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Law Firm Billing: Ultimate Guide and Best Practice

Updated: Jan 25

Administrative tasks like billing and invoicing can be tedious and time-consuming and you may be stuck if you don’t implement the proper law firm billing process at the outset. That is why it’s crucial to have a streamlined process in place, ultimately saving lots of time and resulting in faster client payments.

  • Reduce the repetitive and tedious tasks associated with tracking and entering billable time

  • Simplify and standardize the invoice to create process

  • Make it easier to send invoices to clients

  • Standardize the steps required to accept, received, and account for payments

law-firm-billing

In this law firm accounting guide, we provide you with best practices for your law firm bookkeeping that can help you tame the law firm billing beast to keep your firm profitable and well above water.

Writing Your Law Firm’s Billing Policies

To implement proper billing practices, you need to first establish them and write them down as standard office policies. The law firm's billing policy is as straightforward and standardized as possible so that it gives lawyers and staff something to refer to and keeps everyone in sync.

Provide a template and guidelines

A transparent and accessible law firm billing and expense process will save you valuable time and money later. Your template of the process should include the standard of description, types of expenses, introductory communications on bills, time of invoice sending, etc.

Write out the flow of your law firm’s billing process

Determine how you want your billing process to work and become an expert in the lifecycle of your bills. You should assign each staff member’s duties for each stage of the process. For example, determine quickly which attorneys on a case need to review a bill, who should one inform when sending a bill out, how to send bills…

Set requirements for invoice review

The invoice review process should follow the requirements to speed up the process and leave less room for error.

Integrate the finance team with your billing process

If you have your own accountant or bookkeeper, ensure they know when your firm is sending bills to clients, what still needs to be collected, and what’s being written off.

Include a standard process for disputes and collections

Identify who needs to follow up on unpaid bills and who will review the client disputes when they occur. So it’s necessary to create a standard but personalized reminder email or letter you can easily send to clients and create a framework for resolving the disputes.

Have a public billing policy for clients

Everything should be transparent at the outset when you start their initial consultation. They should be well-acquainted with your billing policy, so they’re clear on:

  • When and how often bills will arrive

  • The different payment methods available

  • How much time do clients have to pay

  • The consequences of late payments

Invoice requirements

If you work with a large legal company, the law firm bookkeeping is very important. You are required to follow strict invoice requirements regarding everything from you need to send bills to how you must format bills. However, according to our law firm accounting guide, regardless of the sizes of the companies you work with, you should still stick to a standard set of invoice requirements. This will keep the billing process running smoothly, good for both your law firm and your clients.

Billing description

Legal firm billing descriptions should provide the right amount of context and information to make clients feel confident that they understand what work has been done on their case and are receiving the value they're paying for. The description should neither be too long nor too short but strike a balance between detailed and concise. Provide brief information that gives clients a clear understanding of what services you are billing for.

Law firm billing codes Law firm billing codes, which are separate from descriptions, represent which activities or expenses a client is being billed for. Examples codes might look like: meeting, draft/revisions, research.

legal billing - law firm bookkeeping - law firm accounting guide

LEDES billing LEDEs is an acronym for Legal Electronic Data Exchange Standard. If you’re working for a large company, the legal invoices are required to adhere to LEDEs standard format. It makes it easier for large organizations to handle large amounts of files and data and assess invoices as they are coded in the same format. Additionally, LEDEs files help your law firm streamline the billing process, save time and gain better control over legal spending.

You also use UTBMs codes ( The Uniform Task-Based Management System) which are a series of code sets your law firm is to classify services on electronic invoices to send to clients.

How to bill effectively for your law firm and get paid quickly

Make it easy to track time

If you’ve ever sat down at the end of a workday and tried to remember exactly where your time went, you know how difficult to record everything accurately on a bill. If that happens often, you not only wasted your time and money but also might lead clients to justify paying for what is billed.

Therefore, it’s so important for law firm bookkeeping to make it easy to keep track of billable time no matter where they happen to be, in the office or in the courtroom. For this law firm accounting guide, oftentimes, law firms use billing software to accomplish this goal in any number of ways. With just a click of a button, you and your staff can convert billable activities into billable time on an invoice. The easier it is for your attorneys to create a time entry, the more accurate time they record.

Bill frequently, and consistently

One of the most common billing mistakes made by some attorneys is not billing on a regular basis since these tasks are an interruption of the important tasks they need to complete. However, if you let weeks or months go by without invoicing clients, the task will become more challenging and you’re less likely to get paid. Sending out smaller bills consistently can lower the shock of a large unexpected bill for your clients. Plus, there’s the added benefit of encouraging positive cash flow for your law firm.

Before the advent of electronic billing, creating, sending out paper, and following up on invoices used to be time-consuming tasks and make your head hurt. Fortunately, legal billing software has reduced inefficiencies and the number of law firm billing processes. You can automatically create and send out invoices.

Automate invoice reminders

Legal billing software also allows you to set up automated invoice reminders to speed up your law firm’s billing process. You can schedule reminders when you send out the vert first invoice to the client if the invoice isn’t paid at the due date. A follow-up invoice will be sent to the client and reminded them the billed amount is still outstanding. In this way, you no longer waste time resending the invoice manually.

Utilize reporting features

Finally, ensure that your law firm’s billing process is as efficient and effective as possible by tracking and analyzing your law firm’s financial health to help implement improved billing habits.

  • Identify overdue invoices to institute appropriate collections procedures

  • Stay within budget for matters and projects

  • Identify the most profitable practice areas

  • Detect profit-stealing client tasks

  • Properly manage client trust accounts

  • Identify the billable time that is not being invoiced

By reviewing reports, you have an overview of your law firm’s billing, invoicing, and collection data.

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