Legal Billing Increments and Client Invoice Solutions

CosmoLex Team

Legal Billing and Client Invoice
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When you run a law firm, positive client relations are key to building the next round of leads. There are many factors that influence how a client feels about working with your firm, but one of the most critical factors in that mix is billing.

In particular, clients don’t want to feel like they’re being asked to pay for more work than actually happened. And traditional legal billing approaches can raise questions for them.

But lawyers are famously resistant to change. Still, avoiding updating billing practices may come at a greater and greater cost in today’s digital era. Why? Because of client satisfaction, of course.

Traditional billing increments

Lawyers have traditionally used standard increments for billing because it’s more convenient than tracking and adding up every minute.

Typically, law firms will use one of the following increments:

  • 1/10th of an hour or 6 minutes
  • 1/6th of an hour or 10 minutes
  • 1/4th of an hour or 15 minutes

In the days of paper and pen billing notes, these increments made sense. They kept things from getting too messy and saved time when it came to adding up and sending out invoices. In turn, that saved time allowed more hours for billable work. The system worked well for the firm in both the short term and the long term.

And while clients may have occasionally complained about the sum on a shoddily-written invoice, they weren’t able to use the Internet to look up fifty offers for hyper-cheap legal work that promised to deliver the same result.

It wasn’t perfect, but it worked

Incremental problems add up

Yet it doesn’t take long for anyone—including a client—to realize that this approach to billing involves a fair bit of rounding, and that ushers in problems for the client, and by extension, the law firm.

Even historically, a law firm’s chosen billing increments could lead to trouble down the line, based on how the firm chose to bill.

For instance, if you’re not rounding up and you go just a tad past the six-minute mark, then you’re not charging for all the work you just did. Do that enough times and it starts to add up.

But if you do try to stick to six-minute intervals, you and your staff will quickly be distracted while you work because you’ll have to keep one eye on the clock. Or you find yourself racing to complete a document in less time than you actually need, all so that you don’t go over the time increment.

Rushed work doesn’t serve the client, or in the long run, the law firm. That’s why many people feel an impulse to round up.

Yet rounding up can obviously create unhappy clients, too. While some people might be able to forgive a two-minute rounding from four to six minutes, they’re probably not going to be as happy about ten minutes of rounding.

Invoices in quarter-hour intervals highlight the fact that some rounding has occurred. This creates dissatisfied clients who take up far more than those rounded minutes in complaining to you. Even worse, they might tell their neighbors or vent about it on the Internet.

Ultimately, that invoice isn’t going to lead to more business for you, and it might even lead to less if a particularly annoyed client convinces others to go elsewhere.[1]

Solution 1: Use a time tracker

Incremental billing became an industry standard because it was easier to work in consistent units when using a pen, paper, and calculator, and this approach made sense with more basic forms of digital time trackers.

But today, it’s possible to track time as you go with the help of your practice management system. Moreover, your management program should be able to track the specific client or matter you’re doing work for—leaving you with accurate time recordings, specific to a client.

Using a time tracker that’s integrated into your billing system lets you invoice according to the precise amount of time you worked. This approach takes up less of your time than traditional methods because when you go to bill for a matter, the various tasks are already there.

Automated time trackers also help reduce the chance of forgetting to record a task so that you capture more billable hours. If you use a cloud-based program that can sync with your mobile phone, you can also track time as you go, even if you’re not at your desk 

Solution 2: Implement descriptive billing

The second solution to client concerns with the bill is to improve the invoices you send out by striving for descriptive charges, every time.[2]

It’s much harder to convince a client that there’s a real reason for the charges they’re asking about than it is to have them simply read the invoice and think, “Sounds fair.”

Descriptive invoices don’t need to be long. You’re not trying to overwhelm. And they don’t need to be as jargon-y as your utility bill. But instead of writing, “meeting,” write “online meeting with client about their civil matter.” Those seven extra words will make a difference and may even jog the client’s memory.

Drafting invoices takes time, so they’re not on the top of anyone’s list of favorite chores. But they are actually a great opportunity to communicate with clients. A well-written invoice is a chance to show your client all the work you’ve done for them.

And the task of drafting invoices doesn’t really need to be a heinous time-eater. You can use your practice management system to generate your monthly invoices in just a few clicks. This approach allows for consistency and timely billing—another ingredient in the client-satisfaction stew.

With integrated time tracking and billing, the system can add a seven-minute task and a twenty-two-minute task together for you—in less time than it used to take to add fifteen and fifteen.

Client service solutions

Ultimately, incremental billing made sense even a few years ago, but reasons for using it are quickly vanishing.

Automated time trackers make capturing billable work more efficient and far less time-consuming than in the past. They also allow for more accurate times cited on bills.

The result is a double win for law firms: your client satisfaction goes up and your billing process will take less time than before. Don’t forget to strive for descriptive invoices, and you’re well on your way to improved client relationships and a little more time for billable hours.


References

1. 8 Ways to Improve Your Law Firm’s Customer Service
2. How to Effectively Bill Time as a Lawyer

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