So much time, attention and effort is focused on accurate time collection, pre-bill time review/edit and bill delivery to improve billing speeds and realization.
But, of equal impact, is the accuracy and compliance of client cost billing that can have as big of an impact on these important firm cash flow initiatives. A client cost invoice – improperly coded, split, capped or otherwise, not compliant with OCG guidelines, can get an overall monthly invoice rejected as quickly as a non-compliant timecard.
Is there proper accuracy, compliance and integration of your AP and T&E Expense processes to ensure a faulty cost card doesn’t slide into a client billing and cost the firm major delays or rejections?
Could a mis-coded expense report cause a multi-million dollar invoice rejection?
If so, you clearly have a major hole in your bucket!!!
And errors happen easily in highly manual processes. Simple and innocent errors are introduced that can cost your firm millions in delays and rejections when manual data entry takes place. It’s unfortunate but basic human nature. The result is increased DSO and reduced collection realization.
And on the fees side of the invoice, collection realizations are hitting historical lows while firm financial performance is at historical highs.
How? The balance of fee rate increases and billing realization decreases is well balanced indeed.
According to Andrew Maloney, writing for American Lawyer: “AMLAW 100 firms saw their lowest realization rates in five years, according to The American Lawyer survey data. The average rate was 80.93%, down from 82.2% in 2022 and 83.11% on 2021, when industry observers expressed hope that firms would remain vigilant about collections for their own sake. The median rate followed a similar course, decreasing from 83% in 2021, to 81.2% and most recently, 79.65%”
But, what happens when your hard costs take a similar 15-20% realization haircut? That is very real money lost.
To avoid these costly mistakes, law firms must invest in technology that can automate and streamline their client cost billing processes. This includes:
- Automated data entry: This can help to reduce the risk of human error.
- Real-time compliance checks: This can ensure that client cost billing is always compliant with OCG guidelines.
- Integration with other systems: This can help to improve efficiency and accuracy.
By implementing these measures, law firms can ensure that their client cost billing is accurate, compliant, and efficient. This will help to improve cash flow, reduce costs, and enhance client satisfaction.
Conclusion:
Holding onto outdated client cost billing methods leaves law firms behind in a client-centric legal landscape. By embracing AI-powered solutions, law firms can streamline processes, improve accuracy, and offer greater transparency to their clients. This paradigm shift in cost billing empowers law firms to deliver greater value, build stronger relationships, and ultimately, eliminate simple but costly errors.
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