The legal industry is one of the few areas that bills by matter rather than by client. An auto mechanic doesn’t separate a customer’s account into billing for an oil change and billing for a brake alignment, and yet attorneys have to do exactly that. Setting up matter-based billing is hard with general billing software, but is a breeze when using the CosmoLex law office billing program.
What Is Matter-Based Billing?
Each case you handle for a client is a separate matter. An attorney might handle a client’s divorce and also help him rewrite his will to remove his soon-to-be-ex-spouse. Most service businesses would lump all charges together on one client account, but in a law practice you would separate them. John Smith’s Divorce and John Smith’s Will would be entered as separate matters linked to a single client.
Why Use Matter-Based Billing?
Some of the reasons attorneys bill by matter include:
- Different Billing Models – The will is a flat fee whereas the divorce is billed hourly, so it’s easier to treat them as separate billing entities.
- Security Retainers – In an hourly case like the divorce, the attorney is likely to require an advanced payment. This pool of money will be used to pay the client’s fees. However it would be a compliance violation to use the divorce advance to pay fees for the estate planning matter.
- Trust Administration – This is a broader example of the retainer issue. If there is a trust account associated with a matter, all monies must be kept separate from any other matter even if they involve the same client. Trust software for attorneys makes this possible by attaching trusts to specific matters.
What If I Don’t Want To?
Before deciding not to use this billing model, check your bar association’s rules as well as state and local regulations. In many jurisdictions, matter-based billing is required. In addition it’s traditional, and simply a good idea. Some attorneys shy away from matter-based billing because it seems like an unnecessary complication, but when you use specialized legal software then matter-based billing is no more difficult than traditional client-based billing.
Contact us to find out more about how CosmoLex streamlines your practice, simplifies your workload and increases your cash flow. Learn to leverage specialized, cloud-based technology to give your law firm a competitive edge over those attorneys still living in the past.
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