Law Firm Collections – The 10 Biggest Mistakes In Managing Their Accounts Receivable

The demands of an ever-growing legal profession require law firms to have forward-thinking management strategies to address clients’ needs. Although lawyers’ main priority is – and must be – to deliver quality service, law firms must also build their organizations to support their clients’ evolving demands, by taking steps such as opening international offices, embracing new technologies, and developing new areas of practice.

As a result of this growth, law firms will face high overhead and growing compensation demands from their professionals. Meanwhile, firms will be squeezed from the other side by clients who have high expectations yet, at the same time, scrutinize their bills.

During the course of a year, many firms find it difficult to judge how well their collection efforts are faring and how this could impact their financial pictures. Lawyers have been conditioned to take a relaxed attitude in their collection efforts, largely due to a mindset among attorneys that grants clients the benefit of the doubt and a view among clients that making payments is not a priority. Attorneys also fail to realize that clients will take advantage of their professional relationship. Thus begins a vicious cycle. Lawyers are not vigilant in getting their clients to pay and the clients, as a result, are not quick to pay. The lawyers, then, are reluctant to press their clients. And so on.

The business of buying legal services does not lend itself to such strict purchase and payment rules.

It often involves complicated transactions, equally complex business relationships, and disputed resolutions that require many hours of work at high billing rates, resulting in high bills to clients. Stopping work because a client does not pay is sometimes not an option because of ethical obligations.

The reality is that problems with collections within the legal profession are not a financial management

issue. It’s all about effective practice management, which requires attorneys and law firms to manage

their accounts receivable proactively. However good the firm’s financial staff may be, attorneys are ultimately responsible for the success – or failure – of collection efforts because they who steer the relationships with clients.

When it comes to receivables, law firms fall victim to 10 common mistakes:

1. Attorneys believe that aging receivables are not an indicator that collection problems exist. Actually, if bills have not been paid within 90 days, you have received the first sign that you may have a collection problem – and, if it is not resolved quickly, they could age further and be virtually uncollectible. Only 50 percent of receivables over 120 days will be collected, and the likelihood drops precipitously after that.

Clients reason that if the firm has waited several months to try to collect unpaid bills, they can wait to pay those bills. They assume, and with good reason, that they are in better position to negotiate discounts. The longer a law firm waits to collect unpaid bills, savvy clients realize, the more likely the bills will end up being discounted or written off altogether.

2. Law firms fear they will damage client relationships by asking clients to pay their bills. The fact is that law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. Efforts to manage receivables will not hurt the relationship, as long as it is done professionally. Actually, most clients are perfectly willing to pay their bills, although many are dealing with cash flow problems. Also, clients fall victim to “sticker shock,” which happens when a client expects to receive a bill of a certain size and gets a rude awakening when larger invoices arrive.

3. Lawyers avoid addressing problems by depending on the mail to communicate with delinquent clients.

Postal mail is slower and far less effective than using the telephone to address delinquency issues. A conversation allows you to have a dialogue about the bill. Besides, letters and reminder statements are easily misplaced and avoided. If the client continues to receive reminder statements after 60 days and still does not pay, chances are there is an issue preventing payment. Even a brief, non-confrontational telephone conversation should communicate to the client the urgency of your need for payment and allow you to learn quickly if there are any problems or concerns – and what it will take to get the bill paid.

4. Firms believe that accounting and collection software will cure all that ails them. Software can be an excellent tool to manage receivables, but it is only as good as the people using it. Many law

firms have developed policies and procedures to better manage their accounts receivable, but many have not properly utilized their software to help implement new systems. It takes time and specialization to fully grasp how the software can help a firm’s collection efforts. Law firm staffs are often responsible for many day-to-day tasks that leave them little time to explore and make maximum use of the functions that software offers.

5. Firms embrace alternative payment arrangements too quickly. Complex transactions may not lend themselves to a regular payment schedule, and they may cause confusion as to appropriate payment if the deal does not come to fruition. Furthermore, risky deals sometimes fail, leaving a trail of unpaid receivables.

6. Lawyers fail to recognize the point at which they should stop doing work rather than continuing to

amass unpaid bills. Sometimes lawyers become so wrapped up in their work that they do not pay

sufficient attention to bills that are not getting paid. By the time they realize clients are not paying, they have put in plenty of additional time. Someone – and perhaps the attorney is not the right person – should be monitoring payment so work does not far out-pace payment.

7. Accounts receivable management reports are not providing the right information to measure progress. Accounting departments are churning out a lot of reports concerning receivables. But are these reports answering the key questions that will allow the firm to maximize its collections? Why is the client delinquent? Is delinquency habitual for this client? What can the firm do to facilitate payment, both in the short and long terms?

8. Law firms are not analyzing the right reports to manage accounts receivable. Most firms still use

generic financial reports that have too much extraneous information to target problem offenders. Instead, firms need to generate more useful information. For instance, firms need to know if an account is being actively pursued and what the payment status is. They need to know who is pursuing the collection efforts (the attorney or the collection staff) and whether they are getting results. They need to categorize their accounts in order to know the reasons clients are not paying, such as cash flow problems, disputed fees and

services, or third-party responsibility. They need to know where the problem accounts are in order to determine a plan of action to get the bills paid.

9. Law firms are not spending enough time focusing on older, aging receivables. As a result of the growing legal profession, most firms continue to bring in new business while maintaining strong realization and focusing on more current accounts receivable. Firm management may be so busy building the firm for the future that it is ignoring the reality that a lot of receivables are slipping through their hands. They do not fully realize that increasing collections with payments from aging receivables is a fast and effective way to put more money into the partners’ pockets.

10. Law firms are not making collection staff or departments accountable for producing results. Many law firms fail to evaluate their staffs’ performances in collecting aging receivables. The collection staff is, therefore, left with little guidance as to what its collection responsibilities should be – and this does not necessarily include addressing and pursuing older, more difficult accounts. Collection staffs often end up being responsible only for monitoring payment of ongoing clients, sending reminder statements, or providing accounts receivable reports to attorneys. Although these duties are important, they do not address the more fundamental issues concerning collecting for complicated transactions and for client relationships that require more individual attention.

Take the time to honestly evaluate your receivables collection and management efforts. By understanding – and overcoming – some basic mistakes, lawyers can become far more effective in managing their receivables.

Finding a Law Firm: Helpful Facts You Should Know

People who need legal advice or assistance know the importance of a reputable law firm. Knowing how to find the best law office in your area is very important.

What Is a Law Firm?

A law firm is apparently a business entity that aims to provide legal services to its clients. This type of business is composed of one or more lawyers that are hired by the firm. Generally, the lawyers in a firm provide legal representation to clients and offer legal advice to other businesses. Typically, a law office renders advice about the legal rights and responsibilities of a corporation or company.

How to Find a Reliable Law Firm?

For people who have been victims of fraud or other crimes, a law office can come to the rescue to solve such matter. These days, countless law offices are available and ready to serve at all time. However, finding a reputable one is truly a daunting task. Searching for a reliable law firm requires time and effort, however with the right knowledge you will not have a hard time in looking for the best option. Here are the important factors to consider in finding a reliable law office.

Proficiency in the Field of Law – The first thing to consider is to search for a law office based on your legal issues. The truth is, law has different categories. You may look for a lawyer to advice you on dealing with criminal law or commercial litigation and other legal matters. It is indeed very essential to know how to pick a particular law firm with specialties on the field that is related to your concern. The best and effortless way to find a law office is to browse online. It can save you time and money as well.

Real World Legal Advice – Mostly, lawyers deal professionally with their clients. They provide legal advices as part of their work and responsibilities. However, as much as possible, you would like to have a law office that can give you a lawyer who shows utmost concern on your case. This kind of lawyer typically explains the legal processes in most convenient way so that the client can easily understand the legal jargons and processes.

Respectable Track Record – Doing business with a law office requires you to spend enough money for it. Since you are spending money, you must opt for the best law office that has a respectable track record. You can do a background check by knowing how many successful cases they have already won for the past years. Although this process requires much effort on your behalf, however it helps you to come up with good decisions. This can also offer you great benefits in the long run.

Facing legal issues in today’s world is not a hindrance for everyone to achieve the right justice. A solution is always present with the help of a highly reliable and professional lawyers to defend you at all aspect of the law. The only thing to do is to find the right law firm that can answer your needs.

How to Choose a Personal Injury Law Firm

There are many cases when an individual or their loved ones are involved in an accident and they will desire to get compensation for that incident. However, it is not often that the compensation is correct or as what may be wanted. This is when a victim may contact a law firm or a lawyer, so that they can negotiate on their client’s behalf to get the most positive result. The first thing that is needed is to search for the best lawyers in the victim’s area that suits their requirements.

There are many cases when the victim feels that the compensation given is unfair and it is not always easy for somebody to juggle with law points and aspects. A victim needs the guidance of an expert at every step during the legal fight and this can be accomplished only through consulting the right law firm or lawyers. There are firms who are experts at scrutinizing the damages or injuries that occurred due to the negligence of a third party. Lawyers can be the best way to assess the conditions of a case legally and to help value the maximum compensation available within a case.

These law firms should be experienced in getting the maximum compensation for any injury case regardless of the type of incident. There are many cases when even the insurance company does not show any interest in helping the victim. This is the right time to contact a law firm to get the best outcomes. These firms should be expert lawyers or attorneys and they may even try new methods to assist their clients. These firms have expert injury lawyers that may be very helpful to a case.

These law firms should be professional and provide good services to their clients. It should be assured that whenever an individual consult these firms with a situation and they should suggest the best solution and advice for an individual case. These firms may take care of everything and they do not have to consult other offices for meetings or inquiries.

If an injury in an accident is due to negligence of the opposite party or due to a faulty product, there are four things that the victim should remember:
– That the individual is allowed to claim compensation from the opposite party.
– The opponent party would be liable for an injury because of negligence.
– The opposite party has breached its responsibility towards the safety and well-being of other citizens.
– The negligence of the opposite party is the only reason for an injury

The law firms should have the experience to prove any negligence from the opposing party to ensure that their client gets compensation. The compensation can include the damages caused during the incident, the costs of any medication and expenses occurred in the hospitals. The victim needs to give complete details to these firms so that they can get their client the right compensation from the case.

Overall, it is important that the victim choose an experienced law firm specialized in personal injury claims, so the victim can get the right advice on how to approach a claim and win the right amount of compensation if it is due.