How to Manage Recurring Expenses for Law Firms

Efficiently managing recurring expenses is essential for the financial success of any law firm. From rent and utilities to software subscriptions and salaries, these expenses can significantly impact the firm’s bottom line. 

In this blog, we will explore strategies to identify, evaluate, and reduce recurring expenses, leverage technology for streamlined management, establish budgets and controls, and ensure compliance. 

By implementing these tips and strategies, you can optimize your firm’s financial practices and focus on growth and success in the competitive legal industry.

What Types of Expenses Do Law Firms Have?

Typical law firm expenses can vary by the size of the firm and the practice areas, but they generally include:

• Office space, rent, and utilities
• Staff salaries and benefits
• Office supplies and technology expenses
• Third-party professional services, such as accountants or marketing agencies
• Business travel and expenses
• Professional memberships
• Insurance
• Continuing education

Recurring vs. Non-Recurring Expenses

Law firm expenses, like other business expenses, can be recurring and non-recurring. Recurring expenses are the repeating costs that arise from routine business practices, often on a predictable schedule. Recurring expenses include office supplies, a mortgage or lease on office space, staff compensation, marketing expenses, office maintenance, subscriptions for legal technology, and utility bills.

Non-recurring expenses are costs that aren’t part of the schedule or everyday business activities. They may be one-off or exceptional costs, such as investment in computers and other technology devices, real estate purchases, severance pay, or repair costs following an accident or natural disaster.

Common Challenges Law Firms Have with Tracking Recurring Expenses

There are many challenges that law firms may face when tracking recurring expenses, including:

Manual Methods

Many law firms still rely on manual methods to track expenses like spreadsheets or paper ledgers. This is not only time-consuming, but it creates opportunities for errors that can have financial repercussions.

Subscriptions

Law firms usually have subscriptions for professional services, legal publications, research databases, professional organizations, and legal software. When all of these subscriptions are on different cycles with different due dates, it can complicate expense management.

Client Expenses

Law firms may incur costs on behalf of clients called hard costs. These costs typically include travel expenses or court filing fees. Tracking these expenses can be challenging to differentiate because some hard costs are absorbed by the firm or billed to the client.

Varying Payment Methods

All the recurring costs for a law firm may have different payment methods, including ACH transfers, checks, credit cards, and other electronic payment platforms. Keeping track of all of these payment methods can be difficult alongside other expenses.

Importance of a Defined Law Firm Budget

Your firm’s budget assists in managing your cash flow by allowing you to predict your income and expenses, which helps you identify any surpluses or shortfalls in your cash flow. This allows you to plan accordingly and take advantage of investment opportunities. 

Moreover, a defined law firm budget serves as a framework to assess your financial status and the impact of significant changes, investments, or expansions. By comparing your actual financial state to your budget, you can make more informed business decisions. 

Tips to Track and Manage Legal Recurring Expenses

Ready to take control of your legal recurring expenses? Here’s how:

Use Legal Technology

Expense tracking software makes it easy for firms to track expenses in real time, store invoices and receipts, and generate expense reports. Solutions, like Bill4Time, can streamline your expense tracking to reduce errors, save time, and provide a comprehensive view of your firm’s financial standing.

Implement a Centralized System

Legal technology provides a centralized system for a single source of truth for your expense tracking. Even though your bills will be to different providers with different cycles and due dates, you can manage it all in one place.

Categorize Your Expenses

With both recurring and non-recurring expenses, you need to stay organized to stay on top of your obligations and evaluate your spending patterns. Categorizing expenses ensure nothing falls through the cracks and is allocated properly. 

Use Reports

With comprehensive reporting, you can analyze your firm’s financial performance and identify trends to achieve success. You can view expenses on their own or include them in your full financial picture to make informed business decisions.

Embrace Law Firm Billing Software

Managing recurring expenses can be challenging when different payment allocations come into play. With tools like law firm billing software, your firm can manage expenses, stay on top of your cash flow, and prepare for the ebbs and flows of your business.

Law firms use the Uniform Task-Based Management System (UTBMS) to list and categorize services on client invoices. The UTBMS comprises a coding structure to ensure each task is completed, documented, and categorized. This way, law firms can accurately gauge spending habits and quickly identify any problems that arise.

What Are ABA Task Codes?

The American Bar Association (ABA), the Association of Corporate Counsel (ACC), and PricewaterhouseCoopers (PWC) originally developed UTBMS codes, but now the Oversight Committee (OC) at Legal Electronic Data Exchange Standard (LEDES) maintains them.

The purpose of these codes is to standardize and categorize legal services and expenses, enabling law firms to easily monitor and analyze these data.

Types of ABA UTBMS Codes

ABA UTBMS codes help law firms monitor their spending habits and other related activity.

A100 Activities

Activity codes reflect the type of activity and its associated cost.

• A101 Plan and prepare for
• A102 Research
• A103 Draft/revise
• A104 Review/analyze
• A105 Communicate (in firm)
• A106 Communicate (with client)
• A107 Communicate (other outside counsel)
• A108 Communicate (other external)
• A109 Appear for/attend
• A110 Manage data/files
• A111 Other

Counseling

Counseling is a more general category. These codes account for the time lawyers spend providing legal advice.

• C100 Fact Gathering

• C200 Researching Law
• C300 Analysis and Advice
• C400 Third-Party Communication

E100 Expenses

Expenses codes will categorize your spending, enabling you to budget better.

• E101 Copying
• E102 Outside printing
• E103 Word processing
• E104 Facsimile
• E105 Telephone
• E106 Online research
• E107 Delivery services/messengers
• E108 Postage
• E109 Local travel
• E110 Out-of-town travel
• E111 Meals
• E112 Court fees
• E113 Subpoena fees
• E114 Witness fees
• E115 Deposition transcripts
• E116 Trial transcripts
• E117 Trial exhibits
• E118 Litigation support vendors
• E119 Experts
• E120 Private investigators
• E121 Arbitrators/mediators
• E122 Local counsel
• E123 Other professionals
• E124 Other

L100 Case Assessment, Development, and Administration

Toward the beginning of using UTBMS codes, combining L100 with activity codes is typical.

• L110 Fact Investigation/Development
• L120 Analysis/Strategy
• L130 Experts/Consultants
• L140 Document/File Management
• L150 Budgeting
• L160 Settlement/Non-Binding ADR
• L190-Other Case Assessment, Development and Administration

L200 Pre-Trial Pleadings and Motions

Expenses codes are typically paired with these litigation codes.

• L210 Pleading
• L220 Preliminary Injunctions/Provisional Remedies
• L230 Court-Mandated Conferences
• L240 Dispositive Motions
• L250 Other Written Motions and Submissions
• L260 Class Action Certification and Notice

L300 Discovery

• L310 Written Discovery
• L320 Document Production
• L330 Depositions
• L340 Expert Discovery
• L350 Discovery Motions
• L390 Other Discovery

L400 Trial Preparation and Trial

• L410 Fact Witnesses
• L420 Expert Witnesses
• L430 Written Motions and Submissions
• L440 Other Trial Preparation and Support
• L450 Trial and Hearing Attendance
• L460 Post-Trial Motions and Submissions
• L470 Enforcement

L500 Appeal

• L510 Appellate Motions and Submissions
• L520 Appellate Briefs
• L530 Oral Argument

Project Codes

These codes categorize legal tasks for non-litigation, such as administrative work and filing. P200, specifically, focuses on the time attorneys spend investigating a case. P300 to P800 are the additional codes.

• P100 Project Administration
• P200 Fact Gathering/Due Diligence
• P210 Corporate Review
• P220 Tax
• P230 Environmental
• P240 Real and Personal Property
• P250 Employee/Labor
• P260 Intellectual Property
• P270 Regulatory Reviews
• P280 Other
• P300 Structure/Strategy/Analysis
• P400 Initial Document Preparation/Filing
• P500 Negotiation/Revision/Responses.
• P600 Completion/Closing
• P700 Post-Completion/Post-Closing
• P800 Maintenance and Renewal

Importance of Properly Tracking ABA Task Codes

Using and properly tracking UTBMS offers various benefits, such as:

• Invoice transparency: If a client receives an invoice with just a final payment amount at the bottom — they may be hesitant to pay it without a full list of services performed and expenses. Documenting every task, no matter how small helps create billing transparency.

• Organization of tasks: Managing multiple clients and tasks can be difficult to organize. Implementing the short and efficient UTBMS codes in an invoice keeps everything uniform and easily identifiable.

• Easily generating and categorizing reports: UTBMS codes make it easy to create, organize, and categorize legal tasks and expense reports.

• Monitoring billing guidelines and spending: UTBMS codes allow law firms to keep tabs on spending habits throughout the year, enabling them to identify areas for opportunity and make more informed billing decisions.

Best Practices to Track UTBMS Codes

UTBMS codes are only as effective as their proper implementation within a law firm. To ensure their usefulness, firms must establish clear and ethical billing guidelines and best practices for tracking these codes. This can be achieved by following the best practices outlined below:

• Consistently using UTBMS codes throughout the firm
• Training staff on how to properly use UTBMS codes
• Utilizing software to manage UTBMS codes and generate expense reports
• Standardizing naming conventions

By implementing these best practices, firms can:

• Set clear expectations from the outset
• Avoid confusion among staff members
• Analyze revenue generation
• Gauge client satisfaction or dissatisfaction

Legal billing software can also aid in this process by providing:

• Automated and customizable invoice templates
• Tools for tracking expenses
• Automated time tracking 
• Online payment options

Use Bill4Time for Streamlined Time and Expense Tracking

UTBMS codes help law firms categorize expenses and services performed when sending clients invoices. However, manual entry and tracking of UTMBS can make the process cumbersome. 

With Bill4Time, your firm can manage expenses, perform essential billing functions, generate invoices, and more in one place. Equipped with essential ABA UTBMS used by law firms, Bill4Time makes it easy to create naming conventions for expenses and track them with custom reports.  

Before we jump into accounting reports, let’s take a step back and picture how people invest time into their everyday lives on different levels. Think about what specific goals you want to achieve either in your professional or personal life. Health, family, business and fitness may come to mind.

Reports on any progress made is critical to making improvements, whether it’s a post-workout report on your fitness watch, your annual check-up review at your kid’s pediatrician’s office, or a spending report from your bank. These reports, full of specific and actionable data, help evaluate progress and improve for future endeavors. The same principles can apply to understanding the financial health of a law firm. Are you able to view your financial progress and make informed decisions? How can your business improve without understanding how it’s doing currently?

Effectively using accounting reports is vital to improving business performance. Let’s explore how Bill4Time’s custom reporting capabilities allow users to gain insights to help their firms and small businesses make knowledgeable decisions on business financials and operations.

Gain Access to Robust, Customizable, and Easily Shareable Accounting Reports

Accounting reports are vital to healthy business operations and help users understand and digest a company’s ledgers. With over 400 reports, your small business or law firm can use Bill4Time custom reporting features to better manage your business.

With the proper digital software, you won’t have to stress over finding relevant reports for your firm. Bill4Time customizes the reports your account has access to specifically for your type of business or practice area.

Depending on your plan and business, users can have access to anywhere from 50-100 reports to help you manage operations. To share reports, you can easily export your data as a PDF or CSV for additional analysis. Bill4Time fosters a team environment while maintaining the individual users preferences like favorited and bookmarked reports — we’ll talk more about those later.

Bill4Time’s Most Popular Accounting Reports

Income Statement: An Accounting Overview Report

An income statement is an accounting report that details a business’s net profit. Income statements are also sometimes called a profit-and-loss report. It includes a business’s invoices, both paid and unpaid, any income, and expenses to provide a detailed revenue report.

In Bill4Time, firms can use the account activity report to show a history of payments, invoices, and balance adjustments by client. Similar to an income statement, the account activity report shows the firm’s income from clients, both paid and unpaid invoices, and more information on specific payment details. Firms can also track expenses within Bill4Time, keeping businesses organized without the clutter of receipts.

Balance Sheet: The Current Financial Status Report

A balance sheet shows the ending balance of an account at a specific date. This gives firms a snapshot of their current assets. While used more currently than retroactively, a balance sheet helps inform businesses of their financial position at a certain point in time.

The account balance report in Bill4Time shows the balance due (amount invoiced without payments applied) and the unbilled (amount that is currently waiting to be invoiced) for each matter. This gives firms the ability to see what revenue is in, pending, and needed to be allocated, allowing them to make financial decisions based on their current situation.

Cash Flow Statement: The Money Tracker Report

A cash flow statement is exactly how it sounds — it details how cash flows in and out of a business. This kind of report can help business owners and law firm managers make decisions on business accounting and financials.

The collections report in Bill4Time shows payments collected toward each invoice, the users, and their billable amounts per payment for applied payments. This is similar to a cash flow statement with the details of cash coming into the business. The collections report shows all allocated payments collected towards each invoice, giving firms the ability to evaluate account activity.

Transform Your Firm’s Profitability with Reporting Features in Bill4Time

It’s one thing to have access to reports, but it can be a gamechanger when you know how to use them effectively. With easily accessible features that allow you to customize the way your small business or law firm runs reports, you can quickly get up and running to use Bill4Time to increase productivity

Accounting Activity at Your Fingertips Provides a Comprehensive View

In Bill4Time, your accounting activity is easily accessible which allows for quick and efficient reporting — even a quick check-in to put any last-minute fires out. Keeping this information readily available frees up your time to focus on other big picture business decisions. With Bill4Time Payments, firms can accelerate cash flow by overcoming one of the biggest challenges to getting paid — invoicing. Using Bill4Time’s invoicing and billing features can increase the accuracy of reports by automatically syncing any data entered.

Review Projects & Productivity to Plan for a Successful Future

Within Bill4Time reports, firms can view organization productivity month over month, year over year, allowing an understanding of workflow and efficiencies. Bill4Time gives firms the ability to understand which projects and matters are consuming the most time, allowing managers to make changes to processes to increase firm productivity and workflow. The Bill4Time reporting features also allows firm managers to evaluate which team members are bringing in the most business, providing insights to help better align compensation based on new revenue generated.

Optimize Efficiency with Favorite and Bookmark Reports

WIthin Bill4Time, there are many reports you can run, but there are some that certain users use more than others — depending on your role and the data needed to be pulled. If there’s a report users find they use more frequently, they can bookmark that report by clicking the flag on the right side of the web page for easy pulling later.

Favorite reports are similar, but dive into specific clients or matters that are run often. If you find you are running a report for a client or matter, you can run the report, enter your specific details for the report to pull the data, and enter in the description details about that report. Once it’s run, it is automatically saved as a favorite since it was created in the favorites tab. After it’s favorited and you go back into the report, all the details are already pre-populated and you can run that report automatically.

Unlock Your Firm’s Potential: Get a Bill4Time Demo

Bill4Time offers plenty of reporting tools for business management. Plus, you can organize files, plan your calendar and tasks, communicate with clients, and manage your firm from anywhere. You can download the Bill4Time app on Apple Store or Google Play today. If you want to learn more about Bill4Time and how it can help your firm add reporting features to reach your firm’s goals, schedule a demo today.

Are there hidden red flags in your firm’s billing practices? Transparency in billing is a key factor in client satisfaction and retention. 

For some clients, the legal billing process can be challenging to navigate making it crucial for firms to have transparent, easy-to-digest terms.

Find out more about red-flag billing practices to avoid and how you can maintain compliance with law firm invoicing software.

What Is Upbilling?

Upbilling is the practice of rounding up billable time. Most lawyers bill in six-minute increments, but with upbilling, lawyers are rounding their billable time up to the next half hour or hour, leading to excess revenue and unjust billing practices for the client.

Another issue related to upbilling, as revealed by the report, is that lawyers were billing for a single six-minute increment of time, despite listing tasks that would typically take a fraction of that time.

What Is the Difference Between Upbilling and Block Billing?

Though equally problematic, upbilling and block billing are different practices. The former involves rounding time increments up for billable hours, while the latter includes a range of tasks in one block of time.

With block billing, lawyers list separate tasks under one time entry for a bill, rather than itemizing their tasks and time increments. 

This doesn’t necessarily mean lawyers are billing for hours they didn’t spend working for the client, but it does make it difficult for clients to determine how that time was spent.

Issues with Block Billing

Clients often complain about block billing because it creates challenges for them in understanding how to budget and may lead to suspicion surrounding your timekeeping practices. 

Common Legal Billing Red Flags to Avoid

Some lawyers struggle with accurate timekeeping and end up underbilling for their time, missing out on valuable revenue for the hours they spend working on a case. Still, clients are quick to suspect that lawyers are “padding the bill,” leading to client disputes.

There are several legal billing red flags that you should avoid to maintain client trust, especially when it comes to the billing process:

• Block billing with large chunks of time and vague tasks
• Repetitive tasks, such as emails or phone calls, that are billed at the same amount, as the time typically varies
• Double charges for work performed by paralegals or other staff members, which is then reviewed by a lawyer
• High minimum billing times, such as half-hour increments for short tasks like client calls
• Repeated entries that have the same amount of time
• Billable hours that don’t align with the client experience, such as a bill for an hour client meeting that only took 15 minutes
• Billing for excessive office overhead

Research is another area where some lawyers may pad a bill. While some cases will involve extensive research on specific legal issues, lawyers should not need to conduct basic research for straightforward cases in their practice areas. That’s what the client is paying for – legal expertise, education, and experience.

Legal time tracking software like Bill4Time helps your firm avoid these pitfalls with accurate, convenient, and compliant timekeeping and billing practices. With custom invoices, you’ll have a detailed list of the tasks performed for a client and spot-on billable time with efficient timekeeping practices.

Adopt Transparent Legal Billing Practices

Whether law firms are deliberately padding bills or extremely inefficient, bills with red flags and errors breed suspicion and doubt in clients.

It’s essential for your law firm to maintain trust and compliance with accurate timekeeping, itemized invoices, and streamlined processes. Law firm billing software is the best way to optimize these processes and ensure that clients are paying fairly for your time spent on their cases.

Many law firms rely on the traditional billable hour for legal services, but there’s a growing trend for law firms to adopt value billing. More than just an alternative fee structure, value billing offers clear expectations, better client experiences, and fees for legal services that offer true value for both the client and the lawyer.

Continue reading to learn more about what value billing is, how it can benefit your firm and clients, and how to go about implementing it.

What Is Value Billing?

Value-based billing is a pricing model that’s based on the perceived value of your legal services and a successful outcome. Value is subjective, so coming up with a perceived value relies on collaboration and research.

Unlike traditional pricing models for law firms that include an hourly fee and billable hours that are invoiced, value-based billing is considered an alternative fee arrangement. Instead of tracking the number of hours performed on case-related work, the fees align with the output or outcome of a case, such as creating deliverables like contracts.

Benefits of Value Billing

Value billing offers many benefits, including:

Increased Client Satisfaction and Loyalty

The value-first pricing model ensures the best possible value for the client, which is a factor in referrals, reviews, and an influx of new clients from word-of-mouth recommendations. It’s a more client-centric approach to legal services and gives them a clear expectation for what they’ll pay, which reduces anxiety about obtaining and affording legal services.

Improved Profitability and Revenue Generation

The value-first pricing model improves profitability and revenue directly and indirectly. First, it ensures that you’re charging what you’re worth based on the value you provide for your clients, rather than the hours you spend on a case. Indirectly, value billing increases client satisfaction, facilitating referrals and new business that will keep your firm profitable in the long term.

Enhanced Efficiency and Productivity

Lawyers spend a lot of time on non-billable business tasks, including tracking, data entry, and billing for those billable hours. The rest of the time, they’re working but not earning direct revenue — even if the process is streamlined with time tracking software.

Value-based pricing can take time to set up initially as you analyze how to quantify the value your firm brings. Once the fees are determined, it eliminates a lot of the time spent on tracking time. Your firm becomes more efficient and productive with a lesser burden of administrative tasks.

Opportunities for Alternative Fee Arrangements

Value billing offers a lot of opportunities for alternative fee arrangements, such as flat-fee pricing for legal services, contingency pricing, retainers, subscriptions, and sliding-scale pricing. Each of these pricing models are suitable for different practice areas and offers benefits for both the client and the lawyer.

For example, flat fees are simple and predictable for certain cases, such as a no-fault divorce or drafting a will. Contingency, which is popular among personal injury attorneys, is a good option for cases that include a payout for a positive outcome.

Enhanced Focus on Client Outcomes and Results

With value pricing, you’re focused more on getting a favorable outcome than the time you spend on a case. Your pricing depends on your performance and the value you provide to your client, making the entire experience more positive overall.

Steps to Adopt Value Billing

If you want to adopt value billing at your firm, here are the steps:

Assess Your Firm’s Practice Areas and Client Base

To implement value-based pricing, you need to have an understanding of the client base, the commonality of work in the practice area, local competition, and the complexity involved.

Identify Suitable Cases or Matters for Value-Based Billing

Value-based billing is more appropriate for some cases than others. For example, simple and straightforward casework like completing a will and estate, reviewing and creating contracts, or drafting immigration applications.

Establish Clear Pricing Structures and Fee Arrangements

Communicating clearly with the client is important with any fee structure, but more so with value-based pricing. The ABA recommends offering tiered levels of service that vary in price to give clients options for perceived value and affordability. This also allows you to gauge price sensitivity for future pricing.

Collaborate with Clients to Define Values and Outcomes

Perceived value relies as much on how much you expect for your services as much as what the client expects to receive in return. You can talk with clients to understand their goals and motivations for seeking legal help, which in turn informs the value of your services, but it’s good to use industry benchmarks as well.

Implement Effective Tracking and Reporting Mechanisms

With Bill4Time, it’s easy to outline your tracking and billing processes with detailed invoices and statements that include payment terms, flat rates, or discounts. Whether you use value pricing across the board or for certain matters, you can customize your rates for each client to simplify the process. You can also track expenses and evaluate your firm’s performance with detailed financial reports.

Common Challenges with Value Billing

Though there are benefits to value billing, it can be difficult to determine exactly how much a client may value your services in monetary terms. It takes some calculating, benchmarking, and time to determine your pricing and expenses. There’s also the potential to undercharge your work.

With value billing, as with hourly billing, the paramount benchmark is ABA Model Rule 1.5(a). Lawyers are not permitted to charge an unreasonable fee for expenses, no matter the fee structure.

It will also take work to set up legal billing processes to adjust to a new fee structure and ensure that it’s clear and compliant. Legal software like Bill4Time simplifies your billing process with custom billing rates and structures tailored to your firm’s needs.

How to Manage Client Expectations with Value Billing

Value billing can provide transparency and satisfaction for clients, but it’s essential that you communicate your fees and services clearly. Instead of focusing on the time involved, communicate in terms of the value that you provide to your client in addressing their legal issues.

Setting up expectations from the start builds trust and transparency in the billing process. When your client receives an invoice, there will be no surprises. They understand exactly what they’re getting for their money.

In focusing on your value, it may be helpful to provide examples in the form of client feedback and testimonials to validate and promote your value-based billing. This forms social proof that gives your client confidence that they’re getting actual value for your services.

Final Thoughts on Value Billing

Legal services are all about value. Using value-based billing gives clients more predictability and transparency in paying for legal services, supporting a client-centric experience that drives word-of-mouth referrals and client acquisition. For firms, value billing is more efficient and productive, providing real value for services without compromising client experience, making it the future of billing in the legal industry.

Efficient billing practices are essential for the success of your law firm. However, the time spent on billing can often become time-consuming, detracting from the productive hours of your day. Furthermore, this time spent on billing is typically not included in your billable hours, resulting in potential revenue loss. 

Fortunately, there are ways to streamline your billing process and optimize your attorney billing statement, enabling you to expedite the invoicing process and ultimately enhance the profitability of your firm.

What Is an Attorney Billing Statement?

An attorney billing statement is a versatile and customizable invoice template that your law firm can utilize to bill your clients in an efficient manner. 

With an attorney billing statement, you have the flexibility to tailor the invoice to meet the specific needs and requirements of each client, ensuring that it accurately reflects the services rendered and the associated costs. 

This enables you to create professional and comprehensive invoices that clearly communicate the details of the legal services provided, the corresponding charges, and any other relevant information in a clear and concise manner.

What Is in an Attorney Billing Statement?

Your billing statement will be tailored to your firm, but in general, all invoice templates should have the following elements:

Details of the Firm and Client

The billing statement should always have the information about your law firm and your client, including:

• Names
• Addresses
• Phone numbers
• Email addresses

The Date

Including the date of issue on an invoice is crucial for proper financial management and communication with clients. It serves as a reference point for payment terms, evidences timely delivery of the invoice, streamlines communication, and supports accurate record-keeping.

Itemized Services and Costs

The most time-consuming part of an invoice is recording the details of the services and their costs. This is important, however, as clients have a better understanding of what they’re paying for and are less likely to raise disputes.

The descriptions of the services should be brief, such as “prepared documents for court” or “researched case law” with the amount of time spent on each. Lawyers traditionally track time in six-minute increments for accuracy. The costs are based on your fees, which may be flat or hourly.

Expenses

If you have expenses associated with the client’s case, such as filing fees, include them on the invoice. You’ll want to include detailed descriptions of each expense so clients understand the value add. Hard costs are often easier to communicate than soft costs that are typically associated with the administrative brunt work needed for a client case. 

Totals and Taxes

After itemizing the services, you should be able to calculate the subtotals and total easily. If you have legal billing software, these calculations may be done automatically.

Once you have the total for all the services, include the appropriate service tax for your state on the billing form. You may wish to include the tax rate and total tax amount. Then, add the subtotal and total with the tax amount for the final balance.

Statement Due Date

Putting a clear due date on your invoice is important for law firm collections and getting paid on time. If you add late fees for overdue payments, include those on the invoice as well.

Depending on the state, you may be able to assess late fees at a percentage of the invoice amount or a flat fee up to a certain amount, but be sure to check with your state bar association.

Payment Methods

Include the options for payment on your invoice. If you accept checks, provide the name and mailing address. If you have an online payment portal, include the details to simplify it for the client.

Your accepted payment methods should be discussed prior to taking on your client’s case, but it’s good to have them listed as a reminder on your invoice.

Sample Attorney Billing Statement

Here is a sample billing statement:

How to Prepare a Billing Statement for Attorneys in 4 Steps

Creating a process for billing statements makes invoicing and billing can make the processes more straightforward in the future. Here’s how:

Step 1: Set Your Fees

Your fees are usually based on competitors and what’s appropriate for your practice area, experience level, and reputation. You’ll want to research and analyze what’s fair in the market along with your firm’s value proposition. 

Step 2: Capture Time

Accurate invoices have every minute tracked accurately. With Bill4Time’s timekeeping software, you can ditch the spreadsheets and capture time in real-time with timers on your phone, desk, or tablet. This not only ensures you get paid, but it helps present more accurate information about the work you do for your clients.  

Step 3: Automate Invoicing

Create, print, or email professional invoices with Bill4Time software, complete with payment terms, late fees, discounts, and more. You can also include custom payment links on your invoices for clients to pay online. 

Step 4: Communicate with Clients

A positive client experience starts with effective communication at intake. Proactively communicate your invoicing and billing details in advance, including fees, schedules, payment terms, and payment methods.

3 Attorney Best Practices for Legal Billing

Billing and invoicing software like Bill4Time makes it a breeze to create a customizable billing template to free up your time. Here are some of the best practices for legal billing:

Offer Multiple Payment Options

Clients want to be able to pay using the method they’re most comfortable with, and as a result, your firm gets paid faster. With Bill4Time Payments, your clients can pay using eChecks or major credit and debit cards for the fastest and most convenient payments.

Offer Custom Payment Plans

Payment plans make it easier for clients to afford legal services by reducing large bills. Bill4Time Payments allows you to create custom payment plans with weekly or monthly installments and automated payment reminders.

Show Consistency

It’s important to set up billing expectations with your clients from the start. You should communicate your billing timelines and send your invoices based on this cadence, so clients know when to expect a bill. This also ensures that your cash flow is more predictable.

Streamline Your Billing Statements

Invoicing and billing are often the most time-consuming and cumbersome part of running your law firm, but it doesn’t have to be. With law firm invoicing software, you can create a streamlined billing process that saves you time, creates a better client experience, and gets your firm paid faster.