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When you run a law firm, overseeing the client billing process is a little like working on your golf swing — no matter how much improvement you make, it will always remain a work in progress. Like analyzing your golf swing, however, any problem is easier to identify and manage if you break it down. So take a look at your billing process in terms of several discrete pieces. Typically, you will find the source of your troubles in one of these five areas: 1. Capture. We all know that law firms basically sell time, but creating time is generally not a problem. Capturing that time, along with the associated client expenses, is. You may be losing more time than you think. Capturing time depends in large part on the habits of the individual timekeepers. You already know that delayed time entry results in lost time. So don’t allow it — require your timekeepers to report their time daily and to enter it themselves on their own computers. Anything less is wasteful and keeps you from monitoring firm production weekly. No CEO would stand for such nonsense, and neither should you. The same is true with respect to client expenses — time is money. Older expenses are always at risk for non-payment. So have a staff person cull the mail for reimbursed client expenses and enter them into your timekeeping system the day they are received. And make sure that all your phone, postage, copy, and other internal expenses are entered or downloaded immediately. 2. Timeline. Don’t make billing an afterthought. Create a specific, structured timeline to let everyone know what is expected and when. At a minimum, the following dates should be set in advance: � Deadline to input time: Generally, all time for the previous month should be entered by noon on the first business day of the new month. � Deadline to distribute pre-bills: First drafts of bills should be distributed internally by the second or third business day of the month. � Deadline to complete pre-bill edits: This is where breakdowns in the process frequently occur. Set a specific day, say, the fifth business day of the month, and go find the tardy partner(s) that day. Stay on that person like a bill collector, and use whatever sticks and carrots you deem necessary to ensure compliance. � Deadline to send bills out to clients: You might have set this at the seventh business day of the month. You won’t always be able to meet that deadline, but if you can regularly get everything out by the tenth business day, you will be way ahead of most law firms, large and small. 3. Tracking. Running a billing process without a tracking mechanism is like a pilot flying in the clouds without any instruments. You may have some vague idea of how you are doing, but you don’t know enough to be sure. Good software is a must. While most timekeeping software will compile time into bills, the tracking and reporting functions separate the good from the merely adequate. When choosing such software, don’t just buy what everyone else does — do some research. Look for a program that can easily give you the reports you need, particularly those that allow you to monitor timekeeping and production weekly or even daily. (For additional guidance, see “Use It or Lose It,” Small Firm Business Spring 2004). 4. Collection. Many law firms don’t even have a formal process for collections. Don’t make that mistake. A proactive collections process will not only get problem clients on your radar before they get too far behind — it will also keep you on theirs. Your collections process should, at a minimum, include: � Timely invoices, as described above. � Monthly rebills, or reminder statements that list all outstanding invoices, which allow you to remind clients how much and how old their debt is. � Reminder letters to clients who get behind, such as when invoices reach 60 or 90 days past due. � Phone calls from the firm administrator or managing partner if the letters go unanswered. � A clear policy regarding write-offs of bad debt. 5. Enforcement. Adopting all of the preceding measures won’t do you a bit of good unless you actively enforce them. Remember, in the Old West, “the Law” referred not to the statute books, but to the sheriff. You should designate both a staff person and a partner — preferably the managing partner — to be responsible for watching deadlines and intervening quickly when problems arise. Anything that the staff person can’t resolve can be kicked up to the managing partner. Get on problems as soon as they arise, and back each other up. All right — so now you’ve examined your firm, located the weak links, and employed corrective measures. You still wonder: If the billing process is a work in progress, how do I know when it’s working the way it’s supposed to? It’s like your revamped golf swing — in due time the results will speak for themselves. Jonathan Smaby is a co-founder of Leganomics, a Dallas-based firm that offers management and operations assistance to law firms. He can be reached at [email protected].

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