Posted on: January 21, 2021 by Huntersure LLC.
Billing is an essential administrative task when running a successful law practice. It is how clients in the industry receive remuneration for their work, take care of their office bills, pay their employees, and get compensated. If done wrong, a law firm’s billing practices can threaten the very existence of the firm itself.
That’s why it’s crucial to implement and execute effective billing practices to keep from making major billing and financial mistakes, which could lead to negligence claims, invoking the additional need for lawyer professional liability.
The first step in implementing proper and effective billing practices is establishing them and documenting them as standard office policy. Law firms should determine how they want their billing process to work, including each staff member’s duties.
According to the ABA, all law firms should track their employees’ time, whether they are timekeepers or not. This practice helps firms better understand where practice time is being spent and make thorough decisions about staffing and firm administration needs. After law firms decide how lawyers should go about time tracking, they should establish how often they will bill their clients and how they need to create those invoices. From there, it’s time to write it down and make them available to all law firm members to ensure there is no question about their time tracking.
When clients receive their invoices, they want to understand what work has occurred in their case. This helps them justify what they’re paying for, after all. If an invoice is vague and only mentions a meeting or a call without a description, it could lead to more confusion than anything.
Instead, lawyers should create invoices that strike a balance between detailed and concise. Lawyers should provide the client with a clear understanding of what services they are being billed for- a sentence or two outlining the services should suffice.
A typical billing mistake merely is not sending a bill on time. While lawyers consistently have plenty on their plate, there should still be a major focus on timely billing. Most attorneys might see this task as time consuming or stressful, but, in the end, it’s the part of the billing cycle that pays the lawyers for their work. Timely invoicing is vital to getting paid on time. When clients go long periods with no communication from their lawyer, they begin to wonder what work was done on their behalf.
Lawyers should not forget to run financial reports periodically. Not only do reports provide lawyers with a clear view of their firm’s financial status, but they can help lawyers implement improved billing practices. By reviewing financial statements, firms can see whether the timekeepers in their practice are billing under their guidelines. Identifying those firm members behind in billing allows firm executives to fix small issues before they grow to more significant problems.
Regular reporting allows firms to identify overdue invoices and stay within their budget for individual matters. Reporting can also help identify the most profitable practice areas and manage client trust accounts.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.
Posted in: Lawyer's professional liability insurance