How law firms can achieve a collection rate of 90% in 90 days.
By Claude E. Ducloux, Trial and Appellate Lawyer
As a veteran of nearly 39 years of broad general practice, I know the importance of cash flow. In my quest for financial security and success, I have perused every Bar Journal article, attended numerous practice management CLEs, and varied my approach to billing and collections to see what worked.
I have learned that getting money in the door promptly and securely is an art as well as a science. Last year, I had a billing collection rate of approximately 97%, which is far above the national average for solo-small firms. With a broad practice, there is no single magic secret to this achievement; instead, it is a combination of excellent communication, billing discipline, and intentional follow-up.
Here Are 8 tips to Help You Achieve a High Collection Rate
1. Learn to communicate in a way that will result in client confidence, reasonable expectations, and realistic time frames for completion of your work, as well as a realistic range of fees to get the matter completed.
2. Always execute a fee agreement. Clients take things in writing more seriously than handshakes. Also, you should rarely (if ever) start work until the promised retainer check clears.
3. Have billing systems in place that allow you to record time daily and produce comprehensible bills with necessary details.
4. Diligently record your time each day. You will forget tomorrow what you did yesterday. If you can’t remember what you worked on during a busy day, check your outgoing email for clues.
5. Know how to bill accurately and amicably. Use the client’s name: “Telephone call to Robert (rather than “to client”) concerning hearing.” Then review every bill for errors or double-billing before finalizing it.
6. Bill at least once per month; I recommend the first business day of the month, after most people have received their paycheck. If you don’t do this, clients might think you’re so rich you don’t need their money, or that there was no work done on their behalf that month. Also, clients are less likely to pay you months after you’ve completed their legal work than they are while the case is active, so make prompt billing a priority. Sending out late bills is a huge management error.
7. Follow up! When you are working on your bills, if you see client John Doe didn’t pay last month, then stop and send him a friendly email reminding him that you haven’t received payment and offering the immediacy of an internet payment link. This works like a charm in my practice!
8. Be modern! Offer to email bills (more and more of my clients only want bills via email) and give your clients easy payment links to a secure online payment solution. Most of your clients will not only prefer the option to pay online with a credit card, they’ll expect it. Supercharge your cash flow and make your clients happy by giving them a fast, simple, and online way to pay for your services.
Claude E. Ducloux speaks regularly on legal ethics, law office management, and trial-related topics. He has a long legacy of bar service, including being president of the Austin Bar Association, and serving as Chair of almost every major Bar-related entity as well as the Texas Bar Foundation. https://lawpay.com
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