Back To Basics With Billing
With GDP expected to fall by 2.5% and the very real risk of deflation, solicitor’s practices, like many other business are feeling the bite of the recession. People are reining in their expenditure and discretionary expenditure is more likely to be put off.
In such an environment it is important that private client solicitors ensure they maximise the billing opportunities they have, by reviewing their billing practices as follows:
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- Review work in progress honestly and ensure that time that will not get billed is written off. Solicitors, like many professionals, sometimes keep work in progress on the tab in the hope, rather than the expectation, that they may be able to bill it later. Clearing out deadwood time will enable you to assess more accurately where you are and what you are able to actually bill.
- Look closely at the remaining work in progress and identify what can be billed now. Unlike your US counterparts, UK solicitors do not have a reputation for rapid billing (and also have a reputation for not chasing payment quickly). Reviews that we have undertaken on behalf of solicitors generally reveal a surprising level of bills that could be raised.
- Review billing practices. Many solicitors still wait until the end of the month or quarter before going through their work in progress for billing purposes. This may unnecessarily delay the billing process.
- Review the terms of trade offered to clients. In many industries clients are billed in agreed stages as the matter proceeds. Whilst this may not be practical for small matters, embracing such a practice can lead to a transforming impact on cash flow. Indeed clients may also prefer to be billed this way – our, albeit subjective experience indicates that a majority of private clients would like to know where they stand on fees and do not like long gaps between bills.
- Consider making the billing process simpler. For example in some cases fixed fees could be established, which avoids the setting out in detail of every last minute spent on the matter on the fee note. Such a process will also increase the certainty of cost in the client’s eyes, which may make them more willing to instruct in difficult economic times.
- For “month end” bills it is important that they are raised and issued so that they can be received before the month end. If they slip over into the following month then in turn they are likely to be settled later. By simply raising an invoice a week earlier cash flow can be considerably improved.
Typically the barrier to implementing the above is an unwillingness to change long-established and comfortable processes. However, the current marketplace is not a forgiving one and will punish those who do not maximise their billing and ensure that it occurs as soon as possible.
Finally it can often help to have fee earners review each others’ work in progress rather than just review their own. This will help challenge why fees are not being raised. Also the very public disclosure of work in progress and billing levels within a firm can be used as an incentive to bill more quickly – although care may need to be taken to properly deflect the resentment this might otherwise cause.
It is time to close this article now – back to the billing!
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