take the challenge...

Do you know how much is being lost by your firm at these stages:

• time recorded - how much in terms of 'utilisation' is being lost due to fee earners in your firm being unwilling to record their time against a matter, perhaps simply because they believe it will look bad if it is later written off?

• time billed - how much in value of time recorded is being discounted from the amount billable at the time the bill is prepared, perhaps because the fee earner is embarrased as the client has not been kept informed of or agreed to fees being incurred?

• bills paid - how much is being lost due to discounting of bills to secure payment, perhaps because of client relationship breakdown? 

• bad debts - how much are you carrying in value of bills more than 45 days, more than 90 days, even longer, perhaps because fee earners are seemingly uninterested in chasing payment?

These are the key stages at which money earned by a firm can leak from the pipes, draining the firm of the resources it needs to thrive.  You may be managing with a certain level of wastage, but why not calculate what it would mean to recover even 25% of what is currently being dissipated?

Improving billing and collections means:

• more profit for distribution - to keep and attract the best lawyers and staff
• better cash flow - to release partnership capital locked up in the debtor book
• greater capacity - to fund for growth

Winning Formula

The formula we promote can be expressed in this way:

   Cost (power)         = Value (perceived)
Opportunity (profit)

The client comes to the firm with a situation and invests in firm’s power to realise the opportunity.  The firm has a service opportunity and lends its power for reward.

The key elements here are:

• Profit – the client pursues an opportunity because there is some profit in it – in other words the client perceives a potential for gain, which may include the avoidance of loss
• Power – the firm has the skills, resources and experience to address the opportunity on behalf of the client
• Investment – the client pays the firm for its services and in doing so invests in an expected return. Managing expectations as to return on investment is central to the service relationship.
• Perception – it’s all about perception!  Value is a matter of perception based on subjective judgment – being clear on both sides of the relationship about what each is contributing and how balance is to be established in the exchange is of vital importance to a mutually beneficial and sustainable service relationship.

The exchange of value lies at the core of every service relationship and unless there is mutuality the relationship will break down; if it breaks down then the firm will suffer in its collections so undermining the business and the practice.

Having run a substantial firm of his own, Peter is well aware of the challenges (running a business with a turnover approaching £10M the collections record was almost 100%).  If you would like to discuss your firm’s needs in this area, then just email or call on the numbers set out below.

See our Top 5 tips for billing and collections..

Billing and Collections – old problem, new approach

Unlike almost any other service they receive, clients have become used to not having to pay legal fees on receipt of the service.  Firms are left to rely on payment at such time as the client chooses and few are willing to enforce payment.  In effect the profession routinely finances the legal services that clients receive.

This is not a situation that is likely to change much in the foreseeable future and so the challenge is how to establish the most effective means of ensuring that fees earned become fees collected with the minimum of delay.  Improved collections mean better cash flow and fewer worries.

If your debtors are higher than they should be then there is only so much your Accounts department can be expected to do.  It is within the power of every firm, its Partners and other fee earners, to implement measures to reduce the incidence of late payment and bad debts.

The answer ultimately lies in the attitudes of Partners and fee earners have to the subject of fees and collections.  Most lawyers are reluctant to discuss fees and there are may be any number of reasons as to why this is so.  However, this unease is the source of the problem and it can be addressed.

Our Approach

We are not debt collectors.  Our approach to billing and collections is at the level of lawyer-client relationships and includes:
 
Enquiry – taking cross section of matters where collections have hit trouble look at the files and talk to the fee earners involved to see how things have been handled.

We also look at client collection relationships that are going well, taking into account different types of work and client relationships (from purely one-off transactions to long term relationships).  Examples of ‘best practice’ are there to be found and shared in any organisation.
 
Listening – in appropriate cases we would discuss particular collection problems with clients direct; including past and live matters.  Though client perceptions may be distorted there is always something to be learned as long as one is not preoccupied with blame. There may also be opportunities to reinvigorate troubled relationships that have foundered due to misunderstandings with regard to fees. 
 
Education – we coach Partners and other fee earners with regard to their attitudes and behaviours surrounding fees and collections.  We can also assist you in communicating to clients the importance to the firm of having bills paid promptly (investment in the firm’s development, technology and efficiency, Partner and fee earner skills development and education, etc).
 
Deliverables

These would include:

• Substantial reductions, over a period of 6-12 months, in bills unpaid for more than 60 days
• More confident Partners and fee earners, able to talk to clients and to each other immediately problems arise
• Clients who better understand the firm’s interests relating to collections
• Refined practice and policy that can be easily disseminated and monitored within the firm

Why not give us a call, or email and we will call you at your convenience?  Our numbers and email addresses are just below...