Here are solutions to the top five billing challenges faced by modern family law practices.
By Dr. Rick Kabra, Technology Specialist
As a family law attorney, you likely already have your hands full with emotional clients, children in need, and complicated, ever-evolving divorce laws. You also face a unique set of practice-management issues that use up time that could be better spent in court or consulting with new clients, which affects your firm’s profitability. Here’s a look at five of the most common challenges found in family law practices, and solutions that can simplify attorneys’ lives.
Technology: Boon Or Bane?
“Technology is supposed to make our lives easier, allowing us to do things more quickly and efficiently,” wrote James Surowiecki in an article in The New Yorker. “But too often it seems to make things harder, leaving us with fifty-button remote controls, digital cameras with hundreds of mysterious features and book-length manuals, and cars with dashboard systems worthy of the space shuttle.” This is just as true with improper implementation of law practice management software as it is with television remotes. Wrong solutions may simply complicate things, requiring you to take an hour to accomplish something that you could do in ten minutes with pen and paper. How is that smart? On the other hand, just because some technology is over-designed doesn’t mean that all technology is bad. Many senior attorneys remember a day before cell phones, easy Internet access, and digital files, but they can’t actually recall how they managed to run a practice without these tools. The best option is to give serious thought to the challenges you face, and then find a technology that addresses those needs.The software that’s right for the attorney across the street practicing estate planning isn’t necessarily the right solution for you. Even if you already have a working solution, it is worth your time to evaluate the new cloud-based offerings because they offer solutions that yesterday’s desktop software couldn’t.
The Five Big Problems
Here are five of the most common problems that interfere with the function and growth of a family law firm.
- Mobility. Family law is one of the most mobile specializations in the legal field. You spend a lot of your time in courtrooms, settlement conferences, and mediation sessions. You need case details at your fingertips, and you need to be able to record your hours and expenses right away rather than trying to remember your charges at the end of the day.
- Fee Disputes. Clients love to nickel and dime their attorneys – especially in lengthy cases decided in ways they consider unfair. An angry client could file a frivolous billing dispute months or years down the road that at best wastes your time and money, and at worst draws the attention of your state bar.
- Retainer Handling. The best way to get paid is to get paid up-front. Many family law practices ask for advance retainers so they can be sure to get paid. Even after you deposit those funds in your trust account or business account, it is illegal to spend that money until you have earned it through your documented fees.Tracking every penny of retainer funds across dozens of cases is a challenge for many family law firms.
- Collections. Few attorneys want to deal with dunning clients for payments, but unless you stay on top of your invoicing, you will find too many matters simply never get paid.The chance of collection drops rapidly as accounts age, so it is important to be vigilant.
- Billing Models. Although family law invoices traditionally use the billable hour, a recent study shows 62% of law practices surveyed are moving away from hourly billing in an effort to keep clients happy (see www.bna.com/using-alternative-fee-arrangements-to-increase-new-business). However, tracking your actual expenses so you can be sure your fees aren’t too high or too low requires stacks of paperwork and is very difficult to do by hand.
The Five Big Solutions
Specialized billing software for attorneys can address each of these problems. Most modern law firm billing software titles offer some or all of these features:
- Mobility. Cloud-based law office management software gives you secure access to your legal billing system from anywhere with an Internet connection – which these days is pretty much everywhere. Rather than depending on hastily scribbled notes or your own memory, you enter your billable hours and expenses as they are incurred so you can bill accurately.
- Fee Disputes. The best defense against fee disputes is a comprehensive audit trail, which is easy to create with legal time and billing software. Nothing stops a fee dispute faster than an itemized and chronological log of all your activities. Audit trails need to be scrupulously protected, since “my hard drive crashed” carries about as much weight with your state bar as “my dog ate my homework”. A good cloud-based solution stores data on remote, professionally-managed servers so you know your data is safe if you need to defend against a fee dispute.
- Retainer Handling. Family law attorneys normally deposit retainers in attorney trust accounts. That makes sense when you consider the duration of most family law cases, the large amounts involved, and the rules of your state bar association. However, attorneys often forget that trust accounting is even more critical to a family law office than their billing needs. Unless your trust and billing systems work together, you are eventually going to make a costly mistake in your record keeping. You really need a legal billing program with integrated trust management functions so you can track advance retainers easily. You also need to be able to issue low-retainer reminders easily so you can notify clients when they need to replenish their accounts.
- Collections. Your collection efforts start with your invoices. In the article “Attorney Fees: Five Keys to Ethical Compliance”, author David Cameron Carr calls accurate invoices “an essential part of a lawyer’s ethical duty to communicate with the client.” Invoices should be clear and uncluttered so clients aren’t confused about how much they owe. However, even the best clients sometimes forget to pay on time. You can’t collect money if you don’t know what is owed. Legal billing software should give you a 360-degree view of your practice’s finances so you can tell at a glance what hasn’t been billed and what hasn’t been paid. In summary, two best practices to keep your collections manageable are consistent invoicing and timely overdue account notices. If your billing software allows one-click generation and emailing of invoices and payment reminders, then you are miles ahead.
- Billing Models. You don’t want to be locked into the billable hour if you are looking into alternative billing, but you also want to retain the option for hourly rates to supplement flat-fees with added charges for unusual work. Even for flat-fee matters, you need to be able to track unbilled hours and expenses so you can evaluate your fee structure and ensure it is fair. Look for software that offers all these billing model options.
Technology does not always make things better, but that doesn’t mean you should continue to practice in the Stone Age. Sit down and make a list of the top five billing problems in your family law practice – they might not be the same as the ones above – and look for a software solution that addresses your specific concerns. With the help of the right technology, you will have more time to give your clients the personal attention they deserve.
The CEO of CosmoLex, Dr. Rick Kabra has years of experience in the legal software industry, catering to the specialized technology needs of small to mid-sized law firms. CosmoLex is a cloud-based legal billing and trust accounting system specifically designed for solo and small law firms. www.cosmolex.com