better billing for lawyers
TRANSCRIPT
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Better Billing for Law FirmsJoshua Lenon – Clio
Janelle Benefield - Lawpay
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Instructors
Joshua Lenon
• Attorney, admitted in New York• Lawyer in Residence at Clio
Janelle Benefield
• Product Development at LawPay
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1. Billing Woes (5 minutes)2. Tap into Billing Data (10 minutes)3. Bill Processes (10 minutes)4. Payment Methods (15 minutes)5. Best Billing Practices (10 minutes)6. Conclusions (5 minutes)7. Questions (5 minutes)
Agenda
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BILLING WOES
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Billing Woes
• Firms with past due bills affect 10- 39% of client accounts.
• 45.6% say collecting on invoices 90 days past due “unlikely” or “very unlikely.”
• 71.2% offer discounts prior to invoicing
Source:.“Law.Firm.Billing.Survey,”.Business.of.Law.Blog,.08/28/2014.
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43%
43%
14%
Yes,.undocumented
Yes,.undocumented
No
Source:.“Law.Firm.Billing.Survey,”.Business.of.Law.Blog,.08/28/2014.
Does Your Firm Have a Billing Process
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Source:.“Law.Firm.Billing.Survey,”.Business.of.Law.Blog,.08/28/2014.
Does Your Firm Analyze Client Billing Trends?
72%
18%
10%
No
Yes
Unsure
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TAPPING INTO BILLING DATA
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Lock-Up
Unbilled work in progress plus debtor days
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Lock-Up Data
- 1/3 UK law firms had lock-up in excess of 150 days
- Average number of lock-up days of 109 on average days
Source:.“Unlocking.lockNup.days,”.The.Law.Society.Gazette,.02/09/2012,.andNatWest.2015.Financial.Benchmarking.Report.–Law.Firms
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What Data Do Lawyers Track?
• Hours• Rates• Types of Cases• Lengths of Cases• Case Resolution Outcomes• Clients’ Legal Histories• Amounts Billed• Payments Received
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Ways to Generate Data
• Bills Sent
• Bills Paid
• Payment Methods
• Tracking Time
• Custom Fields
• Expenses
• Consistency
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What Can Lawyers Determine?
• Financial Health of Firm• Profitability of Clients Over Time• Average Earnings Per Case by Practice Area• Profitability of Practice Areas Per Effort• Productivity of Associates• Projected Workload by Case Type
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Clio.com
4,500,000 matters
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Monthly Billing Data
• ~115,000 bills generated in the first 3 months of 2015
• 36.5% of those bills were marked as paid on the SAME DAY– Trust Accounts Advanced Fee
Deposits– Flat Fees Upfront– Credit Card Payments
Unpaid63%
Same.Day.Paid37%
Q1'2015'Bills
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Bills not paid on the same day took 22 days to close
on average.
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Billing Data Conclusions
• Billing problems start months BEFORE issuing a bill.• Law firms generate lots a data around billing.–Work in Progress Reports– Accounts Receivable
• Lawyers CAN get paid quickly, but need a process.• Lack of process leads to further delays
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BILLING PROCESSES
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Traditional Billing Process
1. Hourly Billing2. Generate Invoice at Matter’s End3. Mail the Bill4. Sticker Shock5. Wait
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Modern Billing Options
Source:.Patrick.Johansen,.CLM,.CPP,.“Patrick.on.Pricing,”.http://www.patrickonpricing.com/continuum
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Alternative Fee Arrangements
• Flat Fees for entire matters– 20% of GCs require flat fees in ACC CLO 2015 Survey
• Unbundled Legal Service– 47% of solo practitioners and 43% of those in firms of 2 to 9
lawyers report providing unbundled services. 2014 ABA Legal Technology Survey Report, at IV-xii.
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Client Preferred Pricing Strategies
• Transparent pricing - 37%• Guaranteed pricing - 27%• Value-based pricing - 26%• Lowest price - 10%
Source:.Altman.Weil.2014.Chief.Legal.Officer.Survey
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Big Law Approach to Billing
• Regular time input• Digital bills and payment options• Frequent billing• Staff for accounting and collections• Discouraging write-offs
Source:.“Firms.Turn.to.Specialists.to.Boost.Collections,”.New.York.Law.Journal,.12/08/2014
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Discounting
Discounts & write-offs rewards good and bad clients alike. <10%
10N19%
20N20%
30N39%
Late'Bills&'Discounts
Often NeverSource:.“Law.Firm.Billing.Survey,”.Business.of.Law.Blog,.08/28/2014.
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Discounting
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PAYMENT METHODS
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Janelle BenefieldProduct Development
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• 170 million cardholders• 413 million credit card accounts• More than $2.28 trillion was spent on
credit cards in 2014
CURRENT TRENDS
ProQuest; US Census Bureau; Nilson Report; ID 245385, ProQuest; US Census Bureau; Nilson Report; ID 245385, New York Fed; ID 245434
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Predicted Growth of Credit Card Payments
CURRENT TRENDS
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What is the catalyst to the growth
in electronic payments?
CURRENT TRENDS
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ATM CARDS AND CHECKS
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DEBIT CARDS
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WHAT DOES THIS MEAN FOR YOUR FIRM?
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PAPER OR ELECTRONIC
How are Bills Paid in Your Firm?
vs.
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ONLINE PAYMENTS
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1. Ensure client funds are handled correctly 2. Update client agreements 3. Verify compliance and security
THREE THINGS TO CONSIDER
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Separate Earned & Unearned Fees
ENSURE CLIENT FUNDS
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UPDATE CLIENT AGREEMENTS
Sample Language
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• PCI stands for Payment Card Industry compliance
• Created in 2006 by card brands to reduce fraud
• Good business exercise to assess security
VERIFY COMPLIANCE AND SECURITY
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PAYMENTS ASSESSMENT
• Card brands do the work for you• Quick payment turnaround with card payments
Are your clients credit-worthy?
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PAYMENTS ASSESSMENT
Does your firm ever encounter past due clients?
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BILLING BEST PRACTICES
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Billing Best Practice #1
Walk clients through their first bill
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Billing Best Practice #2
Don’t wait to send a bill.
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Billing Best Practice #2
Source:.How.to.Start.and.Build.a.Law.Practice,.Jay.Foonberg
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Billing Best Practice #3
Send Detailed Bills
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Billing Best Practice #3
Re: F/UJohn.Doe the clientJ..Doe john doe
Source:.Aluvion Law.Firm
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Billing Best Practice #3
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Billing Best Practice #4
Make it easy to get paid
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Billing Best Practice #5
Get paid first
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Billing Best Practice #6
Don’t skip trust accounting & regulatory duties
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CONCLUSIONS
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Conclusions
1. Billing currently troubles many firms.2. Better billing starts before you send the bill.3. Client are seeking transparent bills; not lower bills.4. Timing matters with billing. Bill consistently &
frequently.5. Use alternative fee arrangements to avoid
collections.
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QUESTIONS
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Social Media: What Lawyers Need to KnowJuly 21, 2015 11:00 AM PT
http://gocl.io/socialmedia