Individuals and businesses are tightening their belts and scrutinizing their legal bills more than ever. Avoid these 10 billing mistakes and you will get paid more promptly.
One of the lasting effects of the Great Recession is that many people and businesses are still sticking to tight budgets. They are eying every expense to find ways to spend less money, and attorney bills are scrutinized more heavily than other invoices. Here are 10 of the most common billing mistakes law practices make, most of which can be avoided with the use of specialized billing software for lawyers.
1) Vague Billing – Clients want to know where every penny goes, but also don’t want to be overwhelmed with details. The ideal professional invoices are clean and clear, and yet are also customizable so you can put your personal identity on each document, as well as preparing special billing for clients with unique requirements. That leads us to…
2) Ignoring Client Billing Policies – You have your billing policies and the client has theirs. When they are in conflict, you better listen to the client or you won’t have that client for long. Flexible legal time and billing software makes it easy to generate customized invoices, add notes to matters about client policies, and tailor billing models to the client’s needs.
3) Sloppy Time Tracking – Trying to recreate your schedule at the end of the week is impossible. You will almost certainly end up padding your hours without intending to. Attorneys should always record hours immediately, even if it’s in a personal notebook. Look at cloud-based legal billing software to let your attorney track hours even when outside the office.
4) Excess Expenses – Clients are going to question if certain expenses were really necessary. The trial isn’t for weeks, so why did you ship those documents Super Deluxe Overnight Express? Sure you needed to travel for the case but you didn’t need to fly first class and stay in a luxury hotel. Have some respect for the client’s money.
5) Billing Administrative Costs – Your base fee should include routine administrative expenses such as copy fees, training costs and local phone calls. If you nickel and dime the client, then you come off as petty and greedy.
6) Lump Sums – Flat fees for a case are perfectly acceptable. However if you are charging by the hour, then lumping all the tasks in a day into one block of hours makes it look like you are trying to hide inefficient practices. Each task and expense should be itemized separately.
7) Multi-Billing – When clients see several people charging for the same thing then they start to wonder. Did you really need four attorneys at the deposition? Should they pay for everyone in your office to attend a routine conference about the case? Obviously there are situations where multiple charges are appropriate but they should be uncommon.
8) No Delegation – Charging senior attorney fees for paralegal work borders on fraud. The senior attorney should not be wasting time on such a trivial task, and the client shouldn’t be paying that much. Solo attorneys who can’t afford a clerk may do the menial work themselves, but they should bill a lower rate by using time and billing software that allows a multi-tiered rate structure.
9) Ignoring Retainers – The client pays a $1000 advance and then gets a bill demanding money because you didn’t notice the retainer. That just makes you look careless. On the other hand, letting the retainer run out because you didn’t realize it was getting low is also a problem. Integrated retainer management is one of the things that separates a legal billing program from a generic billing program.
10) Forgetting Special Arrangements – You offer a 10% discount to an important client, and then absent-mindedly send a bill for the full charge. You grandfather in an old client under your former rate, and then accidentally charge the new rates. People forget; computers don’t. Look for software that allows you to set up matter-based or client-based billing exceptions.
No matter how careful and ethical you are, you will eventually make a mistake and upset a client. Billing software minimizes the chance of a mistake so you can keep your clients happy.