Legal Billing Services Overview
Legal billing services refer to the process of automating and centralizing the billing procedures within law firms and businesses. When lawyers incorporate legal billing services into their practice, they simplify their billing procedures and optimize their cash flow. Legal billing software ensures that invoices are generated and sent out on time, avoiding schedule disruptions, and ultimately streamlining accounting operations.
There are multiple billing methods that are commonly used in the legal industry. The most prevalent of these is hourly billing. This is essentially the same as charging by the hour for any other service and is the most transparent way to charge for your time and expertise. Flat fees are very rarely used in legal billing as cases are rarely straight-forward and expenses tend to arise through various interjections that aren’t always apparent. This method is essentially a flat rate for undertaking a certain type of task , rather than breaking it down into subcategories like hourly billing does.
Contingency fees are used for high-risk cases such as class actions or largescale litigation, often involving the use of third-party finances. It’s extremely difficult to get a contingency fee in a private action. It is more commonly used in large-scale litigation where there is a third-party funder involved with the understanding that the bill will be paid out of the proceeds of the settlement or award.
The Advantages of Professional Legal Billing Services
In addition to optimizing billing processes, legal billing services can also help firms save time and provide accurate invoices. The accumulation of time on a document can make it confusing for clients to trace the path of their bill. In the case of billable hours, clients may not be able to decipher which documented tasks were completed on which day and on which file. By that point, they may have forgotten what you did for them—and the value behind that work—so those costs can be hard to swallow.
For instance, if you have a 75-minute phone call with a client, that takes time to log. Then there are minutes, if not hours, of billing for each entry, including adding the date, task description, and file number for the call. Storing phone numbers, email addresses, and other contact information is also important. Most clients don’t want to be billed for those things, yet they’re all part of your work in supporting their case.
Professional billing services can save time by logging office visits, document preparation, transactions, and even meals with other professionals who are part of a case. When you’re ready to bill, detailed records are available for review, and all you must do is pull together a finalized invoice.
Professional billing is automated and quick, working in conjunction with your timekeeping software. It also helps you manage time better. For example, when you work with a professional billing service, you no longer need to spend time reviewing and approving each facet of the process.
Billable hour disputes frequently arise over a client’s perception of value for services provided. Outsourcing your billing enables you to provide value in a quantifiable way. A well-organized record keeps track of client contact history by file, including phone numbers, email, and documentation. Often, clients rally around a bill they understand and that they can download.
Challenges with Legal Billing
Legal billing comes with its own set of challenges. The process of accurately representing the value of the services your firm has provided can be an obstacle to finalizing your invoices. Billable hours must be accounted for, but there are other factors that require as much attention. It’s not uncommon for an attorney to overlook a detail or two, even on a high-value case. With so many tasks and cases in flight at any given time, attorneys are often forced to sacrifice detail (at least with some of the invoices they send out). Even the most dedicated law firm is frequently unable to avoid all instances of billing errors. Sometimes, the challenges appear before legal billing even begins. For instance, a client may not be paying their bill promptly. This can lead to cash flow problems like bills arriving before the funds to pay them arrive. These challenges can be simplified and solved through the use of legal billing services. Regardless of the obstacle, top-notch legal billing services can help you stay on top of bills, ensure accuracy, and collect on time.
Essential Features of Legal Billing Services
When exploring billing service options, the following features are essential for law firms:
Integration with practice management software: For those using practice management software – such as LEAP – integration is a must. The fees for some legal billing services can be a deal-breaker if they are expecting a law firm to log their time in two different software products, and to reenter billing entries again for invoicing. This is an important point to consider when looking for a legal billing service.
Flexible invoicing options: Can you customize invoices from your billing service at the click of your mouse? If you want one or two invoices per month but you bill some of your clients every week , does your billing service have the flexibility to meet your needs? This is increasingly important as more law firms embrace client-centred services that require a flexible approach to invoicing.
Robust reporting capabilities: Comprehensive reporting tools will help you understand the profitability and losses associated with clients, types of matters and professionals, and to improve overall profitability. It also makes it easier to create custom bills which are so important to winning strong client relationships. You cannot know what your company is doing well, or what needs improvement, without reporting.
Advancements in Legal Billing Technology
The advent of technology has brought exciting new possibilities and solutions to solving some of the most common billing issues law firms have faced for decades. The introduction of automated time tracking has streamlined this conventionally burdensome task, allowing even attorneys with the busiest of schedules to easily track their time exactly as they complete tasks. E-billing has also resulted in an overall reduction of billing disputes. The vast majority of billing disputes are mainly due to law firm billing errors. However – with the convenience of electronic billing, billing errors are becoming less and less likely to occur. AI-driven analytics tools can monitor billing practices across the board, flagging anomalies to better catch mistakes before the bills are sent out. When it comes to billing, AI is a game changer that is increasing billing efficiency and accuracy.
Selecting a Legal Billing Service Provider
When choosing a legal billing service provider, firms should look for several key factors. First, experience is crucial. The provider should have a track record of successfully handling billing processes for law firms similar in size and focus to your own. An experienced provider will be familiar with common billing pitfalls and how to avoid them. A strong industry reputation is also important. Look for reviews and testimonials from current or recent clients of the provider to assess whether they have a history of positive relationships with their customers. It may also be helpful to seek referrals from other firms . Beyond customer service, the firm should also be inquiring about which reporting and analytics features the provider has. An ideal provider will be able to offer a custom fit for your firm’s needs. Any billing provider should be able to integrate with your current software systems, such as document management and accounting systems. Be sure that the provider you’re interested in can work with your existing tools. Investing in a new system can be costly and labor intensive, especially when that system doesn’t integrate well with other parts of your firm’s IT infrastructure.