The following post is the fifth in a six-part series on legal billing excerpted from our white paper, Houston, We Have a Billing Problem.

legal billingTime and billing is, conceptually, the direct conduit between the legal work being performed and the client. As such, the time and billing function is in an extremely unique position: it holds the key to the most critical business information in your law firm and functions as a fundamental communication point with a client.

Every key insight about the critical business operations of the law firm, from how much time and dollars are spent on resource (including lawyer hours, paralegal time, and other costs to service clients) to revenue generation activity (how much money you make and how you process it), resides buried within the time and billing aspect of your practice. Virtually every piece of key information that a firm can use to remain competitive and differentiated is subject to capture and analysis from within this function.

As a result, the time and billing function – formerly thought of as nuisance work, or administrivia – is in actuality becoming an increasingly vital aspect of the firm’s prospects for future financial stability and growth. The law firm that can capture, surface, intelligently analyze, and act upon this key business information, will be well on its way to establishing the type of competitive differentiation needed to thrive.

In addition, the quality of your invoices, how they appear, the manner with which you present them, all has a profound impact on your relationship with your client. Sloppy, delayed invoices with line items from months ago don’t inspire confidence. Bad invoicing practices can jeopardize your relationship with your existing clients and the potential referral base they represent. As we discussed in our Ridiculously Remarkable Legal Billing E-Book, bad billing practices make you fall victim to the following rules:

RULE #1: The longer you wait to send out the bill, the more likely you’re in for a haircut and the bigger that haircut is likely to be.

RULE #2: Whatever “slow pay” instinct a client has, doesn’t even start until she gets the bill to begin with.

RULE #3: When you don’t send bills in a timely fashion, you send your client a message that receiving prompt payment really isn’t all that important to you.

RULE #4: Sending late, large, and surprising bills will ruin your relationship with your clients and hurt your chances of earning more business from them.

RULE #5: When your bills come in on-time and on-budget, your client is more likely to automatically pay them without thinking twice.

RULE #6: By not sending your bills out on time, you are essentially offering interest-free financing and performing your services at a discount.

POSTS IN THE SERIES:
How Bad is Your Legal Billing Problem?
Legal Billing: The Five Levels of Success
Your Legal Billing Problem Needs to be Solved Yesterday
Legal Billing: Which Law Firm Wins the Business?
How Legal Billing Practices Can Differentiate Your Firm
7 Steps to Fixing Your Legal Billing Problem