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Solo In Chicago

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Friday, July 20, 2007

Law firm billing...

I'm amazed at how may firms do a horrible job at this; I don't think we're horrible but that's not to say there are not some near-term improvements that we're considering.

Some critical items that surprisingly I see done poorly:

**Monthly bills must be sent (amazing that I've seen firms that don't do this);

**Enclose self-addressed STAMPED envelopes with your monthly statements;

**Be descriptive in your billing...this is a great communication piece;

**Be HARD in collections;

Where we've been and currently are; where we're going...

Since our inception, we've billed clients monthly and use Quick Books Premier: Professional Services Edition for billing/accounting. No major complaints, it allows for hourly billing and you can describe in detail each entry. I think this program is quite fine if you're a one attorney office. From other reviews I've read, once you get beyond one "biller" you may want to move to some of the more specialized legal accounting/management packages. Bills are sent out religiously the first day of the month. We've done this from day one.

After some time our accounts receivables got higher than I liked and we made some changes. First, once a client hasn't made payment after the 30-day grace period, one of my assistants begins to make weekly calls to that person...non-threatening just reminding people that we haven't seen their payment and asking when can we expect it. This little item has been surprisingly effective.

We've also begun using an outside collection agency. Essentially the stages we go through with an unpaid bill are: start phone calls after 30 days w/o payment, collection letter stating that we'll be sending to collections at the 60 day mark; and send to collection if there are no payments after 90 days. The exception would be if the case is in court we'd probably withdraw after 60 days before getting a collection agency involved.

Probably the only other wrinkle we've added of late has been to include coupons in our monthly billing. I'm still unsure about this. Does a coupon make us look too much like a fast food restaurant? Still "puzzling" on this one. I do know two clients have come to use directly from our coupons.

One other general item (if possible), wall yourself off from collections. Obviously I'm entering my billing for legal work. But maybe it's just me but I don't like doing collections nor does it feel too comfortable for me on the one hand to be dealing with very traumatic and personal legal issues with a person and then simultaneously calling them about the $500 they didn't pay last month. Collecting is critical for your business, but just create a policy that you and clients are aware of and follow it. Have non-lawyer staff follow-up on collections if at all possible!

The future...

I think one of our failings is not getting large enough retainers up front. What's the proper retainer size? I'm guided by some previous jobs I've had but I think I'm too squishy.

I still want to make it easier for clients to pay us. The two thoughts I have are to e-mail our monthly invoices and to use PayPal. It's not a ton of money but stamping an envelope and then enclosing a stamped return envelope multiplied by 20-30 monthly bills adds up. We have looked at PayPal in the past...their credit card transaction fees are competitive (2.5-2.9%) and they offer more credit card options and are obviously Internet based. We do accept credit cards but we've had to run them ourselves which takes time.

The other change is to be "harder" regarding late fees. We include these in our retainer agreements but we don't enforce them in our bills. Essentially we need to use Quick Books' full capabilities better...I know this is doable but I nor my assistant have figured this one out. We don't have many clients not paying but we do have too many "annuity clients" owing us $1,000 to $2,000 and paying in drips and drops...there needs to be a price for this.





4 Comments:

At 9:59 PM, Blogger Bryan said...

What kind of coupon do you use?

 
At 11:25 AM, Blogger Peter said...

Currently we've used a coupon offering 50% off a real estate closing or a 30 minute free consultation. I like the coupon concept...not sure about its current usage though.

 
At 10:46 AM, Blogger Steve Imparl said...

I used PayPal and I really like it. Using it, I get paid a lot faster and clients like the convenience. If you decide to use it, I hope you'll have great success with it, too.

 
At 6:00 PM, Blogger Chris Monaghan said...

Another option is a web-based billing service.

Time59 (www.time59.com) allow you to track time and expenses, e-mail invoices to clients, and manage accounts receivable.

 

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