Billing legal clients requires sound professional judgement in terms of both getting the amount on the invoice to accurately reflect billable hours, and also in hitting the right tone and level of customer service throughout. Educating lawyers about the invoicing process, from descriptions and billing to addressing client concerns is something few firms contemplate. In missing some of these vital ingredients, there is a strong public perception that legal fees are simply too high in general.
You understand the value of good legal representation, but often your clients do not. Be proactive in speaking to prospective clients about how your services can affect the outcome of their cases, as well as being clear very early about your fee schedules and methods of billing. Give them an estimate for the total service. It is widely acknowledged and accepted that legal fees are not cheap, but if your firm commits to being transparent from the beginning, potential customers will be more likely to understand just what your service is worth to them.
Careful navigation of these issues at the start of a client relationship can help your firm to identify any current challenges, how to overcome a perception about high costs, and improve your cash flow.
Let’s look at some of the reasons your clients may think your law firm is charging too much.
They don’t understand the cost breakdown. People who come to your firm seeking legal advice and support are often in the grips of high emotions. They aren’t thinking about how attorneys are paid, which portions of their invoice will go to each service, or the fee structure that might work best for their case. It may be well worth your time to lay out a short, detailed explanation of your cost breakdown.
Is the service they require best paid hourly, contingent, or with a flat fee? Most people understand that hourly rates are most common, but they may not know that there are other types of fee structures in place. Explain how the experience level of the acting lawyer determines the fee, which will help lay the foundations of an understanding that cheaper is not better, particularly when it comes to a more complicated case.
Go over additional fees at the onset of a legal agreement. Your client doesn’t know that your fees rarely include extras, no matter what kind of fee structure they are charged. Court filing fees are an example where you might bill against a retainer, or charge in addition to the agreed-upon cost. The key here is to be upfront, so that your client does not experience any unexpected fees.
Vague billing descriptions. Clients commonly complain about billing issues with their lawyers. Fees and unaddressed customer concerns as well as invoice timing are some of the most frequent issues, so clarity needs to be a top priority for your firm’s billing process. This is a great way to lessen potential complaints and disappointments.
Review each bill carefully and with diligence. Consistently addressing any potential concerns your clients have with their fees the moment those issues are raised will ensure trust and maintain good client relationships. A good lawyer will help their client to understand how to minimize costs going forward, as well as admitting to any mistakes they have made and adjust accordingly. Such careful reviews can save you money as well as maintaining harmony with your customers.
Negotiating fees. Static rates don’t help your firm; annual adjustments are needed to cover the rising costs of running a business. But other than incrementally raising your hourly fees to reflect the cost of living, consider negotiating with your clients as well. In early stages, as in a consultation, discuss fees upfront. Often, a flat fee (plus expenses) can work in the favor of both lawyer and client if it is a straightforward case with no risk of complications. This pay structure aligns the lawyer’s and client’s interests.
If an hourly fee is more appropriate based on the case, make some room for flexibility. You want to retain clients, and this is another method of building a trusted relationship at the onset. Your client could pay a flat fee upfront which has been mutually agreed upon as reasonable, or you could offer a lower hourly rate if the case gets more complex than initially anticipated.
Make sure your fees are reasonable. You can negotiate all you want, but if your fees are not reasonable, potential consumers will be harder to retain. Keep an eye on your competition, based in your area and providing the same types of service as your firm. If your hourly fees are in line with the kind of service you are providing, but there is a lack of legal experience which means the time taken to complete tasks is higher than usual, the final bill will not reflect a reasonable amount. Adapt your fees to reflect the factors which determine fairness, so that there is less chance for disputes when it comes time to invoicing.
Lawyers lose between 10-30% of billable time by not accurately recording their time. It is a task which is easy to forget in the mix of pressing legal responsibilities. Inefficiencies are common without a good system for time tracking, and trying to record from memory is never going to be precise. LawBillity can increase your firm’s billable hours by up to 20%, and save up to 10 hours a month in administration. Sign up for your free 14-day trial today. No credit card required.