5 Billing Challenges Faced By Modern Family Law Practices
Originally published in Family Law Magazine: http://www.familylawyermagazine.com.
Family law attorneys already have their hands full with emotional clients, children in need and complicated, ever-evolving divorce laws. They also face their own unique set of practice management issues that take time better spent in court or consulting with new clients and affects firm’s profitability. In this paper, we want to look at five of the most common challenges found in family law practices and offer solutions that can simplify attorneys’ lives.
Technology: Boon Or Bane?
In an article in The New Yorker, journalist James Surowiecki opines, “Technology is supposed to make our lives easier, allowing us to do things more quickly and efficiently. But too often it seems to make things harder, leaving us with fifty-button remote controls, digital cameras with hundreds of mysterious features and book-length manuals, and cars with dashboard systems worthy of the space shuttle.”
This is just as true with improper implementation of law practice management software as it is with television remotes. Wrong solutions may simply complicate things, requiring you to take an hour to accomplish something that you could do in ten minutes with pen and paper. How is that smart?
On the other hand, just because some technology is overdesigned doesn’t mean that all technology is bad. How many of you “senior” attorneys remember a day before cell phones and easy internet access and digital files, but yet can’t actually recall how you managed to run your practice without these tools?
The best option is to give serious thought to the challenges you face, and then find a technology that addresses those needs. The software that’s right for the attorney across the street practicing estate planning isn’t necessarily the right solution for you as a family lawyer. Even if you already have a great solution, it is worth your time to evaluate the new cloud-based offerings because they offer solutions that yesterday’s desktop software couldn’t.
The Five Big Problems
First we need to look at what kinds of problems interfere with the function and growth of a firm like yours. Here are five of the most common issues family law attorneys face:
- Mobility – Family law is one of the most mobile specializations in the legal field. You spend a lot of your time in courtrooms, settlement conferences, and mediation sessions. You need matter details at your fingertips and you need to be able to record your hours and expenses right away rather than trying to remember your charges at the end of the day.
- Fee Disputes – Clients love to nickel and dime their attorneys, especially in lengthy cases decided in ways they consider unfair. An angry client could file a frivolous billing dispute months or years down the road that at best wastes your time (and money), and at worst draws the attention of your state bar.
- Retainer Handling – The best way to get paid is to get paid up front. Many family law practices ask for advance retainers so they can be sure to get paid. Even after you deposit those funds in your trust account or business account it is illegal to spend that money until you have earned it through your documented fees. Tracking every penny of retainer funds across dozens of cases is a challenge for many family law firms.
- Collections – Few attorneys want to deal with dunning clients for payments, but unless you stay on top of your invoicing you will find too many matters simply never get paid. A study by the Commercial Collection Agency Association shows that the chance of collection drops rapidly as accounts age so it is important to be vigilant.
- Billing Models – Although family law invoices traditionally use the billable hour, a recent study shows 62% of law practices surveyed are moving away from hourly billing in an effort to keep clients happy. However, tracking your actual expenses so you can be sure your fees aren’t too high or too low requires stacks of paperwork and is very difficult to do by hand.
The Five Big Solutions
Now I want to show you how specialized billing software for attorneys can address each of these problems. I am going to use CosmoLex legal billing software as my technology example since it is the program most familiar to me, but modern law firm billing software titles offer some if not all of these features.
Enter billable hours from anywhere
Mobility – Cloud-based law office management software like CosmoLex gives you secure access to your legal billing system from anywhere with an internet connection, which these days is pretty much everywhere. Rather than depending on hastily scribbled notes or your own memory, you enter your billable hours and expenses as they are incurred so you can bill accurately.
Maintain a comprehensive and secure audit trail
Fee Disputes – The best defense against fee disputes is a comprehensive audit trail, which is easy to create with legal time and billing software. Nothing stops a fee dispute faster than an itemized and chronological log of all your activities. Audit trails need to be scrupulously protected, since “my hard drive crashed” carries about as much weight with your state bar as “my dog ate my homework”. A cloud-based solution like CosmoLex stores data on remote, professionally-managed servers so you know your data is safe if you need to defend against a fee dispute.
Track retainer balances and pay invoices automatically
Retainer Handling – Family law attorneys normally deposit retainers in attorney trust accounts. That makes sense when you consider the duration of most family law cases, the large amounts involved, and the rules of your state bar association. However, attorneys often forget that trust accounting is even more critical to a family law office than their billing needs. Unless your trust and billing systems work together, you are eventually going to make a costly mistake in your record keeping. You really need a legal billing program with integrated trust management functions so you can track advance retainers easily. You also need to be able to issue low retainer reminders easily so you can notify clients when they need to replenish their accounts.
See unbilled, unpaid and overdue balances at a glance
Collections – Your collection efforts start with your invoices. In the article “Attorney Fees: Five Keys to Ethical Compliance”, author David Cameron Carr calls accurate invoices “an essential part of a lawyer’s ethical duty to communicate with the client.” Invoices should be clear and uncluttered so clients aren’t confused about how much they owe. However even the best clients sometimes neglect to pay on time. You can’t collect money if you don’t know what is owed. Legal billing software should give you a 360-degree view of your practice’s finances so you can tell at a glance what hasn’t been billed and what hasn’t been paid. In summary, two best practices to keep your collections manageable are consistent invoicing and timely overdue account notices. If your billing software allows one-click generation & emailing of invoices and payment reminders, then you are miles ahead.
Billing Models – You don’t want to be locked into the billable hour if you are looking into alternative billing, but you also want to retain the option for hourly rates if you want to supplement flat fees with added charges for unusual work. Even for flat fee matters, you need to be able to track unbilled hours and expenses so you can evaluate your fee structure and ensure it’s fair. Look for software that offers all these billing model options.
Technology does not always make things better, but that doesn’t mean you should continue to practice in the Stone Age. Sit down and make a list of the top five billing problems in your family law practice — they might not be the same as the ones above — and look for a software solution that addresses your specific concerns. With the help of the right technology, you will have more time to give your clients the personal attention they deserve.
CosmoLex is cloud-based law practice management software that integrates trust & business accounting, time tracking, billing, email & document management, and tasks & calendaring, in a single application. It is CosmoLex’s mission to simplify law firm operation and allow lawyers to focus on the practice of law. CosmoLex is led by CEO, Dr. Rick Kabra, who has years of experience in the legal software industry, catering to the specialized technology needs of small to mid-sized law firms.