Pitfall # 4 – Not Utilizing Built-in Collection Support
One problem most law firms share is a pile of unpaid accounts receivables. Yet, your firm can easily embed tight receivables controls in your legal billing system and streamline your collection process with the right legal billing software.
Make sure your firm takes a proactive approach to debt collection rather than dealing with the issue after the fact and use legal billing software with built-in collection support.
Look for billing software with automated features that allow your firm to:
- Capture incurred expenses (e.g. court filing fees, travel costs, courier fees) when they are incurred and allocate expenses to clients for future billing. This way, you won’t overlook charging a client for expenses.
- Flag and automatically generate batch reminder letters, when a client’s advance balance falls below specified amounts.
- Flag client accounts when unbilled amounts cross a threshold you specify. You may need to send the client an invoice immediately, rather than waiting for the normal billing cycle to kick-in.
- Auto-generate overdue invoice reminder notices at fixed intervals.
- Request retainer replenishments with the help of a retainer alert system that issues periodic reminders.
Remember, bill collection is an on-going and vital practice management process. If your billing system can act as your collection agent or at least provide receivables controls, your firm is miles ahead.
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Use legal billing software with built-in collection support to avoid Pitfall #4 and substantially increase your law firm’s profitability, even in a challenging economy.
Quite possibly, the most important part of utilizing legal billing software is handling invoicing. In order to provide a professional looking invoice, as well as an accurate invoice, the legal billing software in use should be able to provide customization options so the law office can send out exactly what is required.
Legal Billing Software Invoicing
In many different types of businesses, one type of invoice will often meet the company’s needs. However, because a law office can provide different levels of service at not only different rates, but in extremely specific ways, it is important that the invoice produced by the legal billing software reflects exactly what type of service was provided. For example, some may work on a retainer system. The invoice for that client will look different than a client’s invoice who works on a “per hour” basis. Additionally, different attorneys may bill out at different rates, depending on experience, history at the law office and so on. As a result, the law office’s legal billing software will need to adjust accordingly in order to provide the correct type of invoice for each individual client.
Additionally, the invoice received by a client should clearly state what was completed, the rate at which the client was charged and if other charges are overdue. If the client is working off of a retainer, the invoice should document how much was charged back to the retainer and how much of the retainer remains available. A client will want to completely understand what they were billed for and how their legal issue was handled. When an invoice is complete and easy to understand, there will be a reduced number of calls to the law office with these types of questions.
Legal Billing Software
In the end, the legal billing software a law office decides to use must be adaptable. It should be able to be customized by those charged with sending invoices and receiving payments. If a system is rigid, it will ultimately not just hurt office efficiency, but hurt a law office’s ability to be profitable.
As computers are now being used for just about every business function, and hackers are prevalent in just about every industry, security is always a concern for businesses. In some industries, such as the legal profession, security is even more important, especially when utilizing legal billing software as part of tracking a law office’s financial health and efficiency.
IT professionals work hard to keep a company’s computers and network secure 24 hours a day, seven days a week. Employees will often have their own user identifications and passwords, created by the company’s IT department, in order to access their system and the company’s network. Additionally, this information is usually tied to access levels for information kept on the network. This way the employee will only have access to information directly related to their job function.
IT professionals will also utilize different software packages to protect networked computers from being infiltrated by viruses and malware that can compromise a system’s security. Once a system is vulnerable, this vulnerability can create an access point for hackers to gain entry to a company’s entire network. From this point, hackers can potentially access both proprietary and sensitive financial information, putting the entire company at risk.
Legal Billing Software
When legal billing software is utilized in a law office, security best practices should be followed, just like with every other aspect of an office’s computerized functions. The legal billing software used should have user-specific login IDs and passwords, just like when an employee logs on to their computer in the morning. That login information should be tied to specific account permissions that will limit access to the system, depending on their job functions. For example, the person in the accounting department will have different access from the attorney working on a case. Some employees may need to only enter time sheet information; therefore they should have very limited access to the legal billing software.
Keeping Information Secure
All these different access-defined levels within the legal billing software will help ensure that proprietary information stays secure. It will also help prevent gaps in security so sensitive legal issues stay between the client and their attorney.
Almost every business today has some type of networking configuration. Servers are usually onsite to handle tasks such as manage e-mail, websites and company and business data. In a law office, legal billing software should be utilized in a networked fashion as well for maximum efficiency, invoicing and work product documentation.
Multiple Users Operating Legal Billing Software
An important aspect of utilizing legal billing software is the ability for multiple employees to work within the system simultaneously and that the system respond well.
Ultimately, the individuals who work in a law office are legal professionals, not computer experts. If there are lag times when working to document client information and time spent on various client legal issues, employees will be reluctant to utilize the legal billing software on a regular basis. The process will end in frustration and time wasted, which is the opposite of the purpose of utilizing legal billing software throughout a law office. The legal billing software selected by the law office should also be intuitive for the employees. If not, buy-in to use the software will not be global and ultimately information may not get documented properly, which will result in incomplete and incorrect invoicing to clients. When employees are comfortable with the legal billing software in use and the system responds in a reasonable timeframe, employees will have greater comfort utilizing the system and keeping all necessary information well documented.
Legal Billing Software
Legal billing software will be utilized by everyone in the law office, not just those in the accounting department. As a result, it should work seamlessly regardless of an employee’s job function. By doing so, upper management of the law office can have a complete understanding of the client load, invoicing, accounting and overall health and efficiency of the law office.
The Rules of Professional Responsibility are a key part of ethics that oversee the legal profession. A major part of adhering to those Rules is that an attorney generally cannot represent two clients who have competing interests, which could potentially compromise how an attorney can represent their client effectively. By utilizing conflict checking through legal billing software, this potential issue can be found prior to developing into a major problem for the law office as well as the new client.
Understanding Conflict Checking
Every attorney and law firm must maintain a conflict database to check for potential client conflicts or competing interests. If this is handled through a manual process, this can wind up as a huge time waste. Additionally, it will be easier to miss a potential conflict when manual processes are used. When a robust system is put in place in concert with following industry best practices in a law office, the chances of a conflict developing is greatly reduced, if not non-existent.
Legal Billing Software and Conflict Checking
When a robust legal billing software system is in place in a law office, potential conflicts will be identified in their infancy, instead of once legal support is underway. Instead of relying on a likely incomplete and time-consuming manual process, legal billing software will find conflicts in an efficient and complete manner.
When a complete contact database, coupled with client’s information regarding the legal support provided, is maintained within a law office’s legal billing software, conflicts will be found when a conflict search is run within the system before a new client is added. If a conflict is discovered, the law office can alert the individual right away that they will need to seek different counsel for their legal issue.
By properly utilizing legal billing software and maintaining an accurate and complete client database, conflicts will be discovered prior to legal procedures getting underway, which will keep the law office within the guidelines of The Rules of Professional Responsibility and the individual will have peace of mind the competing law office has not received specifics related to their legal issue.
In every industry, there are best practices that should be followed. This often includes the utilization of different industry codes and acronyms in order to keep information organized and industry compliant, as well as have an office work as efficiently as possible. The legal field is no different and no where is this more important than tasks related to law office accounting and legal billing software.
What is UTBMS?
The Uniform Task Based Management System (UTBMS) is a series of codes utilized by law offices in to classify the different legal services provided by a law firm when using an electronic invoice submission process.
During the 1990’s, major United States law departments and insurers wanted to better understand the services provided by outside counsel and corresponding billing. When paper billing was utilized by these different law firms, this information was incredibly difficult to ascertain. In order to resolve this issue, The American Bar Association, the Association of Corporate Counsel and PricewaterhouseCoopers assembled in order to develop a standard electronic billing process.
In order to better organize the different services a law office could provide, those services needed to be grouped by task. At that point, codes were developed in order to classify those services. This resulted in a coding system and standard billing format now known as the UTBMS code sets.
UTBMS and Legal Billing Software
In order for legal billing software to provide efficiency in time tracking and billing, the software utilized by a law office must recognize and understand how to interpret UTBMS codes. This is why utilizing a standard off-the-shelf accounting program is not the best option for a law office. While off-the-shelf accounting programs could easily handle some functions, if the system does not recognize UTBMS codes, a correlation between time spent on a legal issue and billing could not be established. It would also prove difficult, if not impossible, to automate billing, receive payments and other accounting-related functions. This would result in lost efficiency and potentially lost revenue due to possible errors in time tracking.
When a law office decides to utilize legal billing software instead of an off-the-shelf accounting program, only the functions of a law office have been considered. Therefore, by utilizing software specifically designed for a law office that will understand how to handle UTBMS codes, efficiency and time tracking will be improved, as well as ensuring bills that go out are accurate.