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Sample attorney billing descriptions for Security

hello everyone and thank you for joining us for today's presentation as part of the industry insight webinar series topic this time it's better billing for lawyers seeking today will be Joshua Ledet Joshua is an attorney admitted to the New York Bar he studied law at st. Louis University School of Law obtaining a juris doctorate a certificate in international and comparative law during this time Joshua clerked for the Missouri Attorney General helping prosecute discrimination claims on behalf of Missouri citizens he also studied European Union law at the University of Georgia School of Law's Brussels legal seminar I'm working for is publishing departments in both the United States and Canada he helped legal practitioners improve their services Joshua currently serves as lawyer in residence for Cleo providing legal scholarship and research skills to leading cloud-based practice management platform haddock ordered in Vancouver Canada he's been a guest lecturer for movements like legal hacking and legal technology at schools like MIT Suffolk law and Vanderbilt he's also spoken before organizations like reinvent law and the ABA law practice futures initiative presentation today will be followed by a Q&A please enter your questions into the question box on the webinar panel on the right side of your screen all questions will be addressed at the end of the presentation we're recording this webinar and we will be sending a video and a follow-up email in a few days we'll also post a video on our blog over at WWE today org thank you all for joining us will now begin the webinar thanks Austin so welcome everybody to spelling Billy that is compelling for lawyers I'm Joshua Lennon as often mentioned I'm an attorney admitted into New York and I'm the lawyer in residence at Cleo and that's a scholar position that enables me to research things like billing for law firms what works and what doesn't and I'm very fortunate to have access to an incredible data set at Cleo that's going to come into play in today's presentation so what's our agenda there's a lot to cover we're gonna take a look at billing lows and the problems that law firms are having we're gonna talk about the fact that you have a huge volume of billing data and that there are some great processes that we can start to extrapolate from that data and while this still goes all the way down to best billing practices we'll have a few walk away conclusions for you and then we'll take questions it's a lot to cover so let's dive right in so billing woes we know from a 2014 survey by the law practice advisor that law firms are having a lot of problems when it comes to collecting on the bills of their own seventy-three percent of small law firms surveyed say the experience pass new client accounts firms with past due bills tend to affect 10 to almost 40% of their client accounts and nearly half say that collecting on invoices 90 days past due is unlikely or very unlikely they're just gone that's money out the door and this was a big number that jumped out to me over 70% of lawyers offered discounts prior to invoicing now this is really interesting that means that before your client even sees the bill you're writing it down you're just assuming they're going to say no to the amounts and just wiping away the work that you have done such that not only can they never say no to it they don't even know that it exists you are just handing them free money now why are lockers doing this they're doing this because for most small law firms the timing you spend working does not equal money so we know that most small law firms reported spending about eight hours per month on billing the average number of hours worked in a day were around nine hours and the average hours billed were around seven hours I'm going to touch on that a little bit but those numbers are wildly inflated and about 40% of the time the small law firm is working they're not actually billing time let's take a look at that in that chart and that's this chart right here if you are in a small law firm of one to two lawyers almost half of your time is spent on work that is not getting you paid now it doesn't mean it's unimportant work it could be business development it could be the licensing it could be office maintenance to be perfectly honest all things that need to be done for a lawyer and for a business but it's taking you away from the pain work the things that will get you paid that day and so if a lawyer is estimating they're working nine a day and they claim that 40% of that time is unbuilt that is not billing seven hours a day it's just not going to happen now what's interesting is in the same survey as we add lawyers and presumably add staff we're seeing that a lawyer's realization rate or utilization rate I'm sorry actually goes up so the more you're able to focus on being a lawyer and not being an office manager the more chances you have to make revenue and that plateau is right about here at 11 to 20 so there's something that happens right here where a lawyer has a consistent volume of work fewer distractions when it comes to that work and they're able to just knuckle down and be a lawyer and they start losing that once you get to 20 plus and I'm assuming that's because of rain making and the focused on rain making that happens to a part of these law firms but as you can see if you're on the left hand of this chart you're working very very hard but you're not necessarily getting paid for that work and what I think more troubling is that a lot of these law firms don't even really know the 60/40 split so they've been asked do you have a billion process and while we have yes documented in this bright yellow here at 43% we have a yes undocumented and then no and I'm gonna say undocumented is just as good as a no if you do not have a clear checklist of a billing process and I'll show you an example of things that should be part of your billing process it's not written down if it's not talked to all of your timekeepers if it's not a cheat sheet that they can refer to on a daily basis you don't have a billing process and you're setting your firm up for more billing lows and then lastly we have the survey asked does your firm analyze client billing trends can you see for example that certain practice areas are more profitable for you as a law firm do you see that you're actually spending more time per client than you are in a Jif practice area or do you have a client that's taking all of your time but then also refusing to pay your bills and actually arguing down for discounts even though they're the ones taking your time and what's interesting is most law firms said no 72% they do not have a way to analyze client billing trends so you're leaving yourself in the dark not only do you have undocumented processes there eating a lot of your time at least eight hours a month for example on billing and you can't figure out where all this time is just going out the door so we need to find a way to start tracking that data and that's why we should talk about tapping into the billing data within your law firm for example do you know what the lockup is in your law firm and lockup is unbuild work-in-progress plus debtor days and we know for most small law firms that the average lockup is between 90 to 120 days so if you build one hour today you are not likely to see that paid until about a hundred and twenty days from now so that means that it sits around until the end of the month you issue your bill the client doesn't pay your bill you have to chase down the clients to pay your bill eventually they pay your bill that's what lock-up is and that's a huge amount of productivity that's just gone out the door when you deal with something like that so in the UK when they did a study on lockup they found that one-third of UK law firms how to lock up in excess of a hundred and fifty days and so that's one third of the people attending today you are literally three to four months away from getting paid for the hour that your billing today and the rest of you you're just under three months away from getting paid so this is some scary data and if you're having trouble with cash flow in your law firm this is actually one of the reasons why is unfortunately your clients are holding on to the money that they owe you instead of paying you but you're also actually making it difficult for them to pay you because it's working progress you haven't sent them the bill they don't know the status of the case and the value then you're generating to them so how do we start tapping into this data to avoid things like lockup well let's take a look at what lawyers track these are all things that you currently track as a part of your law firm and it ends up being a huge volume of data you can start to really pull a lot of information from and the way you generate this data is the same things that you should be doing anyway it's a part of your daily practice you should be sending your bills you should be tracking which bills are paid you should know what payment methods are being used to pay them you should be tracking time concurrent to the work that you're doing rather than going back at the end of the week you should be having custom fields that actually highlight different values from the client to be able to track expenses you should be applying consistency in your data tracking activities it's not good to do it on Monday and not follow up on Tuesday or Wednesday it's got to be a daily event this is a discipline that we're promoting right here but once you do that you can actually determine a wide variety of information about your law firm first of all the financial health of your firm is something right there most law firms are not able to run three simple accounting reports about their law firm so your profit loss statement your cash flow account statement and your snapshot so how much funds do you have in the bank right now and the reason you can't run that is because you're not necessarily keeping all of your business metrics as well as your working progress in one place then you're also not able to certainly take a look at profitability of clients over time so Clio recently ran a survey and we asked lawyers to estimate the lifetime value of a client and how much money can you expect from a good paying client and the numbers were all over the map three thousand lawyers responded and there wasn't a single kind of thread and that's because most people aren't actually able to take a look at how profitable our clients over time you aren't able to know what the average earning per case by practice area is so if you are a family law lawyer you may know kind of off the top of your head that you kind of sort of earn about $5,000 per divorce but do you know the exact amount for a divorce with no property and dispute no children versus discourse with property dispute versus a divorce with children you'd be able to break this and down and then also break that down even further by effort so if I'm doing a non contested divorce with no property issues that effort that I have to put in that should be significantly less than if I have to put into one with property in dispute can I do a breakdown of that and if I'm growing my law firm either by caseload or by headcount how can I measure the productivity of my associates and the projected workload of case types that I need to both remain profitable and remain busy so how do you start doing that well you need to start turning to tools that have built-in reporting and most practice management solutions will have that here's a highlight of a selection of practice management reports that are available in Clio and this one for example takes a look at your billing history so my ability to take a look at certain types of aspects of my firm for example my accounts receivable do I have money owed to me that people aren't paying and if people owe me money that's where I should be focusing my time that day I should be poking my time on billing more hours to them I should be focusing my time on funding them up and saying hey you guys owe me $10,000 when should I expect to receive a payment I can take a look at billion history so I can track my billion activity over time I can take a look at my invoice payment reports write a general ledger of payments to see my cash flow and how flush I am right now versus whether or not I need to make sure I'm bringing in more to support my business revenue I can also dive down deeper so the type of activities that you need to know for example can i really take a look at work in progress and what works haven't i bill and how does that impact my financial decisions for this month and the next I can take a look at client activities so I know clients who are taking all of my time versus those clients that are our joy to work with these reports and more all exist within your practice management tools but we know that lawyers aren't running them on a frequent basis like a monthly basis in doing so means that you don't have insight into the billing practices that you should have at your fingertips so what's really interesting is because Clio is so widely used or the most widely used practice management system in the world that we've actually started developing insights into all the different ways that lawyers work so we have over 4.5 million matters currently stored with Clio and 40,000 law firms participating in kind of a big data study where we're able to see things that work and don't work for lawyers so for example if we take a look at the billing data from q1 a 2015 we know that lawyers generated approximately a hundred and fifteen thousand bills in the first three months of 2015 so what was interesting to me is that over a third of those bills were marked paid on the same day so we started diving into how are they getting paid on the same day that they generate their invoice and there were three things that really popped up in terms of how the data was showing as lawyers are working for example we saw that a group of those lawyers were paying from trust fee deposits so they had accepted fees to be held in trust an advance fee deposit and then when they generated in your voice they were able to pay that right away from the clients trust funds it was a part of their workflow we saw another segment of those lawyers were actually doing flat fees and so they were getting paid upfront and depositing those fees directly into their operating account if their jurisdiction allows that other times they were doing depositing them as advanced fee deposits but because they were getting paid upfront they were marking the invoices paid and the last bit and this one really stood out to me was there was a segment that also had credit card payments enabled in their account and they would email out a bill and see the bill paid directly from the client that same day and so the three processes show us that depending on how your firm is set up and the workflows that work for you there are lots of ways to make sure that you do not have a lock-up of 90 to 120 days but instead as soon as you issue your bill you can be paid those people who did not have those workflows actually took 22 days to close on average so there's all the work that they did and then it took them 22 days to mark a bill is paid now whether or not it was marked paid is full we don't have access to that type of data we just know that the bills were marked as closed so what can we learn from this we can learn that lawyers won or generating a vast volume of data on what works and doesn't work within their law firms but - there's really strong analysis that can be applied that impacts your day to day operations so who you started taking these data on data insights and publishing them and what we call our legal trends report and our last one was issued just about this time in 2016 and there's a new one coming out in about a month in 2017 but one of the insights that applies to billing is people who use services like credit card processing tended to have a 35% reduction in average payment time compared to checks so not only were there that segment that got paid on the same day but overall if you're accepting a credit card you get paid on the same day so please just started enabling this we built two features trust request and Cleo payments that are powered by law pay and enable lawyers to request either funds be deposited directly into trust account via credit card payment or invoices be paid directly via a credit card payment and that's what led to the 35% reduction in payment times so all of this insight and more is available for you guys to take a look at in the legal trans report and all we'll be providing a link to where you can download a copy after today's webinar so yeah so where are we getting into issues we're starting to see that billing problems happen months before you issue a bill your work-in-progress are we problem start to occur you're generating a lot of data but you're not necessarily running the reports on it even though you have access to those reports and that you can get paid quickly but you need a process and it's that lack of documented process that leads to further delays so what are some billing processes that you can use we know the traditional ones you build hourly you generate an invoice you mail the bill your client has sticker shock in their mailbox about a week later and then you just wait and hope that they pay you and what we're seeing instead is that there are modern billing options being generated all the time so there are a variety of both traditional variants and performance-based or alternative fee arrangements that you can be using within your law firm and what's interesting is that a lot of these alternative fee arrangements are starting to be preferred by clients for example we know that general counsel are looking for flat fees even when it comes to litigation and that we're seeing a rise of unbundled legal service adoption by law firms and their clients across a wide variety of different sized law firms and what's interesting is these alternative fee arrangements are preferred not because they're cheaper but because they're transparent so the allman while 2014 chief legal officer survey broke down why lawyers were looking for firms with alternative fee arrangements and it was transparency that leads the pack not that they were lowest price but that they were transparent that there was a certainty involved and when Alton Wilde dug further into this data what they found was it wasn't necessarily the alternative fee but the ability to collaborate on strategy and its impact on pricing that really led to lawyers choosing this transparent pricing so big law has been studying these reports for a long time and these are some of those some of the changes that they've made to their prophecies first they're starting with regular time input it's no longer acceptable l'Opera to wait until the end of the month and then turn in a napkin with a bunch of numbers scribbled on it or to go through your email and calendar and hope you remember all the work that you've done said you need to import your time on a daily basis you also at big law are starting to provide their clients with digital bills and digital payment options they've recognized the speed that comes from that and the Preferences from their clients to handle things in a more modern online format they've also found that frequent billing actually helps so rather than issuing bills wants quarter at the end of an engagement that monthly bills one are more likely to get paid but to give transparency and a chance for strategy conversations that are desired by clients seeking that transparent billing pricing second-to-last is that are using staff for accounting collections it's not worth a lawyer's time to do these things it is where the staff members time and the last bit and this one really jumped out at me was there discouraging write-offs stop writing down your data and the reason they said that is because we have found that discounts actually reward bad clients so if you have a late bill and you start operating discounts for the client to pay that bill all you've done is encouraged them to drag this out longer in the hope that you've generated a greater discount and in fact we see that firms that are discounting their bills because they are late tend to be discounting at a greater and greater percentage all the way so a larger percentage of bills that are discounted at thirty to thirty nine percent are discounted than a percentage at ten percent you're getting desperate and they're taking advantage of you like that and that's just a bad client move why are you rewarding with that the one time I think you should be discounting your bills is when you're encouraging clients to pay early so here for example is a discount feature that we have in Clio that provides an early payment discount you can set the discount percentage of whatever you want it could be like two could be 50% it depends on your billion best practices but for example this bill is due in 30 days but if the client pays it within 15 days I might give them a 15% discount and that's automatically calculated as a part of the payment process within Clio doing that rewards good clients clients that are paying your bills frequently and timely but if you're doing it for late clients all you're doing is you're letting money walk out the door so process is important discounting is not stop discounting your time we're rounding the last bit let's take a look at billing best practices so one walk your client through their first bill you should never just give them a bill and expect them to understand what it says clients don't necessarily speak the same language as you and they need to know what's on a bill so that they understand them value that you're bringing so while you may deliver the bill electronically I highly encourage that you should also schedule some time or do some outreach with them to offer to walk them through their first bill once you do that you'll find that any subsequent bills they're much more likely to pay them just as is billing best practice - don't wait to send a bill so many lawyers will in an engagement and then wait till the end of the month to send a bill and as we know from Jeff Wenberg how to start and build a law practice there's what's called the client curve of gratitude and you really want to hit them like as soon as possible at the top here right so if you allow more time to pass they are less likely to pay your bill you want to hit them right when they say that's a fantastic lawyer no other lawyer could have done this I owe them so timing is everything so if you're doing a matter and it closes on the fifth day of the month don't wait till the 30th day of the month to send a bill immediately log on to your practice management solution and send that send that bill you should also send detailed bills and we worked with a law firm out of Toronto called alluvion and they have some best practices that they've documented things that they require their associates to put in a bill or in their time entries that show up on bills in order to show both respect and clarity for their clients so for example if it's a phone call or an email it's never a follow up which unfortunately just looks like a big fu to the client but instead it's regarding and then they type out what it's regarding they don't call the client the clients in a very impersonal format they call them by their name and these little details while you think are unnecessary actually personalize the bill and give a higher level of understanding and interpretation and agreement by the client and make them more likely to pay the bill now how do they do this they take advantage of a feature within their practice management system called text snippets that enables them to create these short little anagrams now afternoons I'm sorry acronyms that automatically expand out into a full phrase when they type them so in their timer they type in a MTC and what shows up on the notes for that time entry email to client regarding and then they type what it was regarding and it's this attention to detail but also a labor-saving device that makes it very easy for them to have consistent intelligent interpretable bills by their clients best building best practice for make it easy to get paid that's definitely need providing your clients with options to pay you either upfront at the beginning of the opportunity with an advance fee deposit or a flat fee depending on your jurisdiction and online payments I can't stress that enough if you don't have that you're leaving money on the table feeling best practice 5 get paid first as we saw one third of bills and Cleo can get paid on the third on the same day they're issued and that if you are you're communicating to your client on the need for that and using a feature like a trust request to document the amount of money that's requested to be held in trust that can then be transferred on your behalf billing best practice six don't skip trust accounting and regulatory duties just because you're using these tools doesn't mean that you don't have to document them fully so make sure you're choosing a practice management solution that has integrated trust accounting that has integrated credit card processing that handles it in an ethical fashion for you and doing best practice seven don't let unpaid bills sit so here are a couple recommendations on how to adjust for that especially if you have some bills that are out there you can use for example fund advance systems like fund a box that enables you to take outstanding invoices and take an advanced against those from a service so for example we have outstanding invoice of $5,000 I've got a client who's going to pay me in 30 days but I may be having a cashflow crunch now for things like payroll or rent Clutton box will actually cover that amount and then work with you on a payment plan when that bill come to do by your client such that you've covered your cash flow so it's very easy and available to you and that's a tool that integrates with Clio for example another tool that integrates with you that actually enhances billing is invoice Sherpa and I really like invoice Sherpa because as we learned from big law firm billing processes you have accountant billing staff handle the work a lawyer should be handling account and billing and so what they do is they take the bills from Clio and they'll run things like custom scheduling and reminders they will send out reminders to the clients that hey your bill is due in five days you should pay that and they can also give invoice reminders letting a client know if they have a past due right and reminding them and what this does is this automates the collection process such that you don't have to do it and you can focus instead on your paying clients and the work that they're providing for you what's really interesting is in boys sure but can also set up recurring payments and this is a picture we're looking to building Cleo this is a great way to handle it outside of that so if you have a client that have a subscription model with you or maybe is doing installment payments over time you can use a tool like invoice sure but to automate that process for you such that every month you're not having to generate a bill and send it out and hopefully it gets paid but instead have this taken care of for you so in conclusion while many law firms have billing trouble there are a couple things that you can do to just get rid of them better billing starts before you send the bill have a process now to generate an intelligent transparent bill send that bill consistently and frequently and use alternative fee arrangements or automated tools to avoid collections