Billing Issues? Tips to Increase your Law Firm Billing Efficiency Using Case Management

12 Nov 2021
Small Law Firm

Billing profitably is critical for every law firm – but in the busyness of day-to-day cases, not all firms are optimising their billing capabilities.

Churning out 2,000+ billable hours a year is no longer enough to make a lawyer successful – especially if they are working outside of big law. Alternative fee arrangements such as flat fees and contingencies fees are becoming more popular.

Even for cases using billable hours, recent circumstances have caused clients worldwide to become more cost conscious, and less willing to accept large volumes of billable hours for what they see as simple tasks.

Equally, billing profitability is always going to be very important for lawyers! What practical steps could you take to help your law firm not only become more efficient, but to make sure that efficiency translates into more effective billing?

We’ve detailed some steps that you should be able to implement within a relatively short period of time, and should provide tangible benefits to your firm. Not every tip will necessarily be relevant to your firm – we’ll let you choose the ones that are!

1) Use your case management system as your only system.

Many lawyers decide to use a case management system, but also want to hold onto their paper files.

Here’s some quick maths:

If you bill your time at 250/ hour, and go to the filing cabinet 5x day for 3 minutes each.

This = 62.50/ per day lost time.

62.50 x 240 work days in a year = 15,000/ year in lost billable time per employee.

This assumes that you’re spending a maximum amount of 15 minutes a day at the filing cabinet. Now think of the time spent looking through files for a particular document, searching for files that have been misplaced and digging through the archives trying to find old cases that you need information from. This will soon add up to much more than 15,000 in  lost revenue per employee every year.

Filing administration time does not add value to your business – unlike other unbillable time such as business development, or company management.

Ditch the paper and find the information you need in seconds rather than minutes. Then spend that extra time doing more important things.

2) Make it company policy to record all time in real time.

For a start, sitting on a Friday trying to remember what you did last Tuesday is going to waste time as you try and go over already hazy memories. Trying to remember what you did Tuesday two weeks ago is even worse.

The second issue is accuracy. Whilst associates at large law firms may take the opportunity to pad out their memories, lawyers with cost conscious clients are likely to do the opposite. If you decide to work on a project and only bill some of the time, that is your decision (on average, solo practitioners bill 81% of time on a project). However, that should be an informed decision that you make, rather than one based on guesswork and fear of a bill being challenged.

When you record time in real-time (and we recommend you record both billable and unbillable time), then you gain not only time, but the confidence to use this data as a basis of decision-making about billing, or time management if you are billing on a flat fee or contingency basis.

3) Use a document management system that auto-populates documents for you.

Whichever field of law you are in, it’s a pretty safe bet that many of your documents will be repetitive. Instead of spending either your or associates’ time changing ‘John Brown’ to ‘Mary Smith’ over and over, use a document management system that allows you to set up templates, and then auto-populate them with details from your CRM system.

You can then spend your time working on significant clauses, and ensure that the provisions work for your clients, rather than ensuring that the basic details are correct.

This might take some time at the front end to set up your templates, but once they are in place you will reap the benefits.

4) Use a workflow management system to assign simple tasks.

Once your firm grows beyond a solo practitioner, you need to start delegating.

Whilst you may need meetings to hand over more complex work, many meetings that are called to delegate repetitive work are unnecessary. Instead, just assign the relevant member of staff a task to complete the work, a deadline and any specific instructions. This will take seconds, minutes at most. If you save four team members from a thirty minute meeting that’s two hours saved – two hours that could be spent on billable or more valuable work. Once you’ve saved yourself ten meetings, those 20 hours will really add up!

5) Bill while the iron is hot.

In an ideal world, all clients will be 100% reliable and follow your agreed payment terms. However, this isn’t always going to happen, especially if they are SMEs or individuals.

If you wait until several weeks or even months after the event, their goodwill from resolving their case has faded, and you will go to the bottom of the pile with everybody else. If you’re charging billable hours, they may have forgotten reasons why you had to charge additional hours, or times when you could have charged and didn’t (and therefore expect leeway). Client internal approvals will become slower, as remembering the facts becomes a job that takes more time. They could even have gone into financial struggles or bankruptcy in that time. All of this results in much more time spent chasing invoices, or even not being paid at all.

If you have all of the billing information available immediately in your case management system, you don’t have to delay the creation of an invoice. You can invoice quickly and take advantage of client attention. You don’t just save time in creating bills with a case management system, you can also spend less time chasing collection and reduce the amount of fees that have to be written off.

6) Have clear definitions of what counts as billable.

For both hourly billing and billing of expenses, it can be confusing exactly what counts as billable and what doesn’t – especially as different clients or different areas of law might have slightly different arrangements in place. This might not initially seem too significant – but if you are losing just twenty minutes of billable time per working day across your whole business, that is 87 hours per year, or 21,750 in lost revenue (if you are billing at 250 an hour). Multiply that by several employees, and it could really add up.

Having clear guidelines can ensure that hours and expenses are billed correctly, and that your firm is being properly compensated for the work you are doing.

7) Incentivise your team to find ways of creating greater efficiencies and adding value.

There is a clear incentive for lawyers who bill via flat fee or contingency fee to become more efficient. In an increasingly competitive environment, lawyers who bill hourly also need to become more efficient in order to win work and keep clients happy.

Your employees are the people who have an in-depth knowledge of how your business truly works, and where processes and tasks are cumbersome, duplicating work or outdated.

Your management team need to show a genuine commitment to innovation and ensure that you have a process to promptly evaluate and implement any suggestions. You also need to ensure that employees are genuinely rewarded – not necessarily in financial terms, but in something meaningful. If you do this, then employees will work with you to improve your business and enable you to run it more effectively.

Start Improving Your Law Firm Today

If you have any questions about implementing any of these suggestions, please do get in touch – our senior team have worked with hundreds of law firms, and would be more than happy to help!

If you would like to learn more about Thread Legal, the case management system that utilises Office 365 to provide significant efficiencies for lawyers, just click here to see some of our key features.

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