Using outdated billing options or inefficient software can potentially lead you down the dangerous road of inaccurate bills, dissatisfied clients, and serious complaints.
By Erika Winston
Your clients trust you to provide them with stellar legal representation. They expect you to be honest with them, both in terms of their case details and the invoices you send out detailing your tasks. These expectations are not misplaced and, as an honest attorney, you likely expect the same from yourself and every member of your law firm. This is why you want to do everything in your power to promote accurate client billing – including the implementation of the right legal billing software.
This article will discuss the important role that legal billing software plays in the creation of accurate client invoices. Using outdated billing options or inefficient software can potentially lead you down the dangerous road of inaccurate bills, dissatisfied clients, and serious complaints.
Billing Software vs. Legal Billing Software
You are a family lawyer with a legal practice. Do you run your law office like a retail store or a restaurant? Do you use physician templates when creating forms for your clients? If you answered “no” to these questions, then why are you using software that is not tailored to meet the needs of your law office?
Your legal practice is filled with intricacies and governed by rules and regulations that should be incorporated into your billing software. Each of these small details must be handled with care and accuracy in order to meet client expectations and your professional responsibilities.
The average traditional billing program lacks the tools to handle many of the small details of legal practice management. From accurate trust accounting and customized billing options to mobile time tracking and reporting options, most traditional billing software are not equipped to handle the needs of your family law firm.
A Variety of Fee Arrangement Options
Modern law firms offer their clients numerous variations on their fee arrangements. These attorneys recognize the value in flat fee or hybrid billing models. They have also come to realize that savvy legal clients want and even expect these billing options. If you are one of these shrewd attorneys, you need a legal billing software that accommodates various fee arrangements without creating more headaches for you and your staff – and without increasing the likelihood of inaccuracies.
For example, as a small general practice, you may handle various types of client matters and bill differently for each of them. Here are some examples:
- Hourly Billing. You handle domestic relations divorce and custody cases on a traditional billable hour basis. You need to track time increments of time spent on each matter, along with all associated costs and fees. In addition, you may need to bill clients at various rates, depending on which member of your firm is working on a particular task. You need legal billing software that gives you all of the hourly billing options you need.
- Retainer-Based Billing. You require your civil litigation clients to deposit a retainer with your firm. This billing option occurs when your client provides you with an up-front retainer to cover anticipated legal costs. Those funds are placed in a trust account and withdrawn as they are earned. The laws around these types of accounts are specific and attorneys that utilize this type of billing needs legal billing software that helps them in abiding by these rules.
- Fixed-Fee Arrangements. When handling simple criminal matters and traffic violations, you use fixed fees. You let clients know up front exactly how much their matter with cost. Though this type of billing option can be simpler for invoicing, adequate fixed fee arrangements still require the accurate time and expense tracking that comes with legal billing software. Even with flat fees, clients may still request a billing statement that accurately depicts work completed. In addition, accurate time tracking gives the tools to adequately and knowledgeably set your future fixed fees.
- Contingency Billing. You offer contingency billing to your personal injury clients. These cases involve an arrangement where the attorney takes a percentage of the settlement or award collected in the case. When handling a contingency billing case, many attorneys still provide their clients with detailed descriptions of work completed on the case. The accurate time tracking available through the right legal billing software can make this task easier to handle.
Accurate Trust Accounting
Trust accounting accuracy is vitally important for a number of reasons. It’s not only expected by your clients, it is likely mandated by your state bar. The ramifications of trust account inaccuracies can be severe, potentially threatening the very existence of your legal practice. Unfortunately, trust accounting mistakes are quite common among law practices, but most of these errors can be easily addressed with the right legal billing software. Here are some of the common problems:
- Failing to Keep Accurate Records. Traditional accounting software is simply ill-equipped to handle the record-keeping requirements of legal trust accounting. You need a specific legal billing option that incorporates the rules of trust accounting in your state and helps you abide by them.
- Failing to Keep Individual Trust Account Records. Though all of your client trust account funds may be in one account, most states require you to keep individual records for each client. An effective legal billing software gives you the ability to easily keep individual records, along with management of the account as a whole.
- Regular Reconciliation. Many attorneys find it necessary to regularly reconcile their trust accounts in order to avoid overdrafts and fund commingling. Since these calculations need to be completed on a regularly occurring basis, you need a legal billing system that makes the process seamless and quick.
What to Look for in Legal Billing Software for your Law Practice
When you are thinking about upgrading your billing software, create a Wish List of the features you would like to have. Do not constrain your thinking to what you have now, or “the way it has always been done.” Here is a list to get you started; rank them in descending order of importance – from “crucial” to “would like” to “unnecessary” – and add features that may be unique to your law practice.
Features Wish List
- Price per user
- Client types
- Case types
- Cloud storage
- Document management
- Time tracking (online and offline)
- Custom billing rates
- Custom billing templates
- Consolidated bills
- ABA tasks/expense codes
- Client portal
- Mobile app
- Integration with current software (such as Dropbox, NetDocs, QuickBooks, Account Edge, Xero Accounting)
- Trust accounting
- Free premium support
- Commission tracking
- Task management
- Split billing
- Document automation
- LEDES billing
- Data import/export
- Project management
- Conflict checking
- Matter budgeting
- LawPay integration
- View pre-bills without downloading
Making the Transition to Legal Billing Software
Accuracy must be an integral part of running a successful, trustworthy law firm – and an important tool for making that happen is legal billing software. It provides resources that you won’t find in traditional accounting software, helping you time track and bill accurately. If you haven’t done so, it’s time to make the transition to legal billing software.
Erika Winston is a freelance writer with a passion for law. Through her business, The Legal Writing Studio, she helps legal professionals deliver effective written messages. Erika is a Freelance Writer at TimeSolv, a web-based billing solution for attorneys. www.timesolv.com
Running Like Clockwork
Advice to help ensure that your family law practice runs efficiently.
7 Family Law Technology Tips and Tricks
From online tools to apps, software and social media, these technology tips from divorce professionals are sure to make a difference in how you practice family law.