Materials Prepared by Cheryl Betten Presented by Carol L. Schlein Newark NJ February 22, 2013.

VI. Billing, Collections, Financial Planning and Reporting

Materials Prepared by Cheryl Betten

Presented by Carol L. SchleinNewark NJ February 22, 2013

Managing Legal CostsAttorney CompensationDirect Expenses (Staff Compensation)Indirect Expenses such as

Rent and UtilitiesOffice SuppliesInformation SystemsProfessional FeesResearch and Subscriptions

Carol L. Schlein, Esq.President, Law Office Systems, [email protected] www.losinc.com

Montclair NJFounding Member Lawtopia LLC

www.lawtopia.netNational partnership of legal technology

consultantsFormer chair Computer Division,

ABA Law Practice Management SectionFormer columnist, New Jersey Law Journal

Identify Costs‘’’

Budget Your Revenue & Expenses

Calculate estimated revenue Estimated Revenue = Billable Hours *

Rate * # of TimekeepersMake sure all lawyers are meeting baseline

expectations

Track Your ExpensesNegotiate better ratesStreamline processesUse Firm Admin to manage finances

instead of practicing attorneys

Identify Money MakersBenchmarking- compare your firm to other

firms with goal of improving your own business practices

Negotiate with your vendors for the best deals

Shop around for servicesPut systems in place to track costs and bill

them out where appropriateAutomate where possible

Eliminate Money Wasters

Don’t waste money on bad advertising or a bad marketing plan

Make sure your marketing plan is focusedTurnover – “there are plenty more where that

one came from” is a bad HR strategy and will cost your firm

Don’t sign long term leases. Technology changes too fast.

Maximize 80/20 Rule20% of your clients are responsible for

majority of your revenue – make sure they are happy

20% of your employees are billing 80% of the hours – make sure they are rewarded

Learn from bothFind more lucrative clientsFind ways to motivate employees

Case BudgetingConferring with your Client

Budgets for cases often happen when lawyer least familiar with facts and players

Communicate with client when budget changes

Be Audit-MindedWork with a CPA or Accounting Firm to

ensure compliance with payroll taxes, income taxes, trust funds

Audit-minded professionals will create audit trail and ensure reliable financial reporting

Avoid problems with random auditsHave system of checks and balances

Billing and CollectionsFee/ Engagement Agreements

Outlines services your firm will performDetails Fee arrangement

Hourly/ Flat/ Contingent Retainer required? Frequency of billing Interest or late fees? Detail of billing (itemize) Types and costs for services charged Rates for each timekeeper level

No “air-tight” fee agreement but can prevent disputes

Tracking Work and Time SpentFactors to Consider in Selecting

How many timekeepers in the firm?Will they enter their own time?Do you want the system to also track

accounting?Standalone or network?What’s your budget?What other programs share similar data?

Popular Timekeeping/ Billing Programs

TimeslipsPCLawTime Matters/ Billing MattersTabs3ClioRocketMatter

Strategies for Pursuing Fees OwedBe Proactive

Start with Written fee agreementAdhere to the agreed termsFollow up within 30 days

Determine if firm will or can sever relationship

Use systematic process to demand paymentFollow collection lawsFee Arbitration process

Considerations to Sue a ClientCan your firm handle claim through the

courts?Will number of suits impact your malpractice

coverage?How much is owed? What is the risk of a retaliation law suit?Will judgment be collectable if obtained?

Outsource Your CollectionsConsider using third-party vendorDo your homework about vendor before

proceedingNegotiate the fee with collection vendor Ask for trial periodCompare pricingUnderstand difference between agency and

collection law firmAsk for detailed list of process flowChoose a company or firm that understands your

business