flow for a law firm.
While there are several reasons why a client may fail to pay an invoice, lawyers need to take steps to ensure that they’re paid promptly. One of the best ways is to set up expectations in advance and include a penalty for non-payment in the written agreement at the start of the relationship.
Another excellent option is offering online payment options that are secure and convenient for the client. PantherPayments, a built-in feature from PracticePanther, allows clients to pay invoices in just a few seconds. This feature accepts all major credit cards, including Visa and American Express, and can deposit retainer payments directly into a trust account.
5. Ensure Legal Compliance
It’s vital that legal billing complies with American Bar Association requirements and Interest on Lawyers’ Trust Account requirements. Commonly known as IOLTA, this is a valuable tool for expanding legal representation to charitable organizations and underserved populations.
Solo law firms may struggle to manage compliance, however, due to the complexity and time involved in IOLTA regulations. The penalties for mismanagement can be severe, however, and may include disbarment.
Lawyers can make several critical errors with compliance, including commingling client funds, failing to maintain three-way reconciliation, and inaccurate record-keeping. Minimizing errors takes time and attention, which are not abundant in a solo lawyer’s life.
PantherPayments is a trusted and recognized merchant processor approved by the ABA and fully compliant with IOLTA, ABA, and state bar guidelines for legal billing. This billing software features daily reconciliation reports for real-time financial records and averages 70% faster payment for firms.
6. Gain Billing Insights with Custom Reporting
A solo lawyer and law firm can still focus on growth, even if time is at a premium currently. This requires planning, however, and few billing options have the capability to generate advanced reporting options.
Law firms that want to grow need to track performance beyond a simple payment statement. Effective reporting should track multiple metrics to get a big-picture view of the firm’s overall performance.
PracticePanther offers real-time visual reports that can be created with just one click. It also has an innovative tagging feature to create customized filters and uncover insights on specific data to make more informed decisions.
Legal Billing for Solo Law Firms
Small and solo firms often struggle to find the time for business operations, including billing. With fewer resources, law firms can benefit from technology that can make billing quicker, easier, more secure, and more efficient for accurate invoices, prompt payments, and strong lawyer-client relationships.
