The Science of Billing Clients Successfully!
In most of the practices we consult with, the word that best describes the billing “attitude” of South African Attorneys is….”Apologetic”!
It is always a thorny issue when a client wants to know what the service will cost. It becomes even more difficult when it comes time to account to clients. The good news is that there are some very basic principles, which you can follow in order to improve the quality of your billing while still improving client relations!
Myth Number # 1: Attorneys are a rip-off!
Over many years of studying how attorneys bill and what they bill, we can confidently say that the vast majority of attorneys under recover fees by at least 20-30%. Attorneys are perceived as a rip-off for the following reasons:
- They are often apologetic about fee structures/rates etc. As a result clients often perceive this behaviour as “dodging the question”.
- Accounts are sent sporadically and lack proper detail.
- Always remember that an attorneys service is most often a “grudge purchase”. Clients don’t lie awake dreaming of using your services as they would do when picking up their brand new German sedan the next day! Clients are using your services because they are compelled to and for this reason you need to be on your game from an administration point of view. Sadly, many attorneys do great legal work and then lose the value of such work by billing poorly for it!
Rule # 1: Recover what you are worth!
It is very helpful to be crystal clear with the client upfront as to how and how often they will be billed. It is pointless committing to an amount. Rather explain how unpredictable the matter could be to satisfy the query. Be clear about the known factors (hourly or tariff rate; frequency of billing and terms of payment). Set your clients expectations correctly and then stick to satisfying those expectations. If you say that they will receive a detailed account once per month, then make sure you send it as they expect to receive it.
Once you start doing the work, here are the key elements to remember in terms of Rule#1:
- You and your support staff should record everything as and when it happens (or as close to when it happens as possible):
- With a competent billing system (such as GhostPractice) in place, every email sent or received should be billed for.
- Every telephone call should be recorded onto the system.
- Out of office meetings should be phoned; emailed or SMS’d to your secretary, so that she can bill for it on your behalf.
- Whatever the fee arrangement with your client, recording everything that is done, means that you have the opportunity to recover what you are worth, on each and every matter!
If you have an advanced fee management system like GhostPractice in place, you will be able to track where you have passed a discount or where you have added a premium. You can even measure this element by fee earner and by department! Always remember that if everything is recorded you have the flexibility to do anything from a billing perspective (pass a one line fee; summarise the fee or bill in detail). If however, you are billing without any detail, the client could surprise you by asking for a detailed account. If you have no fee recording system, this only has to happen once to convince you what a waste of valuable billing time, such an exercise is!
Myth #2: If I bill for everything then the client will object!
When consulting to our clients, we are met with this objection on a frequent basis. Attorneys become afraid that if they attempt to recover everything on a matter, they will anger or lose the client. This is simply not true. You are much more likely to lose a client through poor administration than through billing legitimately and in detail.
Rule#2: Make it easier for your client to pay you!
When there is no billing system in place, it is often difficult to get accurate accounts out on time, every time. Inevitably the billing becomes sporadic and inconsistent. Invoices tend to bloat and grow out of control. When the attorney sits down with a file 3 months after taking instructions and prepares the account, he/she is shocked to find that the amount of fees and disbursements outstanding is quite significant. The immediate urge to soften the blow rises to the fore and the attorney passes another discount. The client is still upset and either wants to settle or pay the account off!
Key Elements of Rule#2:
- Make sure you bill the client as often as possible and in small manageable amounts.
- The same principle applies to large corporate clients and to individuals. Internal Corporate Accounts Departments don’t like nasty surprises any more than individuals and you will likely set off a management process (involving a committee) if your invoice is too big!
- If your arrangement with the client is to bill only at certain milestones or at the end of the matter, make sure that you send detailed Pro Forma Statements of Account throughout the matter. The more your client knows about what is owed, the better.
- It is always better to identify a bad payer sooner rather than later. If a client balks at your first invoice then it is unlikely he will pay larger invoices months later.
Last but not least, you need to see billing as an opportunity to communicate your utter professionalism and good service to a valued client. A client will not always appreciate or comprehend great legal work, but they will always identify with prompt, reliable and efficient service. Your billing is a key component of all client service and communication, so make the best of it and you will recover more and have better cash flow with happier customers!