Law Firm Billing: 4 Strategies to Get Paid Faster

Law firm billing and payment collection can be a time consuming process. Attorneys can spend a substantial amount of non-billable time managing different matters, tracking billable time, invoicing and collection. Poor or dated billing practices can make this process even worse.

It’s important to remember that your clients want to pay for your work. However, accessibility or the shuffle of the day, may delay their payment.

Start with the basics

The usual advice offered by a variety of pundits is a solid place to start. To increase your odds of getting paid on time, make sure your invoice:

• Follows billing guidelines
• Is properly formatted
• Is sent to the right people, at the right time
• Provides clear instructions and due dates
• Clearly accounts for performed work
• Follows any additional instructions (i.e., CC decision-makers)

These basic details are easy to miss, so it’s important to verify that you’ve covered your basis with this first before proceeding with the unexpected strategies below. If you’re missing the basics, these extra details won’t work.

Strategy #1: Require 100% percent of your fee upfront

This is a difficult sell for many attorneys.

Many clients are absolutely unwilling to pay 100 percent of your fee upfront. This makes sense for a variety of reasons. If you’re doing work (i.e., litigation) that is ongoing, there’s no way for you to know how much 100 percent is with any significant degree of accuracy.

Then there’s client fear. Many clients enter into a relationship with a new law firm or attorney hesitantly. Most prefer to test the waters first and see how the relationship goes ahead of time.

How do you go about getting 100 percent of your fee upfront? You build relationships, reputation, and authority with prospective clients before they arrive at your firm. You do this by teaching clients. There are a variety of approaches, but the focus is the same. You’re displaying authority and demonstrated expertise that clients can use as a measuring stick to recognize your value.

• Giving speeches at local, regional, and national events
• Conducting webinars
• Partnering with high-profile thought leaders
• Create industry-leading research
• Write a book or create a workshop
• Create several seminars to solve a specific problem
• Become a perpetual interviewee, appearing as a guest on TV, radio, podcasts, and video

When many attorneys hear the word guarantee, they immediately assume clients are expecting a specific outcome with their matter (which they can’t do). You can’t do that because you don’t have control over all of the elements in their matter.

When I use the word guarantee, I’m talking about factors you can control. Here’s a list of the following guarantees you can provide to reduce client risk:

• An attorney available 24/7
• Same day response times for client calls, requests, or messages
• Budget cap guarantees (no additional billing without prior authorization)
• No double billing promise

These are details you can control quite effectively and won’t negatively affect your law firm billing. This upfront preparation gives clients the confidence they need to take a risk. It also enables you to ask for 100 percent of your fee upfront because you’re giving clients far more in return.

Strategy #2: Members-only bonus

Your clients have specific people they’d like to speak with. A members-only bonus can be tied to your client’s performance (e.g., paying on time, offering feedback promptly, being a pleasure to work with, etc.) and used as a behavior correction mechanism.

Here’s an example: Let’s say you’re a real estate attorney, you work with a variety of clients, but real estate investors are your bread and butter. Who do they want to talk to? People with money.

You can create, at your expense, a monthly lunch and learn where you connect your clients (real estate investors) with financiers who have large amounts of available cash. Each month, you provide tickets to the event, available only to clients in good standing.

You can create a members-only bonus around your clients for a wide variety of practice and focus areas. Here are a few examples to get you started:

• Connect clients with financiers
• Introduce clients to power brokers, influencers, and thought leaders
• Provide access to your ‘deal-making service’
• Access to exclusive in-demand seminars and events
• Exclusive members-only services and rewards

You can come up with your own ideas for members-only benefits. The important part here is that your benefits have a strong value proposition and meet four specific criteria:

1. Your clients want/value it
2. It’s exclusive to your law firm
3. They understand it
4. Clients believe what you’re offering

The hidden benefit to these members-only programs is the fact that it enables you to command (and receive) higher fees from clients. If your members-only benefits have a strong value proposition, your clients will jump at the chance to join your program.

Strategy #3: Quid pro quo partnerships

A report by Sheldon Banoff at Katten, Muchin, Zavis, and Rosenman states, “lawyers and law firms are being asked (or are aggressively seeking) to take equity ownership in their clients.” More and more, attorneys are receiving stock and stock options in place of all or a portion of client legal fees.

Is this legal? Absolutely, though, there are some specific guidelines attorneys will want to be mindful of. The ABA Standing Committee on Ethics and Professional Responsibility released Formal Opinion 00-418. “Opinion 00-418 notes that the laws, court rules, regulations, codes of professional responsibility, and opinions promulgated in the individual jurisdictions are controlling on individual lawyers.”

This is good news. Per the ABA opinion, if you receive equity ownership in lieu of, or in addition to, a cash fee for your services, you’re entering into a business transaction with your client. This means you’ll need to meet the requirements of Model Rule 1.8(a).

Will this work for your firm? It’s an important question that you’ll want to consider carefully. Banoff notes that attorneys/firms will need to discuss the following:

1. Are there legal constraints on law firms owning equity interests in various types of businesses?
2. Are there ethical constraints (pursuant to bar association opinions, state court rules, or otherwise) that preclude lawyers from accepting stock for fees in certain situations?
3. How would a jury view a law firm defendant, where the firm has a substantial ownership interest in the client?
4. Do the law firm’s professional liability insurance policies cover situations involving clients in which the firm also has a substantial economic interest?

Banoff notes you’ll also need to have an internal dialog about the following:

• Are you prepared to hold this stock for the long term?
• If a long-term hold is likely, how will the firm allocate the stock ownership among its partners?
• Would the client view the law firm’s sale of the stock as a vote of “no confidence” in the client?
• Should the stock be distributed out to the partners individually?
• Should the equity be transferred out of the firm and into an investment partnership or fund?
• What should be done concerning partners who leave the firm (either voluntarily or involuntarily; by retirement, termination, or otherwise) before the stock is ultimately disposed of? Do they retain an economic interest in the stock’s value?
• Will the firm pay the withdrawing partners cash for their interest, even though the firm cannot or will not liquefy its investment at that time?
• What are the firm’s exit strategies concerning the stock or options received?

This seems like a hassle. But the potential payoff is monumental if both sides properly negotiate the terms. It positions you and your clients on the same side instead of the adversarial relationship that’s typical with attorney/client relationships. This is the benefit of partnerships.

If you’re able to produce exceptional value for clients and you’ve negotiated well, bonuses or incentives are very reasonable requests to make. This also means you no longer need to hound or pursue clients.

Strategy #4: Incorporate ePayments in your law firm billing

If your law firm only offers one method of accepting payments, you may be making it difficult for your clients to pay you faster. Majority of clients are used to paying for services online and about 78% of them would prefer to do so. Law firms are comfortable with accepting paper checks because it has been the norm in the legal industry for decades. However, they present several roadblocks in your law firm’s billing process and delay invoices being paid on-time and in-full.

Accepting ePayments is easy with the advancement in legal technology. Legal software management platforms like Bill4Time, allow you to offer online payments easily. The platform offers a built-in payments processor that keeps your payments safe and compliant.

These law firm billing strategies motivate clients to pay faster

The wonderful thing about these strategies is the fact that you can use all four in your law firm. Use them separately, across various clients, or simultaneously with a small batch of motivated clients.

These unexpected strategies mean you’ll have the peace of mind you need to pour yourself into your work, doing everything you can to take care of your client’s needs. You can go above and beyond, providing the care, guidance, and protection your clients need.

Create the right structure, and you’ll find clients are eager and quick to pay.

The recording for this live stream is available. Register here to access it for free! 

We recently released our built-in payments processor, Bill4Time Payments. Whether you’ve already activated online payments in your Bill4Time account or simply looking for more information on how it can support your business, these best practices will help you get the most out of Bill4Time Payments and reduce your struggles with accounts receivable. 

If you missed the latest virtual event with our Manager, Customer Success, Kris Holz, you can view the recording below to gain more insight on how Bill4Time Payments can simplify your billing. 

Online payments are more than a nice-to-have (3:05) 

In today’s world, it’s almost impossible to run a business without relying on some form of technology or online software. Utilizing technology allows your firm to sync with today’s “on-demand” lifestyle which your customer’s have come to expect when conducting business. This makes having online payments an essential part of your business and customer experience. In fact, many consumers have already agreed that digital payments are their preferred payment option. 

What separates Bill4Time Payments from the rest? (4:03)

Our built-in payments processor cuts out third-parties and gets rid of the middle man. Simply put, we can offer industry-low fees and transparent, flat pricing that other processors can’t. Bill4Time Payments is accessible right within the Bill4Time platform meaning your payments are secure in one place. Did we mention, we’re 100% compliant with ABA, IOLTA, and all 50 state bar associations for accepting online payments?

Customize your client portal (6:44)

Before you get started with online payments, you’ll want to set your clients up for success. This is done by customizing the client portal and activating the appropriate settings. Admin users can easily set up automatic invoice notifications for clients, control the client dashboard to make certain items viewable to the client such as payment history or current balances. Taking just a few moments to customize your client’s experience with the portal will allow for a more secure experience and enable them to pay you faster. 

Sending invoices and your client’s experience (9:00)

Sending an invoice to your clients has never been easier! With Bill4Time Payments, you can easily create customized invoices that will display a “Pay Now” button, giving your client the prompt to securely pay online. If they’ve already set up their client portal, they will receive an email notification to login and pay with a new or previously stored payment method. Clients have the option to pay with credit card, eCheck via bank sign-in or eCheck via account and routing numbers. 

Access a high-level overview of your payments (13:00)

Once approved, you will notice a “Bill4Time Payments” tab within your Bill4Time account. In this tab, you can quickly monitor what payments are coming in and out. You’ll be able to see the status of individual payments, the amounts, and which project they originated from. 

Easily request electronic retainer payments (14:33)

Bill4Time Payments takes it one step further by offering electronic advanced fees or trust payments. Simply send any client in Bill4Time an email containing a link which will direct them to pay their retainer or advanced fee payment to any bank account connected to Bill4Time Payments or operating account. 

Getting started with Bill4Time Payments is simple

In just a few simple steps, your company can be on its way to offering hassle-free online payments. Our 3-step application process is easy to complete and can be found right in your Bill4Time account at no additional cost. 

If you’re not already a Bill4Time user, you can get a free custom demo to learn how our practice management software can help you better manage your business. 

Learn more about how Bill4Time Payments can reduce accounts receivable and exciting upcoming feature releases by watching the recording below.

Research shows attorneys spend two-thirds of their day on non-billable work. If attorneys are struggling to meet their quotas, law firms may notice they’re missing revenue goals. However, there could be other factors that can play a role in lost revenue. Here’s why law firm utilization and realization rates matter and steps to boost them.

How minimum billing increments impact revenue

Daly & Sorenson represented Gabrielle Manigault, their client, in 97 legal matters over the course of 16 years. They had a long-standing relationship.

However, Manigault owed more than $84,500 in unpaid legal fees. She disagreed, so her firm declined to litigate her case and sued to recover their fees. Manigault stated in her appeal that her fee should be reduced because her firm billed in 15-minute minimum increments. She believed her firm would “routinely charge her for work that took far less time to accomplish, and speculated that the firm was billing for unproductive casual conversations between attorneys and paralegals.”

This scenario stems from the absence of a written fee agreement and miscommunication with the client regarding the law firms minimum billing increment policy. Minimum billing increments are a great way to boost law firm utilization and realization rates but it’s important to outline your billing process to clients during the onboarding process.

Using minimum billing increments to boost law firm utilization and realization rates

There are several strategies attorneys can use to boost their utilization rates. Here’s the great news about these strategies; what’s beneficial for your clients is also helpful for your law firm.

1. Make minimum billing increments a part of your intake process

According to According to Lexis-Nexis’ Age of the Client, your client’s number one and number three concerns in the attorney/client relationship is oriented around your fee.

“Provides clear indication of likely costs/works to fixed fee” and “explains charging system clearly at outset” are two of the most important factors listed here, revolving entirely around money. This should be part of your client intake process.

Show your clients the fee arrangements and minimum billing increments you use (if any). Treat this conversation as an opportunity to discuss any objections or concerns they may have ahead of time. Reassure your clients that it’s okay to say “no” so you can be confident in their “yes.”

2. Avoid ambiguous billing practices

Extensive overbilling, block billing, billing for meaningless or unproductive conversations — are all important areas to avoid.

They can come look unprofessional and leave clients with more questions about your billing such as:

• When did this bill come in, and why are all of these tasks lumped together as a single line item?
• Why did it take so long to do this?
• Are you overbilling so you can ring the meter and justify more fees?

These poor billing habits could lead you to a billing dispute and a potential loss of revenue.

3. Enforce timekeeping for billable and non-billable work

If you want to increase your firm’s utilization and realization rates consistently over time, there’s one ingredient you’ll need above all else. You’ll need to review your timekeeping policies and how employee’s are tracking their time.

With utilization optimization, you can:

• See how your employees are spending their time: Is there an administrative process that’s eating away at billable time? Are specific employees struggling with specific matters? Accurate timekeeping gives you the intel you need to assess time management and identify the root cause.
• Find billable leakage sources: Are attorneys spending an unreasonable amount of time searching for the documents and tools needed to do their jobs? Are attorneys under quota and unable to produce the volume of billable work needed to sustain the firm (due to an excess of non-billable work)? With proper timekeeping finding the answer is simple.
• Set billable targets and financial goals: Look at your current situation; do you have the tools and resources you need to hit your billable targets or financial goals? With time tracking software, you’ll be able to give a clear and accurate answer.

Boosting law firm realization rates

By developing good habits, you’ll be able to get more value from each of your employees. You’ll able to identify revenue leaks before they spiral out of control. You’ll finally be able to achieve consistent, year-over-year growth. Morale will improve, making it harder for competitors to poach key employees.

Your clients will be eager and willing to pay the fees that you ask. If you’ve taken the time to keep them in the loop, it’ll be easier to earn and maintain their trust. By taking the time to explain your fee structure clearly, you ease their fears about being abused.

Your realization rates will begin to climb.

Start with clear communication and clean billing practices to boost revenue

Billable leakage can come from a variety of factors within your law firm. Taking a look into your billing practice and having a conversation about minimum billing increments with your team is a simple way to resolve the problem.

Implementing a practice management software is another way to remedy many of your law firms pain points from billing to time tracking. Begin with timekeeping, continue with minimum billing increments, and your poor utilization rates may become a thing of the past.

When it comes to product development, one thing is certain, customer feedback is our guiding star. As product manager it’s my responsibility to listen to that feedback to ensure we are creating the right features for our customers. Over the past few months while scoping out our Bill4Time Payments launch, we repeatedly saw the need for electronic retainer payment functionality. Today, I’m happy to announce that electronic retainer payments are now available for organizations that have activated Bill4Time Payments. For the first time ever, you can now process payments online into a Trust account directly and send requests for retainer payments within Bill4Time. 

Requesting Retainers or Advanced Fees With Bill4Time Payments 

While accounting for law firms presents many unique challenges, the Trust accounting and retainer processes are crucial to get right in order for your law firm to remain compliant. Knowing this, our product and engineering teams worked directly with our customers to ensure that this sensitive task of maintaining compliance while using Trust payments was as simple and user-friendly as the rest of the Bill4Time platform. 

So how does it work? Now in Bill4Time Payments, retainers or advanced fee requests can be utilized to request funds from your client without having to send an invoice. Depending on your unique circumstances, you have the capability to select the bank account you would like to receive the payment into — your Operating or Trust account. These payments will be tied to the Client and Matter selected and can be easily applied to pay off any outstanding or future invoices. 

To remain compliant, Bill4Time never takes processing fees from any Trust account payment. In addition, any Trust fees are pulled from the linked Operating account automatically, so Trust money stays Trust money. 

If you need a refresher on Trust accounting and the importance of separate Operating and Trust accounts, I highly recommend reading our Trust accounting refresher blog that gives a great overview of what you need to know in order to remain compliant.  

A Familiar, User-Friendly Experience Awaits 

Receiving retainer payments should feel intuitive for organizations using Bill4Time Payments and their clients who have used the platform already. Just as you would send a request for payment to your client from the new Bill4Time Payments tab, you can now do the same for a retainer request. The primary difference here is the necessary steps needed to select which bank account your funds will be deposited into. 

Once sent, your clients will receive an email containing a link to pay, just as they do when sent an invoice directly from Bill4Time. They will then be able to pay the retainer request via Credit Card or eCheck. Once the payment has been processed, they will receive a payment confirmation email with all relevant information for their personal records.

For a complete walkthrough of the Bill4Time Payments Retainer process, check out our Knowledge Base article.

While these sample screens seem relatively straightforward, they hold a tremendous amount of information that can be read by any attorney in a matter of moments. This isn’t by chance —  it took many iterations and reviews by our dedicated Bill4Time Product Council customers before we felt we had the right workflow for all of our customers to succeed.  

Whether it be Zoom walkthroughs, feedback via phone and email, or even deep-dive surveys, our Product Council customers were integral to the success of this new electronic retainer feature. If you are curious about being part of our Product Council and wish to shape the future of Bill4Time as a whole, we are always looking for willing participants. Current customers can fill out this simple form to begin the process.  

We’re thrilled to offer electronic retainer payments to Bill4Time Payments customers. We know how important it is to the integrity of your billing process and the overall success of your business. You can get started with electronic retainer payments today by visiting the payments tab in your account, or activate Bill4Time Payments by submitting the application in your account — it only takes ten minutes to apply.  

If you’ve been waiting on retainer payment functionality to get started using Bill4Time, sign up for a customized demo below to learn how to get started. 

Your law firm could attract more clients and increase revenue by 53 percent or more by selling both products and services —attorneys billing hours by the day, selling legal products by night.

According to Mark Cohen, speaker on law firm innovation at LegalMosaic, “The traditional law firm economic model is predicated on high-intensity, high-priced labor as opposed to products, but nonetheless, this is something clients are increasingly demanding.”

Most firms haven’t embraced this model, but it’s a revenue model law firms can use to attract, earn, and win more high-quality clients consistently. Today I’m going to show you how this model can provide you with free advertising. 

Using products to attract more clients

The business model is simple, and it doesn’t require a whole lot of babysitting. It needs some upfront work to set things up, and a willingness to maintain the revenue model, so it continues to perform well for you. 

Here’s how this model works:

1. You advertise on a specific platform. I’m recommending pay per click advertising (e.g., Google ads or Bing ads) to start. 
2. You send customers to a specific landing page with an irresistible quid pro quo offer (i.e., trading education for an email address). 
3. You offer the subscribers an irresistible, low-cost product to gauge interest levels and segment prospective clients.
4. Clients subsidize your advertising; they pay you to promote your law firm. 

Here are the ingredients you’ll need.

• An irresistible offer
• A strong value proposition
• Money to advertise ($300 per mo. minimum)
• An email service provider
• A website or landing page (and all that comes with it)
• Strong educational content
• Social proof, credibility, and authority markers
• Product risk-reversals (you’ll need to verify the legalities)

You must invest the time needed to get these details right. Shoddy website design, an unreliable email service provider, or weak educational content, will sabotage the results you receive. 

As the saying goes, garbage in, garbage out.

The product you offer depends on your goals

You’ll need to determine what your goals and objectives will be ahead of time. Are you merely looking for a way to generate more leads? Would you prefer to transition fully to products? Maybe you’re interested in creating a hybrid firm — 70 percent of the revenue comes from billables, 30 percent from products.

It’s entirely up to you. You must identify these goals ahead of time, so you aren’t distracted by offers that take you away from your goals and objectives.

Which products should you sell? You can sell:

• Books
• Courses
• Workshops
• Seminars
• Events
• Initial consultations
• Productized services 
• Tools
• Apps
• Connections
• Access

There’s more here, but I think you get the point. Using these resources, you can generate a significant amount of revenue for your law firm and attract new clients simultaneously. 

Let’s take a look at our fictitious firm, Goldsmith, Price & Cooper, to see how this strategy would work. 

Goldsmith, Price & Cooper specializes in business law. They’re particularly interested in startups and small businesses. They’ve noticed that prospective clients have some common misconceptions about incorporating in Nevada.

Their clients are worried about asset protection. They want to provide their clients with the help and support they need, but they also want to make sure their firm is profitable. They gather their ingredients together.

• Two irresistible offers: (1.) An asset protection toolkit and (2.) They write a book on asset protection
• A strong value proposition: Their firm offers battle-tested asset protection
• Money to advertise: $2,500
• An email service provider: Mailchimp
• A website or landing page: (a.) A landing page for their asset protection toolkit and (b.) A sales page (with checkout via easy-to-use tools like Gumroad) to sell their book
• Strong educational content: Thorough, informative content that exposes their need for help. 
• Social proof, credibility, and authority markers: “As seen on” badges that highlight your firm’s expertise and recognition in the marketplace
• Product risk-reversals: A 30 day, no questions asked refund policy for the book 

Next, Goldsmith, Price & Cooper arranges these ingredients in the right order. They set things up so prospective clients: 

1. See their ad on Google or Bing
2. Click on their ads
3. Arrive on their landing page
4. Enter their email address to receive the asset protection toolkit
5. Views their irresistible offer and decides to purchase their asset protection book
6. Are invited to set up an initial consultation with a partner (not an associate) at their firm

Using this structure, you can produce a consistent stream of high-quality clients who are eager and willing to invest the amount needed to receive your expertise. You create products that deliver a substantial amount of revenue for your firm, subsidizes your advertising (so it’s free), and generates leads — all at the same time.

Selling legal products boosts law firm profitability

As we’ve seen, selling both products and services are great options to make your firm more profitable and attractive to prospective clients. By having a strong value proposition and creating ways to solve prospective clients’ problems, you’ll find they’re eager to invest in the products and services they need to protect their interests.

A multi-national firm was under investigation. Work conditions at this firm were harsh, so much so that associates were sleeping at their desks in an effort to meet deadlines. Associates were crushed under the weight of huge workloads and punishing deadlines.

This may a typically scenario at law firms. From lawyers to administrative everyone is overwhelmed with work. Managing your tasks may seem intangible when you’re in the thick of it. Here are a few ways to ease the blow.

Tactic #1: Communicate your workload

It happens – you have your task list for the day and a co-worker has something pressing that needs to get done. In these scenarios, we look at how to address these situations.

• Partner A: “I need you to complete these docs and file paperwork with the courthouse by the end of business today.”
• Partner B: “I need you to finish the rewrites on this agreement by 3:30 pm today.”

Initially, you’ll want to agree to both. Especially, if you’re a new lawyer in the office or associate. However, taking on tasks you don’t have the time to complete could cause more harm than good. Here is how you could address the situation:

• Partner A: “I need you to complete these docs and file paperwork with the courthouse by the end of business today.”
• You: “Sure, I can do that. What should I tell Partner B? He wants me to finish contract rewrites by 3:30 pm?”

This works in person, but it’s especially effective if you send Partner A an email and you CC Partner B. Again, you’re going to have to weigh the internal politics of the situation. Either way, your co-workers will appreciate you being honest about the work you can or can’t commit to.

Tactic #2: Put the ball in their court

If you’re being asked to complete a task that will set you behind on other tasks, ask your partners outline a solution. It’s important that your delivery isn’t forced. You’re simply asking for guidance to better your tasks without delaying or sacrificing others.

Here are some examples you can use:

• I’m supposed to finish rewrites; they’re due in 1 hour. Did you want me to let the client know we need to push this back so I can work on your items?
• I’ll need this list of docs so I can meet your noon deadline; where should I go to get these?
• The client mentioned they wanted to go in a different direction. Should I start on this to-do anyway? If so, what should I tell the client?
• I’m willing to help you prepare for your case. Would you be willing to take over these agreements for me instead?
• Richard told me to focus on these tasks for today. What should I say to him about this?

When you position these questions this way, your co-worker can weigh their options and figure out other ways to delegate tasks. The key here is communication. Task management for lawyers starts with being open about your workload and asking questions for guidance.

These tactics work because you’re showing that you want to be a team player. You want to take on more tasks but not so much you’re dropping the ball on other important work.

Task management for lawyers is possible

Most of the time, lawyers attempt to manage the ever-growing-list of projects, tasks, and events. They quietly carry the burden, as more and more work is stacked on their shoulders. Eventually, it become too much and your work can suffer.

This doesn’t have to be your routine. Having open communication and adopting a practice management software with task management abilities, will help everyone at your law firm get a high-level view of everyone’s workload.

You’ll find it’s easier than ever to regain control over your time, work, and resources, no punishing deadlines required.