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Invoice handling for Legal

welcome everyone today's Cosmo explode in our series presentation 5 billing practices used by profitable law firms presenting today we have Erika Mercer the director of strategic communication at cosmetics our guys nearly a decade of experience of a legal software industry catering to the specialized technology needs a small to mid-size law firms she's given numerous presentations across the country on legal technologies such as law practice technology management cloud computing legal billing and trust accounting compliance with that I will hand it over to Erika very good great thank you so much welcome everyone I appreciate you attending today's session so there's two main focuses on our topic today one is of course profit you know being a profitable law firm which is always for any business it's definitely a main goal but more specifically on billing practices I do suggest as we go through today's session to think about reflect on what your current billing workflow is and we'll address what a typical workflow is and you can kind of see how that is similar or different to yours but the tips that we talked about today will hopefully help to you know streamline and make those processes more efficient so that you can be more profitable so the agenda is as I mentioned first talking about a law firm billing workflow what are the different steps in billing from you know the day to day all the way to the monthly activities and sometimes the as-needed activities then will specifically cover five ways that your billing practices can increase profits I've learned from speaking with law firms over a long time that certain things certain activities and also getting rid of certain activities can really help to reduce wasted time and also increase the amount of payments that are coming in to your firm and at the end of the day when you're getting paid that is where you end up earning your profit earning your income and being able to either put that back into the business or of course be able to pay for the resources that you have on staff and then a lot of this will be revolving around leveraging your firm's technology we'll talk about in a moment I have a poll coming up about how firms are tracking their time they're doing the billing process it really varies a lot from firm to firm but there are lessons learned from a lot of the firms that I've spoken with have had really positive results from making tweaks specifically in their technology so we'll talk about that just to give some ideas and some brainstorming into ways that things can be maybe changed if needed so workflow let's start with that when we talk about billing these are often the different functions that you think of by far the biggest is those daily entries whether it's your time tracking or your expense tracking that's the first thing especially attorneys and lawyers in any billable party that's one of the first things that they think of but there's a lot of other steps after that now you may be involved in all of these steps you may be involved in just some of these steps depending on your role at the firm but it is important to understand the overall big picture so day to day entries mainly two timekeepers take care of that then you have your account or invoice review that is if you do routine billing maybe once a month you go through a pre bill or your reports to see what is due to be billed make any tweaks or changes sign off or finalize those invoices until they're ready to be generated at that point of course then those bills are generated you may have a lot of different ways of going about that whether it's using typing up in word using a billing software maybe different tools to get those bills not only created but sent out to the client how are those being sent email mail there are other actually electronic for tools and processes which we'll talk about in a bit how is that getting to your client and it may differ based on the client that you're working with hopefully at that point or at some point they pay you so you want to make sure you're recording those payments as they come in and they may come in in a variety of ways and if they don't pay you that collection process of course billing doesn't mean much of anything unless that money is actually collected so what are the activities done to ensure that so this as I said there's daily activities here some of these may be weekly or monthly or bi-weekly depending on your firm's billing cycle but this is the overall cycle so take a moment think of how you're doing this currently and as we go through our tips today you may be doing an excellent job you may be collecting payments no problem but I'm pretty sure that most of you that are attending today's session are seeing gaps somewhere or at least no there's room for improvement but you're not really sure how to go about it so before we get into the topic itself when you think of this workflow specifically your time tracking I do want to launch a poll and I'm curious to find out what is your primary method for tracking time let me go ahead and launch that okay I see just about 80% of the answers are in so we have 70% of you are using a legal billing software that's great followed by 21% are using written notes and then it's a little bit between 12 and 15 percent for each of spreadsheets or generic billing tools so we have a pretty wide variety but by far the leading which is now at 72% is a legal billing software followed by 24% for written notes so thank you so much I'm gonna go ahead and close that poll I think that that's pretty typical I feel like when it comes to billing law firms have so many unique requirements that very often people are attracted towards legal billing tools there's many of them out there there's many different not only tools but like just phone apps and and different things like that for law firms the written notes I was expecting to have some doing that you know some response to that I was not expecting to be the second option to be honest so if you're a lot of times what may happen which may be your situation is the lawyer the attorney is writing it down on paper and likely passing it to somebody else who puts it in some sort of software or tracks at some way but your role kind of ends at entering them on paper okay well this I think will be a very helpful session for many of you I think especially for those not using a legal billing software there'll be a lot of helpful tips here for those who are using a legal billing software I think this will help you to focus on what your current tools can and cannot do because it's quite possible that the applications that you're using have a lot more potential than you're giving it credit for and you might not be utilizing all the functions available so that brings us to our main focus of today which is the five ways that billing practices can increase your profits the first way or the first item that I'll talk about is something that most people don't even consider to be part of billing and it's interesting because these are very much billable activities so I've talked with many law firms where I asked you know where are you tracking your events or your notes your emails and very often it's in a completely separate tool maybe Outlook or Gmail or something similar to that and they don't really feel a need to have it in their overall practice management tool or whatever technology they're using in their office and what's interesting is those day to day activities are almost always billable if you do a lot of hourly work pretty much every activity you do for your clients is billable now the question is how do you make sure that they are tracked in your billing software well there's a couple things to keep in mind one thing is the second point that I have here these activities are often tracked in a variety of tools if you have multiple staff in your firm sometimes not all the times but sometimes it's one of those preferences you know I like Google Calendar he likes Outlook calendar this person uses a Yahoo calendar because that's just what they like to use a lot of preference comes into place I'm using Mac calendars the problem there though is with using all of these different tools there's no systematic method to make sure that that information gets wherever the billing is currently located some things that can help are there are integrations there are integrations with different calendars different cash tracking tools email tools I would say probably most notably is like Outlook and Gmail they're probably the most used applications for these functions and a lot of billing tools especially legal specific building tools have the ability to sync with those outside applications that is very helpful if you want to stick with the calendar or whatever tools you're using I'll use Outlook as an example I want to keep using Outlook I love Outlook I'm very comfortable with it but I also want to make sure that those items are built so how can I make sure that that ends up in my billing software now you may have a just a billing only tool or you may be using a practice management tool that might have a lot of other functions involved as well mobile apps are also really important so if using any type of cloud billing software you should have a mobile app most of them do come with a mobile app that is incredibly helpful because you're able to you know when you're on the go when you're with a client when you're in court when you're outside the office which is more and more these days you could just pull out your phone and enter your time and not only is that a convenience but it ensures that the time is entered promptly and accurately because you're doing it in a short period of time I think that time tracking is one of the areas where many people struggle the most I know so many law firms that wait until the end of the month when it comes time to review bills to kind of think back at all that took place and try to fill in all of the gaps what that does is it takes up a lot of your time end of month and it will end up delaying your billing that's going out so the one habit and it definitely is a habit that takes effort to change is to enter your time right after the activity latest end of day and technology like mobile apps helps a lot because it's quick it's easy you don't have to think about it and you can ensure that that is being captured not only same day but like I said immediately so think of the tools that your firm is using think if they integrate with whatever tool building tools or practice management tools that you utilize I'll give an example with cosmolex we integrate with office 365 Calendar Google Calendar we have a mobile app as well but there's also things I mentioned here email and documents there's other integrations for those as well so it depends on your preference but anything you can possibly do to get your time tracked sooner rather than later is worth investing in all right our next item is related to costs ironically when we talk about capturing items and the day to day everybody thinks of time but most people are not thinking about costs it is considered I think mainly an accounting activity that maybe the bookkeeper or whoever's handling that can take care of but if I am whoever attorney paralegal anybody who let's say I'm going to the courthouse and I need need to pay for a filing fee today I could pay by cash I could pay by cheque I could pay by credit card I could paint by debit card very often it's just whatever I have on me at the time how do I make sure that that gets accounted for you may be holding on to receipts which is not the most reliable but you should hold on to receipts if at all possible also some of those costs the example that a game need to be reimbursed by the client so not only do you need to account for it for your business account like if you're cutting a check from the business account or if you're using a business credit card it needs to be accounted for from an accounting perspective but also how do you make sure that that gets billed because if it's not billed it's not going to be reimbursed that all comes up to your internal workflow I think most firms what happens is you pay a cost on a credit card and then eventually it gets to the accountant on the credit card statement that that happened and they have to make sure that it is marked in whatever billing software that you have I suggest looking into whatever workflow you have currently reason being is almost every law firm I talk to when I say do you have client cost that you forget to bill they say absolutely we just don't know how much it is or how often it happens because they're not keeping very good tabs on it and the interesting piece is these costs you're paying out of pocket for your client you would not be paying for a client cost like the example of filing for an expert witness you would not be paying for that if it wasn't for that client so if you don't bill for it properly you're not gonna get reimbursed and that is income straight out of the firm so this whole process which is called cost recovery making sure those costs get built to the client and then hopefully reimbursed that will have a direct impact on the profit of your firm because if you don't have a close eye on it it's gonna cut into those profits also think of how you're going to handle indirect costs what I mean by that is usually overhead things like photocopies printing postage meters anything that's kind of part of the expense of just doing business different firms choose to handle the different ways you may decide to absorb that fee say oh it's a cost of doing business I'm just gonna absorb it which is fine some choose to tack on an administrative fee on their invoices maybe it's 5% or a flat dollar amount again up to you but you could tack that onto every invoice so that it covers those types of costs another way is to actually itemize those costs to the client like charging them X amount of cents per copy or for printing or passing through you know their portion of the FedEx bill or the postage meter that you're tracking their their shipping or their mailing through so decide what makes the most sense but as you know recovering any portion of those expenses could definitely help towards your profits whether it's the whole amount or just partial the next topic we're talking about so those first two are very much daily activities another point I do want to mention is some software's do have import functions so if you're worrying about you know capturing all of your cost or track capturing all of your time there are tools that allow you to actually import credit card statements Excel spreadsheets to make sure that all of those times and costs are accounted for so that's nice to have as a kind of a checks and balances to make sure missed items are captured too so now we're into billing let's say it's end of the month I'm gonna do my invoicing process like I said every firm kind of has a different way of handling this but the first is you want to do to be honest probably with the billing like the actual invoicing part of it so much automation can happen if you are part of that 24 percent that does written notes for their time now again you may give it to somebody else who puts in the billing software but if you're not using any billing software whatsoever you are spending way way too much time in preparing your bills so a few tips is first as you want to leverage custom invoice templates any billing software legal or not should have a way to customize your template meaning I can put in a logo I can put in a header I can put in a signature I can decide how I want it to look and feel and that template will apply going forward to all of my invoices then routine billing so it does depend on your type of practice I would assume that since you all are attending a billing webinar likely you do some hourly work but usually hourly cases or if it's a recurring fixed fee case you do routine billing typically every month but it can vary from that if you're able to do routine billing I highly recommend it for a couple of reasons it creates the expectation for your clients so they know that that bills coming every month so they're going to pay that bill every month just like you as a consumer you know your phone bills carving every month you know your electricity bill is coming every month so it it puts you in a pattern and in a routine and you can also budget really well based on that because you know what's kind of coming up but also internally it allows you to utilize a lot of batch or bulk function so if I'm doing monthly billing I can generate all of my invoices at the same time so if I have I'll say 50 clients let's say and many of you probably have even more than that find 50 clients that are due to be billed and I have a billing software that has batch invoicing I can generate all of those in one click as opposed to if I'm generating bills kind of as needed and whenever I feel like it or kind of scattered around you can't make use of those batch functions and I do understand that some cases it doesn't make sense but in the case of most hourly cases or routine billing cases you can do that so batch invoicing for those that said they're using billing software look into your tools they should all have some way of generating multiple invoices at once but also delivery a lot of tools allow batch printing batch emailing again if you're not using it absolutely look into it I can you know choose 50 clients and some some actually make it really simple like you can actually pull up a list of 50 clients have one communication template and then we'll send it out to everybody at the same time so a lot of automation there and then electronic delivery so electronic delivery is not just emails today I mean you do have the ability to email invoices of course some of your clients prefer that but there's also a lot of delivery portals you can either use document management tools to share an invoice you can use a lot of practice management tools have client portals where you can share an invoice electronically in a secure encrypted way but it's electronic delivery you know they're getting it that second as opposed to mailing it and then getting in you know three to five business days along with that with email and online delivery comes online payments that's becoming a lot more popular as well you could have an invoice with a link on it they click on the link they pay online and many billing software's integrate with these types of tools with cosmos for instance we integrate with la Paix which is a very popular legal credit card provider or merchant provider I should say so if a client clicks on a link on an invoice they pay online not only is that payment processed but it is actually entered into the billing software and all those updates are made for you so it it actually eliminates the back-office entry needing to be done when receiving those online payments so really great internally but also think externally for your clients if I know myself if I get a bill and I have the ability to pay online I do it all of my personal bills are paid online and I'm sure many of you are the same way so your clients would like that as well so just having those flexible options could result in much quicker payments because they could pay you at Saturday night at you know 11:30 12:00 o'clock at night and not have to call you or come into the office I do want to give a little bit of visual when it comes to this these billing options like I said most billing tools should have this functionality and if not definitely look into tools that may have that so I'm going to quickly jump into cosmics just to show what we mean by automated billing so let me go to I'm actually gonna go to our activities area here and we have an invoice tab so when I talk about bulk invoicing in case some of you don't use those types of functions I wanted to give you an idea of what that looks like so if I go to create an invoice and let me see if I can get a few items here ok so let me actually do a different date range full ones ok we can do as many as we need so if you have one if you have 500 they'll all be listed here and you can actually generate them all at the same time so this is a matter that has an unbuilt balance so the system will pull everybody who has an unbuilt balance and I can go ahead and generate them all at once and you can pick and choose which matters you want to invoice for and then I can see that item is right here in terms of the templates I mentioned that you can customize your templates so just to give you an idea of what mine looks like you have the ability like I said most tools should provide the option to upload a logo there's even a payment link here like I said for online payments I have a cover sheet which is optional and then you have your invoice in this case I just have this is a fixed fee file so I just have my one line for fixed fee but you can get as itemized or as detailed or not detailed as you want depending on what template you choose to use and I also wanted to show emailing cuz emailing is believe it or not still a fairly not new but a lot of law firms still mail their invoices which is okay but you can email as an additional contact or communication method so if I go to email invoices here the system will let me know how many invoices I can email so I can select them all or just a few and then again here you have a it's gonna finalize them here you have a template that will apply to each of those invoices and send them all out in one batch and they'll each have their invoices attached so this is what we mean by leveraging your technology when doing billing and really any type of billing software should have this type of function but it's important to keep in mind in case you're not using it okay the next item we're gonna talk about is collections so when it comes to collections that's the the piece where I'm saying they're not paying you I mean you're in a service business so not getting paid is is not a foreign concept I'm sure to many of you but there's so much that you can do to combat that most firms don't have a solid collections process in place they kind of just call people when it's needed reach out to them when they have to and sometimes it works sometimes it does not depending on your clients so we do like to give some tips when it comes to collections many of them as you see on this list are proactive and then there are some that are reactive most law firms are only thinking about reactive meaning once that bill is past due then you're thinking okay we need to reach out to them but there's so much more that can be done before that even happens so when I talk about proactive a few points here I touched upon already like timely billing I mentioned routine billing getting those invoices out on time ideally if you're doing monthly billing they should be out within the first week of the month if you're taking longer than that you need to think of how you can cut back on that billing and review cycle so if you get that out the first of the month you will of course likely get paid quicker because your client will receive that bill that much sooner that also takes into account delivery so again if you're trying sharing through a client portal or emailing as opposed to or maybe in addition to mailing they will get that invoice that much quicker so they can get it within that first week of the month maybe the first few days of the month depending how efficient your process is and that again gives them more time to get that payment out uncluttered bills you want to make sure that your bills are easy to understand you know the types of questions your clients have especially if you've been in the business for a long time so create your bills so that they're informative enough to answer those questions for them but not 20 pages long that they'll get overwhelmed and confused and have even more questions to ask so it's a delicate balance but taking a lot of time to craft a great bill will save on the time that is spent working with the client and answering those questions you want to track your unbilled amounts so and that's your whips balance so if I am billing over time or I should say entering items over time maybe that balance is getting you know 2,000 3,000 4,000 and I need to build a client and I'm thinking oh you know what if I knew that I would have billed them sooner because the lower the balance is the more likely they are to pay you so you may discover by looking at unbuilt balances that some people may be should be billed sooner than others maybe when it's about half the amount that you think you're going to be at that may their likelihood of paying so again just being aware of those dollar amounts and seeing if billing them sooner or later will make a difference you want to keep an eye on those retainer balances many of you hold retainers likely in the trust oil to account you want to keep an eye on when those are getting low because if my unbuilt balance is at 3.3 thousand dollars and my retainer balance is at a thousand that's already going to be an issue you know by looking at those numbers that I'm gonna have a two thousand dollar balance on this invoice and they're gonna have to then pay me at that point and I'll be chasing them for that as opposed to if I see my unbuild as three thousand and I see my retainer as a thousand I can do a retainer replenishment request prior to billing them so that I can get that retainer up to say five thousand and know that that bill will be covered when the time comes so it's proactively planning that out to reduce the amount of chasing that you'll have to do once that bill is out to your client reactive is once you get it out to your client money is owed what to do about it just like I showed you with batch emailing and batch generation of invoices many tools also have collection functions we have an invoice reminder tool where it will let you know everybody who's past due and you can send out a mass email to contact those people that they need to provide payment the point is I can do all of that in probably less than 30 seconds so it's a huge time saver the easier your collection process is the more likely people are going to do it in your staff and you want to make it routine if you bill monthly you should be doing your collections monthly for the months prior and the fifth item we're gonna talk about is leveraging billing metrics so this is about knowing what is working what's not working so that you can decide where things need to be changed so a few metrics or points that I've mentioned here you may be measuring now or you may be completely unaware of the first is is non-billable and billable time proportional you should be able to see on all of your cases how much is going towards that non-billable admit strain of work and how much is going towards billable it needs to make sense if you're spending way too much administrative time on particular cases then maybe efficiency as a problem is there a way to cut that back because you're not getting paid for that work and billable time is that way too low should you be billing for more activities than you are right now the comparison of AR whips and retainer balances this is what I mentioned in the slide prior being aware of what is owed on a file what is due to be billed and what they have in retainer on a regular basis to say maybe I need to seek replenishment or maybe I need to do a collector reminder for this person or maybe I need to build them sooner rather than later different decisions can be made to ensure that that money comes in sooner rather than later productivity on fixed fee cases if you do any fixed fee work I know many law firms do not track their time I suggest doing that even if you just do it for a few of your matters reason being well one for many of you it may be required like if you get a fee dispute or an issue in court and they ask for proof of the work that you did on that file you need to show that proof so that's one reason but another one is for productivity so if you're charging a $5,000 fixed fee for a particular case how much time you putting into that case you may be putting in seven or eight thousand dollars worth of time but only charging five thousand dollars to your client so either you need to be a little bit more efficient with your time because with fixed fee efficiency is really important because you're getting paid the same amount regardless so either efficiency is a problem there or you're not charging enough and then you may decide you know what my fee does not match the work putting into it I can adjust that but you're only gonna know if you're tracking what that productivity is billing in collection by party it's always important to see which timekeepers which matter owners which originators are bringing in or not bringing in but tallying up the most activity billable activity also what is being collected you can have hundreds of matters hundreds of clients but nobody's paying you so that's not helping your profits at all that's just wasted time a lot of billable time that you're not getting paid to do so you want to make sure not just for the firm what's being billed and of that what's collected but for each person because if you have a rockstar in the firm if you have a particular time keeper or a matter owner where they're billing billing billing and they're doing a great job at it and they happen to be collecting as well you may want to have bonuses or other things associated to that to encourage that behavior same thing with originators if you have outside especially outside counsel that's referring business to you because maybe they're in a different practice area and they end up you know you have originator a an originator B and person a is referring you really really profitable matters people that pay people that generate a lot of work an originator B is not you know he's he's passing you people that don't pay for their bills or don't really need a lot of help that's important because you may want to work with more with one person over the other it's a lead generation tactics for law firms and then you have utilization versus realization utilization is how much time you're spending versus how much of that is being billed I know many of you will you know write off time you may say I will do no charge for that which is okay within reason so you need to be aware of how much physical time is being spent and of that what's being billed and realization is how much of that's actually getting paid so let's say I worked for five hours i billed for eight but i'm only collecting enough to cover three hours that shows you right there that there may be a flaw in the system and how can you realize as much payment as possible on the time that you're spending you don't want to be working for free of course you do courtesy discounts and waves when necessary but in general you don't want to be working for your clients for free last piece is we talked about a bunch of Technology mainly around billing do you keep in mind though that your billing and your accounting are very very closely related a couple examples is those client costs I mentioned you need to record your credit card or your check in your accounting software but you need to Bill it to your client to make sure you get reimbursed and another example is when your invoices get paid you need to record it in your billing software to show that the invoice is paid but the income has to be recording your accounting software so whatever tools that you're using whether they're together whether they're separate you want to make sure that they're very very streamlined and that that process is as tight as possible to make sure that there's 100% accuracy so that your reports your billing and are accurate but also your clients are happy okay that wraps up our topic today of course hosting this is Cosmo Alexa we have a fully legal specific practice management software which does include billing along with your business accounting trust accounting and daily practice management needs if you'd like to learn more please feel free to reach out to us Thank You Erika we also do have a great giveaway for today's attendees avoiding compliance issues when getting paid that is available now in the handouts section would go to webinar panel that's also available on our online legal billing Resource Center at cosmics common cosmic CA so well thank you everyone for attending today's cosmos webinar series presentation we hope that is educational for you and your law practice