Let’s talk about billing and the effect it can have on your client relationships. Billing is, of course, one of the fundamental business and ethical aspects of practicing law. But it isn’t just that: it’s also a form of relationship development, practice management, and even business development. How you manage billing shows something about your attention to detail, how you clearly and fully communicate with a client, and more.
Most of the time, invoicing is fairly routine. You have an agreement for an hourly or alternative fee arrangement, you and your team track the work you do, that work is reflected on monthly invoices that explain the work completed, you review the invoices and correct or modify them before sending them to your client, and the client pays within a reasonable amount of time.
But what if there’s a fee increase, a delayed bill, or a passage of time that leaves a client surprised by your invoice? Surprise will leave your client dismayed. The legal budget may be strained in unexpected ways, and your client contact may face unpleasant questions from a superior or a corporate Board. You’re guaranteed to get pointed questions about the invoice, and you and your client contact will spend time resolving the issue. Worst of all, trust may be damaged, maybe even broken. This change in your client relationships can further impact your business development process and growth goals.
The good news is that avoiding these problems is simple: communicate about any changes in advance.
- Planning a fee increase? Notify your clients about the change in advance—don’t just send a bill at the new rate. I’m also hearing that some firms are increasing rates multiple times a year now, without any guideposts for when that may happen. I don’t recommend that: it creates unpredictability and brings undue attention to your fee.
- An unusually high amount of work to be charged against an annual legal budget? As soon as you see the meter going up, reach out to discuss the work, the spend, and the client’s priorities.
- Something slipped and you’re sending a late invoice? Give thought to how you’re going to position the tardiness, what effect it will have on the budget and perhaps other pending work, and how it reflects on you as a businessperson. In some cases, you may find that a discount or write-off, perhaps a significant one, makes sense.
The same is true if there’s a misstep in a matter you’re handling that causes your client to conclude that a fee is unduly high or unearned in light of the circumstances. Here, you likely can’t communicate in advance. You may ward off these issues if you evaluate each invoice in context before sending it to the client, but there will be times when a client’s feedback, or its intensity, is surprising. Aim for collaborative communication. Listen to the client’s concerns and emphasize that you value the relationship as you respond. The outcome of the discussion is important, but maintaining trust is likely more important than receiving.
While it’s important that you receive due compensation for your work, be aware that clients are likely watching the bills more closely now than they have in the recent past. Inflation is hitting us all, individuals and corporations alike, and expenses may be increasing without a corresponding increase in income.
Clear communication can help you to manage expectations, prevent surprises, and build or maintain a collaborative approach that leaves your client feeling comfortable that your interests are aligned. Ensuring clear and effective communications with your clients will greatly contribute to your business development strategy and future business growth.
P.S. I have two openings for the new clients this month, and then I will not be accepting new clients again until January 2023. If you’d like help in growing your book of business, let’s have a conversation. Book a complimentary consultation here.