Close this search box.

The Ultimate Guide to Law Firm Billing for Increased Profitability

Is your law firm constantly chasing billable hours, only to see profits diminish? 

You are doing everything in your power to increase the profitability but the desired results are nowhere to be seen.

Inefficient billing practices are a hidden leak in many firms that silently drain your bottom line. 

If you want to change this, don’t worry – there’s one thing you can do, and you can start doing it today. 

This ultimate guide will equip you with the knowledge and tools to optimize your law firm billing system while maximizing profitability without sacrificing client satisfaction.

Be Punctual With Billing

Running a law firm can be a race against the clock. 

But sometimes, even when you win the case, you might not see the finish line – financially speaking – because your bills get lost in the “to-do list shuffle.”

To avoid this, make sure you send bills out on time, every time.

Make it a rule in your law firm that each Friday everyone who is responsible for billing. It means the attorneys, the paralegals, the admins, puts in their hours. Not on Saturday. Not the Monday after while they’re having their morning coffee. Friday by 6 pm. 

Then make another rule where your accounting department sends out invoices on the 15th of the month, and again on the 30th of the month. We find that when law firms process invoices at the end of the month, inevitably, something gets missed. By having it be done twice each month, you know you have a “back up” or “catch-all” second run of the invoices. 

And when you process on the 15th, you can use the cash that comes in immediately, instead of having to wait to process on the 30th, and not having that cash until the next month.

Remember, the sooner your client gets the bill, the sooner they can pay it. 

To make things even smoother, add clear details about the work you did for them, so they understand exactly what they’re paying for.

Don’t say “Response to motion” or “email draft” – be specific about which motion, and be specific about the email. Bonus points for attaching screenshots of the first page of the Motion, or the email.

Our memories can be short, and it’s helpful to have the thing you are billing someone about be attached to the bill.

This transparency builds trust and keeps the payment process hassle-free. 

Track Your Time 

You’re busy, we get it! 

Between court dates, research, and client meetings, it can be tough to keep track of all the time you or your team spend working on a case. 

But here’s the secret: both the time you spend directly with your client and the time you spend behind the scenes matters.

Using time-tracking software helps a lot in seamless tracking. We’ve seen law firms use many options when it comes to time-tracking: TimeSolv, MyCase, or just the clock on their computer.

Whatever you use, don’t forget to double-check the time you’re putting in.

It’s easy to forget that client phone call that was scheduled or that opposing counsel meeting.

And while we all idealize putting in our time each day, sometimes, we forget or get busy. Referring back to your calendar or your emails can help you remember all the things you did that day.

It helps you ensure you’re fairly compensated for all your hard work, and your clients appreciate knowing exactly what they’re paying for. Happy clients lead to happy pockets. 

Follow Up, Regularly and Often

Just like you keep track of your cases, keeping track of your invoices is essential for healthy cash flow.  

Sometimes, bills get buried in inboxes. So, a friendly reminder can go a long way. We like software that has built-in reminders, that let you choose how long until you send a friendly reminder. Quickbooks and Freshbooks are two such options.

Make sure to be professional and polite when following up on unpaid invoices – you don’t need to say “Hey, PAY ME!” But you can politely say “This is a friendly reminder that your invoice was due on X. Click here to pay it now.” 

A quick email can remind your clients and keep the billing process smooth.

Remember, treat your clients like a family, and they will do the same.

Avoid The Paper

We like reading books on paper, and paper wedding invites, but using a legal pad to track your hours? That’s not a good use of paper. 

Automate your billing with legal billing software. 

With this software, you can create and send out invoices with just a few clicks.

No more spending hours on manual calculations or chasing down missing information. 

This frees up your valuable time to focus on what matters most – your clients. 

Plus, a smooth attorney billing process makes your firm more appealing to potential clients who value efficiency and a hassle-free experience.

Utilize Technology

Legal billing software is a great start, but don’t stop there.

Staying on top of the latest technology can give your firm a big advantage.  

For example, you can use AI for legal billing by automating time tracking, categorizing tasks under correct billing codes, and predicting billing discrepancies. 

You can also use it to automatically format your legal invoices in a way that insurance companies and other legal systems can easily understand.  

It enhances overall accuracy and efficiency, reducing manual errors and freeing up time for you to focus on more important tasks.

Be Flexible with Payments

Let’s face it: big upfront bills can be a pain for everyone.  

By offering flexible payment plans,  you’re giving your clients more control over their finances.  

This could include options like splitting the bill into installments. If you’re an estate planning attorney, you can ask for monthly payments or take a payment at signing the contract, and another at signing the Will. If you’re an immigration attorney, then you can charge monthly, or when the client signs on, then when the petition is filed. 

By working with your clients on payment options, you’ll improve your cash flow and keep them happy – it’s a win-win!

Resting The Case!

In 2023, law firms experienced aggressive growth in worked rates (the rates clients agreed to pay for new legal work).

The industry is growing, but mastering the art of “how to bill a client” is essential for any law firm’s financial well-being. 

Following these law firm billing guidelines can establish a smooth and efficient law billing process. 

With a streamlined law firm billing system in place, you can free up valuable time and resources to focus on what truly matters: providing your clients with the exceptional legal representation they deserve.