Should my law firm outsource our legal billing?

CosmoLex Team

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Outsourcing Legal Billing

Billing is an essential task for law firms, but doing it can take up valuable time. Studies show lawyers can spend up to an hour a day processing client payments and preparing and sending invoices[1]. To maximize billable hours, it can make sense to outsource legal billing. However, for some firms it may make sense to hire someone to handle this task.

Outsourcing your legal billing can provide a number of benefits including:

  • Improved collection timelines
  • Better cash flow
  • Time saved/freed for billable activities

When to outsource legal billing

Whether or not to outsource your legal billing will largely come down to whether or not you have enough work to keep a part-time or full-time employee busy. If not, it can be cost-efficient to outsource your legal billing with an as-needed service.

Even if your legal billing doesn’t take up enough time to warrant hiring someone, you may be able to cross-train them. In that case, it would make sense to hire an individual to handle this task.

For firms that don’t have enough work to hire someone, that doesn’t mean lawyers or their paralegals need to spend valuable time doing it. There is an alternative: outsourcing.

Outsourcing your legal billing also provides the benefit of having an expert handle your billing, which can be worthwhile in itself. When someone in your office handles legal billing but it’s not their primary responsibility, it can mean a lack of best practices or effectiveness. Additionally, those who legal billing regularly can help catch critical accounting errors before they become a larger-scale issue.

How it works

It’s important to note that for outsourced legal billing to be effective, your firm needs to be accurately tracking time. Otherwise, it’s likely that you’ll be missing out on billable hours and being paid for them. On the other hand, you could also wind up overcharging a client.

It’s helpful to work with those who have experience working specifically with law firms. They’ll have a thorough understanding of Work in Progress (WIP), types of fee scales and be able to catch possible mistakes in recorded time, such as a deposition taking 48 hours instead of 4.

The person or company you outsource your legal billing too won’t necessarily have to come to your office to handle your billing. With the widespread use of cloud-based technology and billing systems, your outsourced legal billing choice can likely perform their services from anywhere in the world.

In deciding whether or not to use outsourced legal billing for your law firm, determine how much work you have related to billing, how much time is being spent on it currently and if the benefit of having it outsourced will help you recover time to instead spend on billable tasks.


References

1. Master the Hand-Off: How to Effectively Outsource and Automate Routine Law Firm Tasks