Case Management Billing Guidelines
Understanding binding agreements for your firm’s profit
“Good fences make good neighbors,” the phrase coined by Robert Frost, can also be applied to legal terms once you are in charge of a law firm.
When providing your services to clients, the more transparent and efficient that you implement your billing practice, the easier you can ensure fair compensation for your business while enhancing client satisfaction. Law firms strive to provide exceptional legal services to their clients while maintaining a profitable practice.
However, before you partake in anything, understanding the law firm’s billing guidelines could be very useful.
Step 1:
What is a legal billing system?
Whether you are just barely starting with your law firm, or you’ve been here for a while, sometimes you think you have the full grasp on a concept, but once someone else asks you what it is, you realize that you may not understand it fully, either.
For that, let’s first define what a billing system is.
According to SimpleLegal, legal billing guidelines are a binding agreement between a legal department and a law firm, that ensures payment in exchange for legal work.
The guidelines establish rules for legal invoicing formats, staffing, deadlines, and other important aspects of the working relationship.
Guidelines are one of the most effective ways to control one’s legal spending and build stronger working relationships.
The key for an effective billing guideline is to set clear expectations.
Unfortunately, the billing process tends to be deemed monotonous, annoying, and repetitive. It is a dreaded process by lawyers, who often do not want to participate. Besides, it is very time-consuming.
Why would I need Billing Guidelines?
Billing Guidelines summarize the procedures and policies related to client invoicing and fee collection.
These guidelines promote transparency by clearly communicating the law firm’s and its clients’ expectations and responsibilities.
By establishing comprehensive billing guidelines, law firms streamline their financial processes and avoid potential conflicts or misunderstandings.
How do I manage the Billing process?
According to Clio, the billing process looks something like this:
Overall, you need to establish and define clear hourly rates that ensure that both the law firm and their clients are aware of the pricing of each legal service.
Timekeeping procedures also help accurately track billable hours, allowing for accurate invoicing and allowing clients to undertand and validate the fees incurred.
Another practice that ensures that clients are charged fairly and efficiently is to determine the billing increments, such as every six minutes or every tenth of an hour, ensuring consistency and clarity when calculating billable time.
Clio states that in many cases, the law firm billing process goes like this:
- The law firm brings a new client, opening their case.
- Billable time and disbursement fees/expenses are logged throughout the case.
- At the end of each month (or at the end of the case, if it is shorter) bills and expenses for each client and case are put into a draft bill.
- Lawyers add notes and adjust costs as needed and approve the bill.
- A final version of the bill is created and sent to clients, for payment.
- Clients pay. This can be done via whatever payment method the firm accepts as valid.
- The accounting team sends follow-up reminders regarding late payments.
It seems straightforward enough, but often, issues arise. For example: lawyers that take too long to approve bills can cause delays for bills getting sent out. This, of course, also delays the payment.
What do I need to include in Legal Billing Guidelines?
According to LegalSimple, there are five key elements necessary in legal billing guidelines:
- Introduction
For your guideline, your introduction needs to state the purpose of the document and the expectations of the relationship.
As we have expressed before, clear, well-established expectations are what set your billing guidelines for success.
Use the introduction section to define the working relationship, along with its pros and benefits.
Bear in mind that your billing guidelines are not a set of rules or demands, but a guide -as its name states- for building strong partnerships.
Remember to keep your introduction fairly short, straightforward and right to the point, so you don’t get the other part involved tired before actually partaking in the business relationship.
Your introduction should also include the following:
- The date when the billing guidelines will go into effect.
- A declaration of your legal department’s right to modify or reject invoices that do not comply with the guidelines.
- A reminder for law firms to accept the terms by signing the signature page included in the guideline.
- Staffing
This section dictates who has the right to hire vendors, addresses appropiate levels for staffing certain projects, and outlines the approval process for staffing changes.
In this section you can also clarify that you will not pay partner-level rates for work that could be completed by an associate or paralegal.
- Legal invoicing and law firm billing procedures
Your billing procedures explain how outside counsel must submit invoices and define your preferred legal invoicing format.
Establish properly how you would like to receive invoices. Then, describe clearly how invoices should be formatted and what they should include.
- Timing
In this section, you will outline how often vendors should submit invoices and how we will be paid.
Use this section to establish the following:
- Frequency of invoice submissions
- Timeline for invoice payment
- Penalties for late invoices
- Invoices that will not be paid
- Method of payment
- Signature page
The signature page is your assurance that your outside law firms have read the billing guidelines.
A signature page should state “our firm acknowledges receipt and accepts the terms of these legal billing guidelines” can prevent a lot of disputes down the line.
Credits to LegalSimple for the brief summary on how to build your legal billing guideline.
Now, along with starting with a clearer, more straightforward vision of billing, you will also need a team that allows you to provide a high-quality service for your clients to expect a good paycheck too.
With Legal27, lawyers can focus on their legal work while leaving the receptionist duties to a reliable and dedicated team.
Contact us to learn more about how we can support your law practice.
