When the demands of a busy law practice are at full throttle midway from the year-end push, billing clients can present as a colossal challenge to many attorneys. However, good billing practices serve as the backbone to running a successful firm.

Consistent and timely billing practices combined with diligent dispute resolution that more quickly anticipates, and then ameliorates, client concerns, are both crucial in avoiding client misunderstandings or sticker shock. Allotting regular timeframes to review timekeeping entries, outstanding invoices, and overdue accounts help to streamline firm billing, demonstrate communication, trust, and consistency to clients, and anticipate concerns before they develop. When they do arise, giving billing issues the attention they deserve allows firms to avoid leaving earned fees on the table and identify concerns which, if not corrected, may develop into other problems with the representation.

Although most law practices make the final push for fee payments in December, mid-year is a good time to assess current protocols and make adjustments to set firms up for a successful and ethically compliant year end.

Assess Billing Practices and Adjust Accordingly, Early and Often

Consistent and regular review of timekeeping and billing practices—like time entries, invoicing, accounts receivable, payments made, or return of an unused portion of an advance payment in trust—are integral to the attorney-client relationship. Diligent accounting can help address client concerns before they develop into something more severe.

Often, a dispute is raised over a client bill merely because there is confusion about what work the attorneys are doing and what costs are associated with that work. Regular review of time entries allows attorneys to ensure what is being sent to the client accurately reflects the progress made on the file.

Attorneys should review itemized bills regularly to ensure entries have enough detail, reflect time spent that is appropriate for the work performed, and clearly describe the work done and how that work moves the case forward. If a client does not understand a bill, thinks they are being overcharged, or even does not recognize a new timekeeper, it might be because the bill does not provide enough detail or because it is difficult to read. A resolution may be as simple as revising billing entries to provide additional information.

Adopt Regular Invoicing

In taking inventory of accounts receivable and work in progress fees, law practices can review whether their invoices are being sent on a regular basis, and to whom they are being sent. For example, if bills are going unpaid, the bills might have been sent to the wrong person or it could be that the firm or the invoices are not in the client’s system. These situations are typically easy to rectify, but may go unnoticed.

If bills are not sent regularly, sending an invoice that encompasses several months of work can come as an unpleasant surprise to a client. A client may even begin to question the work that has already been completed if irregular bills suggest that the representation is unusually expensive. Monthly palatable bills reduce the risk of a fee dispute and increase the chances of prompt payment. Regular invoices also educate the client and demonstrate what tasks are being completed in each case.

Is the Client Paying Regularly?

In addition to ensuring good client relations, regular bills avoid the risk that the firm or practice has a substantial amount of fees invested before learning that it may not be able to collect payment. With frequent, regular bills, nonpayment or fee disputes typically come to light sooner and may involve smaller amounts than disputes resulting from a single bill covering six months or a year of legal fees. Issuing bills in regular (and therefore smaller) amounts reduce the risk of a dramatic hit to the bottom line if there is a dispute.

In addition, the failure of a client to pay over an extended period of time can indicate a problem, such as that the client does not have the financial resources to pay, the client has questions about the bill, the client disputes the costs, or that the client has concerns about the representation.

Regardless of the explanation underlying an unpaid fee, communicating with the client to pinpoint the issue is imperative. Not only will better communication often result in more bills being paid, but these conversations help satisfy attorneys’ ethical obligation to communicate with their clients about a representation. Indeed, California Rule of Professional Conduct Rule 1.4 requires attorneys to “reasonably consult with the client about the means by which to accomplish the client’s objectives in the representation” and to “keep the client reasonably informed about significant developments relating to the representation, including promptly complying with reasonable requests for information.” Ca. R. Prof. C. 1.4(a)(2)-(3).

Regular invoices can help satisfy an attorney’s obligation to engage in regular communication with a client and increase the likelihood of a positive outcome if there is a dispute or delay in payment.

Resolving a Fee Dispute

A good goal to set when problem-solving a fee dispute is to ensure everyone is on the same page about the volume of work the case demands and the cost of that work. Answering questions and communicating to make sure clients understand the work involved is important to avoid even bigger disputes down the road.

The attorney may choose to discount or write-off amounts—as a client service issue—if the amounts exceed what was expected. In some instances, write-offs may be necessary if the client was not aware how much the attorney would incur or if the attorney conducted legal work that was not approved or authorized by the client. Sometimes a write-off is simply a gesture of goodwill by the attorney.

Either way, it can be incredibly helpful for the lawyer to ascertain why the client is objecting to payment. If the client is low on funds, that is an issue that may impact whether the lawyer continues with the representation or if other arrangements need to be raised. If the client refuses to pay because the client is dissatisfied with the quality of work, additional steps may be warranted. Typically, ignoring such dissatisfaction does not make the issue go away and can get worse with time. Most firms in this situation will confront the issues directly to determine whether the client is unfairly refusing to pay or if there is a more serious quality issue.

By implementing diligent billing practices at mid-year, attorneys can reduce the stress of the year-end collections crunch, comply with ethical obligations, and help maintain a good attorney-client relationship.