Best Practices for Law Firm Billing and Payments
No lawyer enjoys chasing after unpaid invoices. Unfortunately, although unpleasant, collections are part and parcel of running your own business. You can mitigate the more unpalatable aspects of bill collecting by making a few adjustments. Below are five best practices you can adopt to hopefully get paid on time, every time.
1. Interview Clients Carefully and Thoroughly
The goal of a potential new client consultation is to assess the client’s situation and give them reasonable legal advice. First, determine whether the client’s needs and expectations can even be realistically satisfied. Next, exercise your own judgment as to whether this client is credible and not a potential liability to the firm. Finally, ensure the client understands the cost of the case and the firm’s expectation of payment. When the consultation ends, both attorney and client should be comfortable and confident in the integrity of the other party.
2. Be Timely in Your Billing
Endeavor to bill clients around the same day every month for internal consistency and external predictability. Even better, aim to have your clients receive their monthly statement around the beginning of the month, typically about 3-4 days after the first. Sending invoices around this time increases the chances that (1) the bill is hitting around the client’s payday, and (2) the client’s paycheck has cleared their account by then. Further, having a set schedule helps minimize the time between when you complete the work and when you bill for it.
3. Create Clear and Concise Invoices
Every invoice should be clearly-written and detailed. You don’t have to outline your time to the minute, but use separate line items for the larger tasks and include a brief summary of the work you did. As much as possible, avoid legal jargon. Your objective is to give the client visibility into what you’re doing for them, but not inundate them. And if you use too much technical language, your client may end up with even more questions.
4. Follow Up on Unpaid Invoices ASAP
Have a plan to follow up with clients who haven’t paid their monthly invoice, lest you risk non-payment. Remember, the longer a bill sits unpaid, the less likely it becomes it will ever get paid. About a week after invoices are sent, schedule time for a follow-up contact. Generate a list of clients who haven’t paid their invoice and how much each one owes. Then reach out to inquire about payment. (Be sure to give them a convenient way to pay by credit card, debit card, or eCheck to increase your chances of being paid timely.)
5. Utilize Scheduled Payments
For clients who might have trouble paying your bill or who are habitually late and/or forgetful, setting them up on a recurring monthly payment plan is a great way to help. It also saves you time and effort, all while ensuring you maintain a consistent, predictable cash flow. Have clients sign payment authorization forms during their intake paperwork and set them up on a payment plan as part of your initial meetings and onboarding. That way, your clients’ payments can run automatically without any action needed from you or them.
Keep in mind: dealing with non-paying clients is part of the job. There will be instances where you make the payment process as easy and straightforward as possible, and clients still won’t pay. However, you’ll be in a position where dealing with non-payment can be far less frequent if you implement the changes above and take advantage of technology designed specifically to make getting paid easier—like LawPay.
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