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Think faucet, not ocean. When you think about your law firm’s cash flow, it shouldn’t ebb and flow like the tide. It should be a constant, steady stream.
But if your law firm is like many others, you may have been struggling to ensure your cash flow stays consistent — especially in the aftermath of the pandemic. This can really hurt your firm’s bottom line.
Most small law firms and midsize law firms have past due accounts, which can kill your cash flow and make it possible to pay your employees and bills. And it’s often uncomfortable to ask your clients for money!
Some practice areas may be doing better than others. But no matter the current state of your law practice’s financial health, you’ll always find that there are opportunities to reduce costs, improve lawyer productivity, and get more cash in the door.
If you’re struggling to keep your firm’s cash flow consistent, here are 10 steps that you can take to improve your law firm’s current cash flow.
If you haven’t yet taken the time to do a deep dive into the status of your law firm’s finances, start there. One place to start is by projecting your firm’s cash flow by month, quarter, and year.
Begin by understanding your fixed expenses, such as your rent and utilities. Then add in fluctuating costs such as payroll. Consider whether there are any opportunities to reduce your costs by negotiating with your service providers, such as your phone or internet companies, or to set up a fixed payment structure for your utilities so you can better predict your expenses.
Once you’ve pinned down your costs, it’s time to estimate how much client revenue you expect to receive. This will give you a sense of whether you’ve got a negative or positive cash flow.
Once you get a handle on your law firm’s current finances, you’ll be able to create an accurate cash flow forecast. And with the right practice management software, you’ll be able to quickly generate billing and accounting reports so you can understand your incoming receivables, study where you’re making and losing money, and compare your firm’s cash flow over time.
When legal professionals are busy and stressed, they’re less likely to focus on keeping accurate accounts of where they spend all of their billable hours. If the lawyers in your firm aren’t keeping up to date with the hours they bill, you’re likely suffering from billing leakage. They may be losing up to 30% of their billable time!
This is especially true if you’re working on fixed-fee projects. It’s all too easy for projects to creep in scope and for lawyers to provide work that they don’t charge their clients for. To make it easier for your lawyers to capture every billable minute, implement technology that automatically captures their time throughout the day for calls, texts, emails, appointments, and more.
If you’re struggling to get your clients to pay on time, it may be because there’s friction in your payment processes. Set up a system that accepts different payment options, including online payments, to streamline your invoicing and collection processes. If you aren’t already sending your clients bills by email, now is the time to start.
Typically, accepting credit cards will expedite your payment cycle and make it easier to track incoming cash. It may be worth paying a small convenience fee to a processor to get payments in the door more quickly.
Speeding up payment requires firms to lower the time between completion of work and billing. Make sure your lawyers are invoicing for their billable hours as soon as possible — either when work is completed or at a reasonable point in the interim.
If your attorneys take too long to review their bills, send them reminders and set a policy that bills must be reviewed within a set number of days. Clients don’t like it when they receive bills months after work is completed. And it’s often helpful for clients to receive a bill at the beginning of the month, which is often right after their payday.
You may also entice clients to pay faster if you offer a discount for earlier payment, such as within 15 or 30 days of your invoice. Typical discounts are between 3 and 5 percent of the bill.
The longer an invoice remains open, the less likely it is to be paid, so review your accounts receivable regularly and set a cadence for following up.
It can be uncomfortable to ask clients for payments. But it’s necessary to have these conversations and offer your clients a solution, if necessary. Instead of asking clients when they can pay you and how much, it’s often more effective to present payment plans to your clients. Consider proposing a 60-day plan with installment payments, which may make the overdue amount more palatable. Another effective strategy is offering clients a brief email reminder with a link to pay online.
Because lawyers in your firm may worry about jeopardizing client relationships, it may make sense to have a billing or accounting professional manage the collections process; you may also want to consider outsourcing collections to a third-party provider.
If your client retainers are running low, increase them before you run out to avoid shelling out cash that won’t be replenished immediately.
You should also avoid surprising clients with billing for items they don’t expect. Make sure your agreements spell out upfront what new clients should anticipate. If you have an unexpected expense or if you have a large bill, prepare the client with a short call to make sure they fully understand the cost before they get your invoice. This way, you’re more likely to avoid the need for write-offs.
Make sure that you are paying your bills when they’re due. If you pay them after their due dates, you’re likely exposing your firm to late fees. And if you pay too early, you’re tying up cash that you could use for other purposes.
You should have enough cash saved up to cover all of your law firm’s expenses in case of a rainy day (or, say, a global pandemic). Use your cash flow analysis to predict your expenses and set aside an amount sufficient to pay your firm’s bills for three months. That way, you won’t have to panic in case you experience a seasonal slump or another temporary downturn.
Some law firms also establish a line of credit to ensure they have an additional financial cushion in the event of a shortfall. If you don’t use it, you won’t incur any interest, and it will be there for you when, and if, your firm needs it.
Setting reasonable key performance indicators will help you keep your firm on the right path. For example, you might track the number of days that bills remain outstanding and measure whether that number drops over time. Or you might study the change in your working capital over time, which is a ratio of your current assets divided by your current liabilities.
You can also account for variances that may account for any changes in your forecasts. The possibilities are almost limitless, especially if you have access to reporting features in your billing or practice management platform.
The most successful law firms integrate their accounting processes with a cloud-based practice management software platform that helps them improve their firm’s efficiency, productivity, and profitability.
When your firm chooses the right technology, you help your timekeepers eliminate countless minutes that they would otherwise spend on administrative tasks — including timekeeping, invoicing, and collecting on overdue invoices — that take away from your revenue. And you can more accurately (and quickly) project your firm’s finances and study your historical and projected cash flow so you can plan more accurately and set realistic goals for the months and years to come.
Acquisition enables Centerbase to offer end-to-end client and matter lifecycle management, bolstering the company’s mission to power the growth of law firms.[/vc_column_text][vc_column_text]Centerbase, the leading provider of cloud-based legal technology for mid-sized law firms, has acquired Legalfit, the premier web marketing platform and content management system (CMS) built specifically for law firms.
“When we saw Legalfit’s dedicated legal CMS and intake capabilities, we knew we had to bring them into the Centerbase family of products. It’s a huge step forward in our mission to power the growth of law firms. With Legalfit, we are able to provide our clients with a robust, scalable website CMS on top of the practice management and billing suite we already offer, bringing true end-to-end visibility of the client lifecycle,” said John Forbes, Founder and CEO of Centerbase.
“It adds immense value to our clients to unite these products and give law firms the first client relationship management (CRM) tool that tracks the complete client lifecycle, enabling them to not only improve operational efficiency, but drive more business.”
Founded in 2015 by Robert Zhou, Legalfit believes that with enough data, analytics, and automation, law firms are able to take the guesswork out of marketing decisions. Legalfit develops highly intuitive websites and marketing solutions to optimize law firms’ brand and business objectives via unparalleled SEO performance and industry-leading Google scores. With the company’s fortified platform, Legalfit is excited to expand its services into mid-market law firms with Centerbase.
"Combining the best-in-class websites with practice management software unlocks a unique opportunity to deepen product integration and accelerate innovation to help law firms grow faster,” said Robert Zhou, Legalfit Founder & Owner.
This acquisition comes at a time of accelerated growth for Centerbase. Following a growth equity investment from Mainsail Partners in 2021 and continued momentum year-to-date, Centerbase has invested heavily in its core product while exploring feature and practice area-specific integrations.
The announcement also follows Centerbase’s acquisition of Family Law Software. As family law firms tend to have the most paperwork-intensive intake process, Legalfit’s software will allow family law clients to populate intake forms and provide access to the client portal directly on their firm websites.
“No one else in the market can offer a client experience like this. It’s going to be exciting watching our clients run their firms in ways they’d only dreamed of before. And the growth they’ll experience in return will be exponential,” said Forbes. About Centerbase
Centerbase is a cloud-based legal operations platform that empowers midsize law firms to run their practice with confidence. It’s a highly scalable and configurable system that liberates legal teams from manual work by automating routine tasks and connecting them in a single collaborative work space. Boasting a comprehensive feature set of billing, accounting, and practice management tools plus the ability to offer full-history data migrations, Centerbase has become the go-to solution for midsize law firms. For more visit centerbase.com.
About Legalfit
Legalfit is the premier web marketing platform that creates high performance websites with industry-leading designs to drive practice-specific leads. The easy-to-use content & design management tools empowers law firms to take control of their brand story. The Legalfit Dashboard provides valuable data in an actionable way, so that law firms can understand where their marketing currently stands and what their next strategic move is in the digital marketing space to align with their business goals. Learn more at legalfit.com.
[vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none"][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
Process vs. automation vs. workflow
Benefits of workflow in a law firm
Areas workflow can be used in a law firm
Types of workflows found in legal practice management software
Legal practice management software that includes workflow
How to implement workflow software[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none"][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]What if we told you about a technology that would relieve 50% of the administrative burden from your legal operations professionals... would you be interested in hearing what we had to say?
Of course you would!
That’s why many in the legal tech community have become fascinated by workflow technology. For many attorneys, finding tools to free up more time to bill is essential to growing their practice. Based on a recent report, law offices responded that they spent 40% of their time on administrative or manual tasks.
In this blog, we’ll introduce you to workflow, explain what workflow is, some of its benefits, and the different workflow tools available in legal practice management software to help you streamline your law firm.[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" id="whatis" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none" shape_type=""][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
If we go back to the basics, workflow itself is defined as the sequence of industrial, administrative, or other processes through which a piece of work passes from initiation to completion.[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" id="process" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none" shape_type=""][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
Process, automation, and workflow are terms you’ll hear people refer to as synonyms or married together such as “workflow automation” or “process automation”.
Though they sound similar, the three terms refer to different things:
For example, if you’re trying to improve your client intake, here’s how each term would be defined:
Process:
A prospective client contacts the website > someone from the firm contacts the prospective client > an initial consultation is scheduled > an attorney meets with the prospective client
Automation:
A webform populates a database, a personalized email is created and sent from information stored in the database and a document is automatically generated based on information stored in the database.
Workflow:
[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" id="benefits" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none" shape_type=""][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
For many law firms, workflow can be a game-changer by creating structure and efficiencies within their practice.
Although the list is long, here are some of the most important benefits workflow processes can bring to a law firm:
[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" id="areas" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none" shape_type=""][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
Workflow can be used in any area of your practice that requires administrative work but the majority of the legal practice management programs will focus on automating one of three areas:
74% of all legal consumers visit a law firm’s website to first take action. This means if your firm has a high volume of website form submissions you need a process for managing your pipeline.
Today, many firms receive an automated email from their website’s form tool with the prospective client’s information, but that doesn’t get the information into your case management software to begin managing the intake process.
These days, most legal technology offers workflow tools to help you manage your intake.
This includes sending personalized response emails out once someone contacts the firm, scheduling follow-up tasks, merging new client agreement documents, or keeping the status of the potential client updated.
If your firm deals with a high volume of matters, such as an insurance defense or personal injury firm, workflow within matter management software can be used to help you juggle all the balls in the air.
On a matter, you can use workflow to do things such as schedule follow-up tasks if a member of your staff hasn’t touched a matter within a certain number of days, automatically email updates to clients or generate/email medical records requests for you with the click of a button.
Using workflow to manage the pre-bill process and collections can help dramatically improve cash flow.
For pre-bills, workflow can flow the pre-bill through an electronic approval process. If your firm requires the associate then responsible attorney to review a pre-bill before posting it, the workflow can move the bill from one person’s approval list to the next, before finally updating the status once all the approvals are completed. Your billing team can then receive a notification that the bill is ready to post and send out.
Collections are another pain point for a lot of law firms. It requires the staff to constantly manually send out reminders to your clients. With workflow, you can have reminders automatically sent out to your client once a bill is overdue and continue sending the emails until the balance is paid off.[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" id="types" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none" shape_type=""][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
If you work with a team, there is a good chance that you assign tasks to different staff members at different stages of a case.
Think about when you open a new case. If you don’t have activity workflow, you either:
This can be automated using a calendaring workflow within practice management software.
Some legal practice management programs will let you create prebuilt lists of tasks and then quickly assign them out.
Other programs will automatically assign tasks to different staff members you’ve designed once a matter is open.
Or finally, programs will give you a list of tasks and let you fill in the staff you want to complete the task.
This is helpful to any firm, but especially to firms that have a high volume of cases, new potential clients contacting the firm, or if you have a high staff to attorney ratio on your team.
Similar to tasks, many firms have a set of internal deadlines or meetings they want to schedule once a new case is opened or reaches a certain stage.
For many firms, this requires a paralegal or assistant to manually calculate relative dates based on a certain deadline. It’s time-consuming and error-prone.
Many legal practice management software programs have a feature built in to solve this problem.
The technical term for this feature is chain calendar events. These are all appointments with relative dates based on a trigger date such as “date of trial.”
This isn’t to be confused with a scheduling order designed by the courts but rather, a list of internal deadlines.
Automated workflow expands beyond activities and allows you to flowchart your processes into software automation. This type of workflow will keep your case status up to date and offer your staff different options based on the process you’ve defined for that stage of a case.
Your process for opening a new matter might look like this:
Throughout this process, your system could use workflow to take the burden off your staff by automatically merging the engagement letter, sending out an emailed retainer bill to the client, and even opening the matter file in your system.
With workflow, the software will bring you down the path you set up and automate certain tasks, but your staff will still be required to prompt the software to move to the next stage by marking tasks as complete or clicking on the next step.
Advanced automated workflow is like having a robot assistant.
The difference between automated workflow and advanced automated workflow is in an advanced automated workflow, your staff doesn’t have to click a button to make something happen.
Advanced automated workflow can be triggered by the creation of a record, updates to a record, or queries.
Your possibilities become endless with advanced automated workflow, but it does require the most setup.[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" id="practicemanagement" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none" shape_type=""][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
ActionStep is a cloud-based, legal practice management and billing and accounting software. Within ActionStep, you’re able to build a matter-centric automated workflow.
Their tool lets you create different workflows based on the type of matter. The individual workflows are broken into linear stages of a case. Once a matter is moved into a certain phase of the case by a staff member, the workflow can perform tasks such as generating appointments/tasks, creating merged documents, or sending emails.
ActionStep also allows you to purchase prebuilt practice packs that have already been set up for you if you want to plug in and go.
Centerbase is a cloud-based, legal accounting, billing, and practice management software. Within Centerbase, you’re able to build advanced automated workflows on any record type.
Each step of a workflow can automatically or manually trigger different events to occur such as creating a record, updating a field, merging a document, sending an email, or creating a calendar appointment/task. Workflows in Centerbase are not linear, they instead let you move throughout the workflow based on your needs.
Clio is a cloud-based, legal practice management and billing software. Within Clio, you’re able to create intake workflows.
Clio’s intake workflow allows you to create forms for clients to fill out. Once the form is submitted, internal tasks can be assigned and personalized emails can be sent to the prospective client.
Rocket Matter is a cloud-based, legal practice management and billing software. Within Rocket Matter, you’re able to create calendaring workflows on matters, based on status updates. These workflows can create tasks assigned to different members of your staff or the workflow can create calendar appointments based on relative dates.
As Zapier put it, they’re “the glue that connects thousands of apps.” Their software is used to connect different applications in your technology stack, based on certain events occurring. If you’re using different siloed programs within your firm, this is a great option to integrate your processes and curb duplicate entry.
For instance, if you enter a new potential client in your practice management software, Zapier can create a task in your task management software for someone to follow up and add that contact to a specific marketing bucket within your email marketing software.[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" id="implement" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none" shape_type=""][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]
As soon as you pick a workflow tool, it's natural to want to get started right away.
However, it may be beneficial to take a slower approach to implement your new process automation tool. If you’re implementing a new practice management software that includes workflow tools, get into the software first before you start designing workflows.
By delaying your workflow implementation, you’re able to better understand how the new software works. Many firms jump right into implementing workflow by designing their workflow process around how their previous software worked, which in turn makes the workflow effective.
Another common recommendation is to build your workflow out in pieces. Start small, use what you’ve built for a few weeks and continue to build from there. It’s common for a flow to sound good during implementation but isn’t practical once you begin using it. If you build your workflow out in pieces, it’s easier to tweak these changes as they come up.
Finally, if you’re new to workflow, work with a legal consultant. There are many in the industry that have spent their careers helping law firms implement workflows and can guide you through designing the right workflow for your firm’s processes.[/vc_column_text][/vc_column][/vc_row]
Benjamin Franklin famously said that “nothing is certain except death and taxes.” If he had been talking about law firms, he would have also added: “and time entry.”
We all know how tedious and frustrating time entry is, but it’s, unfortunately, a necessary evil for nearly all lawyers at firms. Your law firm must bill to be paid.
The key to minimizing the frustration and allowing the lawyers at your firm to cut back on nonbillable time so they can get to higher-value work is to implement legal tracking software that actually works. Your firm administrators and bank account will also thank you for the heightened efficiency and accuracy.
As always, we have you covered on how to start making changes for the better.
Change is hard! Many attorneys, particularly more senior attorneys, are reluctant to modify their time-tracking ways. “Why fix what isn’t broken?” they might ask as they keep handwritten time-entry diaries.
There are a number of reasons why lawyers stick with tried-and-true ways of manual time recording: simplicity, efficiency, and accuracy. We understand that convincing holdouts to stop tracking time offline isn’t an easy task, but we promise you that it’s easier than deciphering your legal professionals’ handwritten scribbles and going through call logs and calendars to manually enter their time at the end of each billing period.
Simplifying the time-tracking process and offering your attorneys a streamlined, integrated time-tracking tool may help to convert even your most adamant holdouts. At a minimum, it will make the process easier and less painful for administrators and staff who assist with time entry in your billing system.
For lawyers, time is always of the essence. But when you have court in the morning, a filing for another client in the afternoon, and a conference call for yet another client in the evening, simultaneously tracking, keeping, and entering time understandably slips.
The real issue is the culmination of those slips and delays that results, usually, in the attorney and their admin playing detective at the end of the week (or worse, month) and trying to piece together the story of their billable time from fragments in your legal billing software. This method almost always results in underbilling and loss of productivity (not to mention stress, frustration, and other headaches too).
Other offenses include simply not tracking time accurately or efficiently, which is a problem that tends to plague junior attorneys. They might lose track of the time spent on phone calls, forget to start their timer, forget to bill for time emailing or texting with clients, or underbill for a meeting that went long. These attorneys are trying their best but need a little help on the back end with better tech.
Luckily, all of these mistakes are easily remedied with time-tracking software and integrations.
We’re so glad that you asked! Legal technology can transform the way the lawyers at your firm track their time, and a comprehensive, integrated legal tracking system is the best way to do so.
With so much on their plates, it can be difficult for lawyers to remember every time they perform billable work. In the middle of deadlines, they may lose track of the time they spent on research, emails, text messages, or phone calls. Travel time may slip through the cracks. An organized system helps prevent this chaos from occurring.
Additionally, productivity tools take the tedium out of billing, so lawyers feel more engaged. When your professionals feel better about their work, they do better work — which, in turn, affects your profitability and client satisfaction.
Not only can these tools help lawyers capture more of their billable time, but they can also help lawyers understand where they’re spending most of the time. If that time happens to be nonbillable, they may need to rethink their workflow or approach to matters.
Consider the following tools and features courtesy of tech:
With the right tech, your legal practice will be off to greener pastures, both literally and figuratively. We know the process of getting the lawyers at your firm to bill in a timely and accurate manner can be a struggle.
By getting the right legal practice management software in place, you’ll minimize friction in workflows, help lawyers enter time more regularly, and save the administrative staff at your firm time and headaches. Plus you’ll increase your firm’s profitability. It’s a win-win-win-win.
Legal technology is great, but it can feel overwhelming for lawyers who aren’t sure how to maximize the benefit of the features of the software — especially those who are more comfortable storing their information in Excel spreadsheets or in Microsoft Outlook.
If you’re new to legal practice management software, you may have noticed that you can manage almost everything under the sun. With features to oversee everything from employee productivity to client satisfaction, you can also manage individual cases and matters as they relate to certain employees or the law office as a whole.
With all the ways to collect metrics and analyze case information, you may be left wondering what’s the difference between them all? One of the most common questions is the difference between case management and matter management solutions and the benefits your law firm can derive from them.
Matter management and case management are not the same thing, but they’re related. Many people are confused by these two terms because they’re used interchangeably. After all, sometimes lawyers refer to cases as matters and vice versa.
It’s easiest to think of these two concepts as an umbrella. A law practice’s business is made up of individual clients who have cases that form the bulk of the work. Lawyers and staff manage these clients and cases on a micro level, keeping track of the discovery, communications, and billables per case and client. But the cases exist under the security of the larger umbrella.
Matter management is the larger umbrella. It governs the practices and processes that makeup case management and the business of the law firm relating to a particular case or client (or set of cases and clients). It is more complex and higher-level than case management because it involves more moving parts.
Matter management is overseeing the business processes of the law firm for individual cases. It involves managing both external and internal processes. Law firms can also use matter management to manage complex litigation with multiple clients and related cases progressing simultaneously.
For law firms with multiple practice areas, matter management may include analyzing the productivity of multiple lawyers working in particular practice areas or the billable hours spent on certain types of cases. It can also involve tracking budgetary and financial metrics by practice area or by cases with a similar feature. Matter management gives partners the opportunity to review spending and productivity-related to a matter as a whole and the impact that it has on law firm resources.
Legal matter management isn’t just about tracking internal processes but also managing external processes as well. It often involves overseeing any external providers working on a case, like expert witnesses or local counsel. This can mean assigning internal and external lawyers and administrative staff to cases and specific tasks and examining the overall operational efficiency of the case management process.
When a matter management system is used to manage complex litigation, multiple attorneys can upload their legal documents, work products, and data into the cloud-based system so that they can review and download documents from anywhere. Plus, the system serves a useful project management function because each contributor can see the work that their colleagues have completed in real-time through task lists and collaborative features, like a comprehensive calendaring system.
Case management is managing everything that relates to the lifecycle of a particular legal case or client. It is internally focused and is more about the processes of managing a case than the implications that the case has for the larger business of the law firm.
Think of a case management system as a single source of truth for a digital case file. Legal case management software usually includes managing appointments and court dates for a particular case, storing and organizing documents and discovery, managing client and witness communications in a client portal, time tracking, and billing and invoices for a particular case or client.
Case management is a great way for lawyers to manage cases that involve other attorneys, administrators, and clients but that don’t quite rise to the level of complex litigation. Unlike matter management, case management collaboration is more limited to the case at hand rather than a larger matter. It is less of a tool for law firm management because it isn't designed to provide the same high-level insights into workflows related to case management.
Legal operations professionals can leverage practice management software to streamline almost every business process, like billing and payments, metrics reporting, and client intake. Certain key features can also be used to organize workflows related to matter management and case management in several ways.
Increased automation is the number one way that legal technology streamlines legal processes, including those related to matter and case management.
The benefit of automation is that you don’t need to recreate the wheel every time you do something. Instead, you can rely on legal technology to do the legwork for you. You also don’t need to hire a dedicated employee to perform tasks that can be automated and can rely on the legal operations team to oversee the use of the technology.
Automation is handy for case and matter management. Instead of having an administrator draft, print, and send out a bill, the software can automatically create an invoice for a case or a matter. Then the technology automatically sends it to the lawyer for editing and then to the client for payment. This process reduces the time that administrative staff spends collecting payments and following up on delinquent accounts.
Legal matter management software and case management solutions are also highly intelligent. They can automate the timekeeping process by detecting billable hours from appointments on a calendar and correspondence sent to a client through the system. This eliminates the time that a lawyer needs to spend tracking billables and inputting data.
For matter management specifically, the software can automatically pull data and generate helpful reports that allow law firm management to keep an eye on the firm’s profitability and overall health. This means that stakeholders and timekeepers can spend less time digging around for the right data and metrics and more time being productive.
Legal technology can also help legal professionals standardize administrative tasks, like invoicing, calendaring, and organizing discovery. Standardizing routine tasks gives your legal team members more time to direct their efforts elsewhere and minimizes human errors made in manual tasks.
While lawyers still need to understand, research, and apply the law, they can lighten their workloads from administrative tasks that are time-consuming when they are standardized by technology.
For example, instead of conducting an in-person client intake, case management software can automate the client intake process and send out standard templates without needing a lawyer or paralegal to set up an appointment. This cuts down on the need to have an intake appointment for every new client, which saves time. It also reduces the need for administrators to print out intake documents, schedule intake appointments, and correspond with the client.
Legal technology has revolutionized the processes related to document management, especially for case and matter management.
With legal software, lawyers can upload and organize discovery and documents as part of a case or matter management system. This feature streamlines the discovery process by giving users (including clients) 24/7 access to the documents and incorporates useful features like the ability to search for frequently accessed documents. That means no more sifting through a cluttered desktop or irrelevant discovery when you’re only looking for one particular document. It also helps facilitate a remote work system where employees need to access documents from home.
Case and matter management software also make it easier for teams to collaborate on documents. Lawyers and administrators can review changes and past versions of work products and opt into notifications when documents are accessed by certain parties. This makes follow-up more immediate and keeps the discovery process moving. It also gives clients the ability to upload emails directly into the case management or matter management system, so that they can be easily produced in the future.
Intuitive document management can increase the overall productivity of the law firm by cutting down on time spent managing documents.
Case management and matter management undeniably play a role in financial management since the revenue stream starts and ends with cases. Legal technology makes it easy for legal operations professionals to streamline financial management practices and implement a comprehensive financial management system.
With the right technology, lawyers can easily track their billables and nonbillables on certain cases and invoicing for a case. Management can then track billables and nonbillable hours on a larger scale as part of their matter management and employee productivity analysis. This provides insights into larger financial trends that may affect the law firm as a whole.
Technology does more than just track hours and generate invoices. It also generates financial reports and can inform management about how a particular case or set of cases is affecting the law firm’s bottom line. It helps management track financial trends, allocate resources, and get a picture of the firm’s overall financial state. This makes it easier for the firm to stay on top of key performance indicators and achieve long-term financial goals.
If you’re looking for new ways to simplify your workload and manage all of your cases, you need a better system than Excel spreadsheets and a desk full of clutter. If you’re ready to look for a technological solution, look for a matter management and case management system that helps you keep every important detail in one place.
Check out a free demo so you can see for yourself how Centerbase is the one system to rule all of your case and matter details.
We’ve talked before about the importance of legal analytics and legal technology for law firms. If you’ve already made the leap to using a cloud-based legal management system, you might be overwhelmed by all the data it’s collecting. After all, most lawyers don’t moonlight as statisticians.
It’s difficult for leaders to know what metrics are the most important for the firm’s success in the long term and how to use those metrics to make higher-level decisions that help drive law firm profitability. The best way to start is by tracking the metrics with a convenient and easy-to-use tool that keeps them organized all in one place.
That tool is called a dashboard. Every law practice can use dashboards to easily track financial metrics, make informed decisions, and grow their business.
A dashboard is a customizable page that uses simple graphs and visuals to monitor key performance indicators (KPIs) in real-time.
Usually, a dashboard is a landing page and part of a larger cloud-based law firm management platform. Dashboards provide law firm management with an easy-to-digest snapshot of the metrics and relevant data for their goals. Instead of struggling to understand the big picture, dashboards provide much-needed perspective and turn raw data into actionable information.
Dashboards are a tool to help law firms increase productivity and stay on track. They empower law practice management to monitor progress and make informed decisions that drive firm strategy, hiring, staffing, pricing, and more.
Dashboards aren’t just for law firm management. They can also help lawyers and staff monitor appointments, tasks, and individual metrics. Access to dashboards helps employees stay on task and improve their collaboration while allowing management to do a deeper dive into individual employee productivity.
Data points are raw numbers without any context. Data points are the building blocks for the information that is displayed on the dashboard. Data informs metrics and KPIs and the graphics that appear on your screen.
Legal technology platforms constantly collect data. For example, when timekeepers input data (like their billable hours or completed tasks) into a case management system, it is automatically populated and incorporated into other aspects of the software and may also interface with other technology solutions.
A great example of a data point is the number of employees in your law firm, the number of daily website views, or an employee’s time spent on a particular task, like billing. Data points are different from metrics because you can’t influence them. Data is data, no matter how you spin it.
Metrics add meaning and context to data sources and inform KPIs. Metrics measure the overall health of a law firm. Law firms track key metrics to create KPIs that measure progress toward achieving a larger business goal.
Some examples of metrics are the actual minutes or hours that lawyers spend on particular billable tasks per week (instead of just a raw number), the lawyer turnover rate in the office, or the percentage of new clients who view the website and request a consultation.
KPIs reflect a law firm’s progress (or lack of progress) toward achieving a particular goal. They are forward-thinking data collected to analyze productivity.
KPIs are based on specific metrics related to different aspects of a law firm’s functionality, including budgeting and billing, education and training, overall client satisfaction, and internal processes. The law firm’s leaders identify a goal based on the metrics and then use KPIs to measure progress toward that goal.
KPIs based on our example above include reducing the time that lawyers spend on billing processes by 25% each month, generating 30% more clients in the upcoming year, or retaining employees for at least 3 years.
Data points are the foundation for a metric, which gives data meaning. Then the metric (or multiple metrics) are used to create a KPI and monitor progress towards a particular goal.
Dashboards are only as helpful as the information that they display. Even though they are simple, dashboards require some forethought to set up. Legal practice leaders should take time to customize their dashboards to be the most practical and effective.
Before using your dashboard, you’ll need to have KPIs. A clearly defined KPI helps you achieve your business goals. It keeps everyone in the office on the same page and makes your dashboard more useful. A well-defined KPI is SMART: it is specific, measurable, attainable, realistic, and time-bound, meaning that it has a specific deadline.
A great example of a KPI is to bill 25% more hours in the first half of the fiscal year. This KPI is clearly defined so that every timekeeper can get on the same page. It is a realistic goal that can be measured and tracked throughout the designated period.
A dashboard is designed to be a snippet overview of your progress toward reaching KPIs and the health of your law firm. Most law firms have many different business goals that change over time. It is important that you declutter your dashboard and only focus on the most important KPIs for your purposes.
If there is too much information on your dashboard, it takes away from the tool’s simplicity. The more data that’s displayed, the harder it is to quickly digest important trends and track progress. As time passes and you reach certain goals, you can re-evaluate your dashboard and add or subtract KPIs as necessary.
The great thing about dashboards is that you can have more than one. Instead of having a dashboard that tracks everything under the sun, you can set up different dashboards for each area of the business. For example, you should have a dashboard dedicated to financial metrics and a separate one dedicated to client metrics.
Using multiple dashboards also lets employees track the metrics as they relate to their own performance and responsibilities. To reach your law firm goals, you’ll need to rely on your staff. By giving timekeepers access to their own dashboard and the ability to track their own metrics, it keeps them focused and sets clear expectations for their work. Instead of nagging lawyers about how they spend their time, they can self-monitor and make adjustments along the way.
Your law practice can use a legal dashboard to track just about any metric. Law firms should consistently track financial, learning and growth, client services, and project management metrics for every practice area. Each of these categories should have a dashboard that reflects the KPIs related to them.
Of course, many of these metrics tend to relate to a law firm’s financials. After all, streamlining internal processes, increasing lawyer productivity, and having happy clients all affect revenue. An easy way to start is by creating a dashboard to track financial metrics.
Small and mid-size law firms that want to grow will benefit from tracking some combination of the following financial metrics:
Just because law firms should track all of these financial metrics doesn’t necessarily mean they should all be included on the same dashboard. Law firms need to take the time to identify the metrics that are specific to reaching their financial KPIs. Law firm management may opt to have multiple financial dashboards that subdivide these metrics even further.
A well-thought-out dashboard can benefit a law firm by driving productivity and helping the overall business development. Dashboards help law firm leaders turn data into usable information to inform decision-making. They are an excellent tool to track financial performance and monitor the firm’s finances without wasting time staring at meaningless numbers. Dashboards can also be used in conjunction with other best practices, like reporting, to increase the bottom line.
Well-organized dashboards can also keep law firm management focused on the big-picture goals for the business instead of getting bogged down in the minutiae. Plus, dashboards can help keep everyone in the office on the same page about firm performance and give them the business intelligence they need to focus on their role in growing the firm.
Innovations in legal practice management software have changed the way that law firms do business. Technology is an incredible tool for law firms looking to streamline workflows and increase productivity, but how do you know which one to choose? While some software is fully integrated, others can only perform one function, like billing and accounting, client management, tracking metrics, or generating reports.
Sometimes the options can feel overwhelming, and many law firms find that their workflows end up fragmented across multiple platforms.
This fragmentation defeats the purpose of using practice management software, which is to make your life easier by managing all areas of your law practice. Law firms that use multiple platforms to manage distinct parts of their business end up creating more work for employees. For example, lawyers may be required to enter data multiple times in different systems, so you fail to reap the full benefits of the technology.
While QuickBooks is a popular option for managing legal accounting and timekeeping, it isn’t the most efficient option for exactly that reason: it doesn’t always play nice with other technology designed specifically to address the needs of the legal industry.
There’s no point in using legal accounting and billing software if it makes your work harder. It needs to have enough features to streamline your workflows and simplify your workload. You don’t need to invest in software that only functions as a glorified clock that tracks time.
Fortunately, legal accounting and billing platforms have a variety of features that can help your law firm manage finances, even for small law firms that may grow and change significantly over time. Sometimes this means that the software includes features you never knew you needed or those you thought you could live without until you tried it.
Given the number of financial accounts in a law firm’s financial ledger and the potential number of firm clients, it can be daunting to track them all in a standard bookkeeping system. Law firms must track assets, retainers, receivables, revenue, equity, expenses, and much more. A centralized repository that puts all of your bank accounts, operating accounts, and related information at your fingertips in real-time is essential.
Every lawyer knows that closely managing client trust accounts is an integral part of ethical (and legal) law firm billing. Billing and accounting software must be able to effectively manage lawyer trust accounts that hold clients’ funds before they are earned. This includes tracking interest-bearing accounts (IOLTA) and three-way reconciliation with the asset sheet, trust asset account, and trust liability account.
Legal accounting and billing software must be able to accurately track billable hours and support LEDES e-billing practices. It’s even better if the software has features to automatically detect timekeepers’ billable hours, such as the ability to capture time for appointments or communications sent through the same platform.
Some law offices use flexible fee arrangements, depending on the client or type of case. To be effective, the accounting software should recognize various fee arrangements like fixed fees, contingent fees, and subscription-based payments.
Generating invoices and collecting payments is one of the most time-consuming parts of legal billing. Software that can generate and send automatic invoices to clients, facilitate edits and changes to bills directly within the system, and collect credit card payments through a secure system will cut down on the time that administrative staff spends on billing.
It’s important for billing and accounting software to synthesize data and generate reports that give law firm management insights into the efficacy of billing procedures. These reports may include billable and nonbillable hours per timekeeper, client, or case as well as measures of attorney profitability.
Law firm billing and accounting are important because they tie directly to the financial success of the business. Legal practice management software must be able to track metrics related to big-picture finances like expenses, overhead, and cash flow so that management can pinpoint areas of success and opportunities for improvement.
Perhaps the most important feature of legal billing software is that it can be customized to support your unique business goals. For example, a legal billing solution might offer add-ons like billing templates, a customizable dashboard to track relevant billing and accounting metrics, or the ability to create one-of-a-kind financial reports.
There’s no doubt that your legal practice management software should include billing and accounting features within the larger platform. In fact, this is one of the most common reasons that law firms choose to implement cloud-based software.
Law firm employees spend time tracking billables and nonbillables. Management spends time reviewing revenue statements, budgets, and law firm expenses. Billing administrators spend time generating invoices and following up on delinquent accounts. By having legal practice management software that includes billing and accounting features, you can streamline some of the most time-intensive, manual processes at your law practice. This software also lets management review billing and accounting data within the larger context of other law firm metrics.
Legal practice management software without any billing or accounting features leaves a gaping hole that management usually needs to fill with multiple platforms. This can confuse the data and your employees, and it typically creates more work for everyone. Plus, it usually results in an added expense for the law firm.
QuickBooks is billing and accounting software from Intuit. It’s primarily marketed toward small businesses, including small and mid-sized law firms.
Intuit has developed two different versions of its subscription-based software package: QuickBooks Online and QuickBooks Desktop. Depending on the subscription and version of QuickBooks that you choose, it may include features like automated invoicing, expense tracking for mileage and receipts, payment collection, and payroll tax management.
QuickBooks wasn’t designed to be accounting and billing software purely for law firms. Because of this, it must be integrated with other cloud-based legal management platforms. This means paying for more subscriptions and integrating multiple systems just to manage what should be run-of-the-mill billing workflows.
There’s no reason to use QuickBooks for law firms when you can have legal practice management software that streamlines more than just billing and accounting processes.
Law-focused software does more than just track finances. It also lets you integrate your billing and finance data into a larger system. This means you can use the platform for billing processes and better understand your data as it relates to other parts of the business. You’ll get a leg up in increasing productivity and your bottom line when you have one system that can do it all.
Legal practice management software is a better choice for law firms than QuickBooks for many reasons, but the principal reason is that it’s designed for lawyers. That means you won’t need to worry about facilitating integrations with other legal platforms or pay extra money for multiple subscriptions. It also means that there are features specifically designed for law practices, like supporting alternative fee arrangements and pricing models. Instead of generating an invoice that is designed for any type of business, you can create a custom invoice and incorporate legal-specific best practices, like LEDES coding and an attorney-review process, that increase efficiency.
With legal practice management software that includes billing within the larger system, your data is also stored conveniently in one place. This cuts down on the need to double enter data or cross-reference information in multiple platforms. It also makes comprehensive financial reporting easier since one system can pull data from different areas to make useful reports that go beyond the basics of billing and accounting.
While QuickBooks has a dashboard feature, it’s limited to billing and accounting metrics. It isn’t as comprehensive as the dashboards included in fully integrated systems that can track billing as it relates to other areas of the business. This means that you can make more progress on achieving your key performance indicators, even if they aren’t purely related to financials. For example, it might be helpful for law firms to track what attorneys regularly have clients who aren’t paying their bills or the amount of time that timekeepers spend on particular clients or matters.
At the end of the day, legal practice management software is superior to QuickBooks because it’s full-service technology with heightened functionality. It doesn’t fragment your processes and create more confusion. Instead, it streamlines workflows and incorporates billing and law firm accounting data to give unparalleled insights into your law firm’s overall health.
The Pareto Principle is the theory that 80% of your results come from 20% of your effort. This principle applies to client retention, meaning that 80% of a law firm’s revenue comes from just 20% of its clients.
This principle is incredibly powerful for law firms that want to use minimal resources to maximize their profits. By focusing on retaining and improving the client experience for the top 20% of your current clients, you can significantly increase your revenue and grow your law firm.
One way to start the client experience off on the right foot is to offer a new client welcome kit.
A new client welcome kit is a collection of documents that you give to new clients after the intake process or initial consultation. The welcome kit introduces the client to the law firm and its employees, provides practical and necessary information for reference throughout the case (like billing processes and key contacts), and sets the client’s expectations for the representation.
Client welcome kits will look different depending on your law firm’s practice area. Some law offices create a physical welcome kit, while others prefer the ease of an electronic version. Either way, the kit should include, at a minimum, the following six items.
Your welcome package should include a billing document outlining your fee schedule and expenses, invoicing and billing practices (such as whether you accept credit cards), and the signed retainer or engagement letter. It should also include an introduction to the client portal, plus instructions on how your client can use it, and a list of the common questions that a typical client has.
A short document summarizing the client’s legal matters and the legal services that you plan to offer goes a long way. It shows your client that you were listening to them and planning to meet their needs and should include details beyond those in a standard retainer agreement.
It’s a good idea to include a short bio and key contact information for each lawyer, paralegal, and support staff member working on the case. You can also outline the best ways to communicate with each person and list an emergency contact option for after-hours or urgent legal issues.
A clear flowchart describing the different steps in the legal process is a great tool for your client to reference throughout different phases of the representation. This helps keep your client informed every step of the way.
Lawyers do a lot of work on clients’ behalf, but some responsibilities lie squarely with the client. A concise checklist gives the client an idea upfront of what their responsibilities will look like throughout the case. These may be responsibilities like acquiring and producing documents in a personal injury matter or the timing for making important decisions in an estate planning case.
We all love automation, but sometimes a personal touch is what you need to show clients that you care. Include a handwritten or digitally personalized welcome letter to thank each client for hiring you.
Unlike other practice areas, family law firms handle similar matters over and over again. The client welcome packet is a great way to focus on the specific nuances of family court cases and prepare clients for the road ahead.
One option is to include an overview document explaining the basics of common family law topics, such as divorce, child custody, or the mediation process. If you create a few different documents for each topic, you can easily include something relevant for new clients.
Discovery is also particularly important in family law cases, but it can be daunting for new clients. Including a specific intake checklist in the welcome packet helps family law clients begin to track down the documents that they need to disclose at some point. This makes discovery go faster and also helps clients manage the process in an organized way.
A well-prepared welcome kit builds trust between the new client and the lawyer, which benefits the overall attorney-client relationship.
A welcome kit is an important tool to communicate with the client and one that presents the law firm in an organized and professional manner. A welcome kit can help manage client expectations so that your clients feel satisfied and don’t become overwhelmed. It also serves as a great point of reference for clients throughout the legal process, leading to happier, less-stressed clients who are more likely to hire you again.
Additionally, clients who trust their lawyers and have a past positive experience with a law firm are more likely to rehire and give you referrals. A new client welcome kit starts representation off on the right foot because it signals to the client that their case is important to the law firm. It also gives new clients a sense of transparency about the law firm and legal process.
When clients have realistic expectations, they are less likely to be disappointed in their lawyers. This keeps clients coming back time and time again.
Since 80% of profits are typically made from 20% of clients, retaining that top 20% is essential. Finding new clients is also expensive, so keeping clients on board is a great way to maximize profits and decrease costs.
By spending too much time trying to turn unsatisfied clients into satisfied ones, law firms ignore the happy, easygoing clients who make them money. A better business model is to maximize revenue from happy clients by keeping them on in the future. This doesn’t mean ignoring other clients and their needs but instead using thoughtful business practices that allocate resources to get the most bang for your buck.
The welcome kit is a great way to increase client retention, but it’s not the only way. It’s best to use a welcome package in conjunction with other practices designed to create happy clients. Some other tools to increase client retention include streamlining the intake process, implementing easy-to-use legal technology, and generating retention reports to monitor your progress.
When law firms use all of these tools together, they can have a huge impact on client retention.
As a lawyer, you’re no stranger to legal research and analytics. Data drives your practice and law firm as you review dockets, draft briefs, search SEC filings, and find deeds. But is your firm intelligently conducting research on and reviewing the analytics related to its bottom line? If not, it’s time to get started.
Your law firm likely already has some kind of reporting system, or at least a CRM, in place. The question to ask yourself now is whether your system is working and whether you’re taking full advantage of and properly reviewing all the data it produces. By putting the right tools and systems in place, your law firm and its administrators can have aggregated key performance indicators (KPIs) on important data at their fingertips. Reporting and legal analytics will give your law firm real-time, actionable insights into your productivity and profitability.
We understand that these concepts may be new to you. That’s why this article offers helpful tips that will help your firm maximize the value of your law firm data with the right legal analytics tools.
Legal analytics is the process of collecting, organizing, and then applying data to the practice and business of law. The goal is to use the data you have to make more informed decisions that enable you to better manage your firm’s performance.
With the right analytical tools, your law firm can assess its own data and numbers to create helpful reports on all aspects of its business model and then take actionable steps to streamline workflows and increase its profitability. In sum, data analysis is a magic wand that can help your legal practice sort through the chaos and drive toward better performance.
Analytics gives your firm a competitive edge because you’ll be able to unlock the value within your data and gather business intelligence that you otherwise wouldn’t have. Your administrators will be given that magic wand to help maintain, improve and, if needed, transform your law firm.
For example, legal analytics can help you, your law firm, and your legal professionals and administrators forecast the ebb and flow of certain matters, strategize financially based on facts, and manage internal resources and teams more intelligently. You can view user-friendly data visualizations that graphically represent billable hours, money going in and out, and invoices.
We already know your next question. This all sounds great, but how does it apply practically to the nuts and bolts of my law firm’s practice and operations?
Legal reporting software offers adaptive, real-time reports. Basic data points for legal reporting include billing, accounting, productivity, and compensation.
Through reporting and analytics, your law firm will be able to identify, for example, its highest paying clients and matters, figure out where the money is being made and where it’s being lost, manage staffing and track lawyers’ billable hours, ensure accuracy in origination credit and compensation matters, and use other raw data points to build complex spreadsheets and pivot tables to aid your firm’s decision making.
This translates to using legal analytics and reporting to set pricing, stick to realistic financial performance standards and targets, make informed hiring and employment decisions by knowing which specialty groups are growing and need more help and which are falling behind, track key client relationships, and allocate resources between departments appropriately. Financial reporting helps your firm reduce risk and identify cost-saving opportunities.
By reviewing internal data and creating customized reporting, law firms can use analytics in nearly all of their day-to-day operations, improving their profitability and functioning in both the short term and long term.
Each law firm has unique needs. A real estate boutique will need something different than a large litigation firm, and the types of reports run will vary based on those individual needs (and also show why customization is so very helpful).
Below is a list of examples of the types of reports your firm should consider when building out your reporting structure across all departments and practice specialties. For more detailed information regarding what these reports include and how often to run them, check out our legal analytics and reporting guide.
The right reporting and analytics will help your law firm administrators evaluate the health of your firm. They must be able to identify KPIs that speak specifically to the firm’s unique needs and determine how often these metrics should be monitored: weekly, monthly, quarterly, or annually. Firm leaders will be empowered to make more strategic decisions because they’ll know just where the firm can and should grow and where it should scale back.
Legal reporting and analytics will undoubtedly help your law firm optimize its performance. Choosing smart legal analytics solutions and reporting tools makes it easy to develop a competitive advantage and keep your firm running smoothly all year long.
Once you implement the right analytics tools, you’ll find your firm is running smoothly and efficiently. To accelerate your progress, download our legal analytics and reporting guide, which will give you a deep dive into different types of reporting so you can choose the right reporting options for your firm.
Lawyers live and die by billable hours. If you don’t meet expectations for billable time, you won’t generate revenue and grow as a firm. If you go overboard, you risk losing clients.
Since billing is arguably the most important administrative process in the legal profession, it’s a great place to start when you’re looking for ways to increase your firm’s productivity and profitability. In this blog, we’ll discuss some steps you can take to improve your firm’s productivity and accelerate client payables.
The standard billing process in the legal industry usually looks something like this:
This process might get the job done, but it’s not very efficient. In fact, it leaves an opportunity for law firms to target the billing workflow as a way to increase their productivity and realization rate.
A clear billing policy gets everyone on the same page when it comes to billing at the law firm. Without a clear policy, timekeepers may have inconsistent and ineffective billing practices that contribute to lost profits. A clear policy cuts down on billing errors and streamlines the process to increase billing productivity across the board.
It’s no secret that lawyers tend to work more nonbillable hours than billable hours per day. That’s because, between court appearances and client meetings, many lawyers are spending time on tedious administrative tasks. By automating administrative workflows with legal technology, law firms can decrease the time that lawyers and paralegals spent on nonbillable tasks and improve billing productivity.
eBilling software streamlines billing workflows to help law firms generate bills faster and get paid sooner.
That’s because admins won’t need to print multiple pre-bills and spend precious time sending drafts back and forth. Instead, lawyers can edit the bill directly in the system after being automatically notified that a pre-bill has been generated. Everyone on the billing team can review it contemporaneously and quickly send it up the approval chain without printing a single document, sending an email, or picking up the phone. Once the bill is approved, the billing team is notified, and the bill is immediately sent to the client or uploaded into the client portal.
eBilling software also makes it easy for clients to pay their bills online, so there’s no lag time. They support different types of billing arrangements like split billing, consolidated billing, and project billing and can be customized to allow partial payments or custom amounts. eBilling software can also send automated reminders to clients with delinquent accounts or payments coming due so that an administrator doesn’t need to waste time following up. The optimal eBilling system will have built-in integrations with other practice management systems, making it easier for lawyers to understand their law practice at a glance and simplifying tasks for small firms that don’t have a large administrative team that oversees all of these processes.
The client experience is directly tied to billing productivity because happy clients pay their bills and give referrals. Dissatisfied clients are more likely to balk at invoices and request adjustments that affect your realization rate. That’s why it’s important to make new clients feel confident that your work is worth the cost.
Law firms with a great intake process are well-positioned to cut down on billing disputes. The client relationship starts the moment a client contacts your office, so firms that set expectations related to billing from the beginning ensure that clients aren’t blindsided by the price tag and avoid debates over billing rates. Not only is this a great way to increase billing productivity and realization rates, but it also keeps clients coming back for more.
You’ll need to delve into the analytics to make sure the billing process stays on track and actually increases the law firm’s bottom line. The best way for law firm management to understand the raw data is to use legal reporting software to generate reports about the various workflows related to billing. These reports can provide key metrics that help managing partners understand the bigger picture.
Collection reports help law firms identify delinquent accounts and observe patterns related to nonpayment. For example, a specific attorney may have several clients who aren’t paying their bills, which could be a sign of poor client relationships or a lack of detail in their descriptors. This data and other key performance indicators help law firm management address why a client isn’t paying and track whether automated billing reminders are having an impact.
Lawyer productivity reports are a great way to identify the timekeepers billing the most hours and those billing the least. These reports let law firms specifically track billing productivity and provide an opportunity to target less productive lawyers and turn their nonbillables into billable hours. A firm’s productivity reports can be run monthly, yearly, or at a custom interval of your choice.
High-revenue client reports help law firms identify which clients consistently bring in money for the firm. These reports help law firms understand what clients bring the most value to the office and those that detract from it. With this data in hand, law firms can work to keep clients that are directly tied to billing productivity and law firm profitability and cut loose the others.
Every law firm operates differently, so custom reports are a great way to grab data that is directly related to your billing workflow and might not be captured in a standard report. With custom reports, law firms have the freedom to innovate their own billing process and track exactly what is most significant for them.
Of course, there are many more reports that can keep your billing processes on track. Check out our Legal Analytics and Reporting Guide for more information on how specific reports can be helpful to your firm and when to run them.
To get paid regularly, you have to bill regularly. Billing your clients according to a schedule (usually monthly) helps to consistently bring in revenue. Clients will pay you more frequently and are less likely to dispute their bills.
That’s because sporadic billing signals that your firm is disorganized. Clients are more likely to think that a disorganized lawyer made an error on the bill. Not only that, but clients will likely also remember certain line items on the bill (like that 30-minute conversation you had a few weeks ago) in the short term, but as time passes, they might forget about it and raise a dispute.
Irregular billing is simply asking for a client to dispute charges, which affects your realization rate and how quickly you get paid.
Allowing clients to use a credit card to pay and allowing them to pay their bills in installments are great ways to get paid faster, even if it’s not in full. Lawyers are expensive, and many clients are making financial sacrifices to hire one. They might not have enough money for the full bill every month. By allowing clients to use credit and payment plans, you’ll be more likely to collect your fees and garner favor with your clients.
eBilling software identifies delinquent accounts and sends automated reminders to encourage clients to pay overdue bills. These reminders gently nudge clients (or not so gently, depending on how late it is) to make a payment they may have forgotten about. This software also cuts out the need for admins and lawyers to spend time hassling clients about payments so that they can focus on higher-value work instead.
Insurance defense firms have it harder than most law firms in other practice areas when it comes to billable hours and realization rates.
That’s because insurance defense firms are usually hired by an insurance company to represent the insured according to the terms of the policy. Sometimes the insurance company and the insured have the same interests, but usually, they don’t—especially if the behavior in question might fall under the policy.
When insurance companies scrutinize a firm’s billing processes, it puts stress on the billing department and can result in a low realization rate that seriously affects your bottom line. That’s why insurance defense firms need to work harder (and smarter) to make sure they are paid in full on time.
Every law firm should be generating itemized bills that specifically describe the basis for each charge, but this is particularly important for insurance defense firms. That’s because insurance companies are notorious for arguing that line items are ambiguous. Billing software that supports LEDES billing makes it easier for individual lawyers to describe their time and standardizes codes for each task so that insurance companies can’t argue ambiguity.
It’s common for insurance defense firms to have multiple attorneys assigned to the same case. Usually, they are working together but in slightly different roles. It’s particularly important for co-counsel to have consistent and accurate time entry practices so that there are no discrepancies. Otherwise, insurance companies might use the inconsistencies in timekeeping as a basis to negotiate their retainer or fee.
A clear billing policy and automation with legal technology standardizes the billing process and removes human error so there are fewer errors in timekeeping.
It’s pretty common for insurance defense firms to provide legal services for multiple clients all tied to the same matter. Split-billing is an easy way for law firms to divide and send bills to multiple different clients without adding additional work for the staff. Insurance defense firms should also explore other fee arrangements and pricing schedules, like project-based, subscription, and contingency fees, to make the billing process easier and cut down on the need to waste time arguing with insurance companies.
Billing isn’t rocket science. But it’s not why you went to law school. And, while it ensures you get paid, it’s not value-added work that improves your profitability. Law firms that use technology to simplify the billing process are better able to track their receivables, improve their lawyers’ productivity, and raise their bottom line.
