better billing for lawyers

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Better Billing for Law FirmsJoshua Lenon – Clio

Janelle Benefield - Lawpay

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Instructors

Joshua Lenon

• Attorney, admitted in New York• Lawyer in Residence at Clio

Janelle Benefield

• Product Development at LawPay

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1. Billing Woes (5 minutes)2. Tap into Billing Data (10 minutes)3. Bill Processes (10 minutes)4. Payment Methods (15 minutes)5. Best Billing Practices (10 minutes)6. Conclusions (5 minutes)7. Questions (5 minutes)

Agenda

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BILLING WOES

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Billing Woes

• Firms with past due bills affect 10- 39% of client accounts.

• 45.6% say collecting on invoices 90 days past due “unlikely” or “very unlikely.”

• 71.2% offer discounts prior to invoicing

Source:.“Law.Firm.Billing.Survey,”.Business.of.Law.Blog,.08/28/2014.

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43%

43%

14%

Yes,.undocumented

Yes,.undocumented

No


Does Your Firm Have a Billing Process

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Does Your Firm Analyze Client Billing Trends?

72%

18%

10%

No

Yes

Unsure

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TAPPING INTO BILLING DATA

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Lock-Up

Unbilled work in progress plus debtor days

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Lock-Up Data

- 1/3 UK law firms had lock-up in excess of 150 days

- Average number of lock-up days of 109 on average days

Source:.“Unlocking.lockNup.days,”.The.Law.Society.Gazette,.02/09/2012,.andNatWest.2015.Financial.Benchmarking.Report.–Law.Firms

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What Data Do Lawyers Track?

• Hours• Rates• Types of Cases• Lengths of Cases• Case Resolution Outcomes• Clients’ Legal Histories• Amounts Billed• Payments Received

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Ways to Generate Data

• Bills Sent

• Bills Paid

• Payment Methods

• Tracking Time

• Custom Fields

• Expenses

• Consistency

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What Can Lawyers Determine?

• Financial Health of Firm• Profitability of Clients Over Time• Average Earnings Per Case by Practice Area• Profitability of Practice Areas Per Effort• Productivity of Associates• Projected Workload by Case Type

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01/01/2015 01/08/2015 02/01/2015 06/30/2015

Time

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01/01/2015 01/08/2015 02/01/2015 06/30/2015

TimeCriminalCivilAdmin

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Clio.com

4,500,000 matters

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Monthly Billing Data

• ~115,000 bills generated in the first 3 months of 2015

• 36.5% of those bills were marked as paid on the SAME DAY– Trust Accounts Advanced Fee

Deposits– Flat Fees Upfront– Credit Card Payments

Unpaid63%

Same.Day.Paid37%

Q1'2015'Bills

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Bills not paid on the same day took 22 days to close

on average.

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Billing Data Conclusions

• Billing problems start months BEFORE issuing a bill.• Law firms generate lots a data around billing.–Work in Progress Reports– Accounts Receivable

• Lawyers CAN get paid quickly, but need a process.• Lack of process leads to further delays

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BILLING PROCESSES

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Traditional Billing Process

1. Hourly Billing2. Generate Invoice at Matter’s End3. Mail the Bill4. Sticker Shock5. Wait

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Modern Billing Options

Source:.Patrick.Johansen,.CLM,.CPP,.“Patrick.on.Pricing,”.http://www.patrickonpricing.com/continuum

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Alternative Fee Arrangements

• Flat Fees for entire matters– 20% of GCs require flat fees in ACC CLO 2015 Survey

• Unbundled Legal Service– 47% of solo practitioners and 43% of those in firms of 2 to 9

lawyers report providing unbundled services. 2014 ABA Legal Technology Survey Report, at IV-xii.

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Client Preferred Pricing Strategies

• Transparent pricing - 37%• Guaranteed pricing - 27%• Value-based pricing - 26%• Lowest price - 10%

Source:.Altman.Weil.2014.Chief.Legal.Officer.Survey

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Big Law Approach to Billing

• Regular time input• Digital bills and payment options• Frequent billing• Staff for accounting and collections• Discouraging write-offs

Source:.“Firms.Turn.to.Specialists.to.Boost.Collections,”.New.York.Law.Journal,.12/08/2014

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Discounting

Discounts & write-offs rewards good and bad clients alike. <10%

10N19%

20N20%

30N39%

Late'Bills&'Discounts

Often NeverSource:.“Law.Firm.Billing.Survey,”.Business.of.Law.Blog,.08/28/2014.

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Discounting

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PAYMENT METHODS

Janelle BenefieldProduct Development

• 170 million cardholders• 413 million credit card accounts• More than $2.28 trillion was spent on

credit cards in 2014

CURRENT TRENDS

ProQuest; US Census Bureau; Nilson Report; ID 245385, ProQuest; US Census Bureau; Nilson Report; ID 245385, New York Fed; ID 245434

Predicted Growth of Credit Card Payments

CURRENT TRENDS

What is the catalyst to the growth

in electronic payments?

CURRENT TRENDS

ATM CARDS AND CHECKS

DEBIT CARDS

WHAT DOES THIS MEAN FOR YOUR FIRM?

PAPER OR ELECTRONIC

How are Bills Paid in Your Firm?

vs.

ONLINE PAYMENTS

1. Ensure client funds are handled correctly 2. Update client agreements 3. Verify compliance and security

THREE THINGS TO CONSIDER

Separate Earned & Unearned Fees

ENSURE CLIENT FUNDS

UPDATE CLIENT AGREEMENTS

Sample Language

• PCI stands for Payment Card Industry compliance

• Created in 2006 by card brands to reduce fraud

• Good business exercise to assess security

VERIFY COMPLIANCE AND SECURITY

PAYMENTS ASSESSMENT

• Card brands do the work for you• Quick payment turnaround with card payments

Are your clients credit-worthy?

PAYMENTS ASSESSMENT

Does your firm ever encounter past due clients?

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BILLING BEST PRACTICES

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Billing Best Practice #1

Walk clients through their first bill

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Don’t wait to send a bill.

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Source:.How.to.Start.and.Build.a.Law.Practice,.Jay.Foonberg

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Send Detailed Bills

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Re: F/UJohn.Doe the clientJ..Doe john doe

Source:.Aluvion Law.Firm

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Make it easy to get paid

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Get paid first

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Don’t skip trust accounting & regulatory duties

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CONCLUSIONS

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Conclusions

1. Billing currently troubles many firms.2. Better billing starts before you send the bill.3. Client are seeking transparent bills; not lower bills.4. Timing matters with billing. Bill consistently &

frequently.5. Use alternative fee arrangements to avoid

collections.

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QUESTIONS

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Social Media: What Lawyers Need to KnowJuly 21, 2015 11:00 AM PT

http://gocl.io/socialmedia

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Thank You

Joshua Lenon

[email protected]

@JoshuaLenon

Linkedin.com/in/joshualenon

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