Automation is becoming more prevalent in streamlining operations for legal practices. Attorneys continue to look for more ways to save time spent on tasks that distract them and their staff from more productive tasks.
According to a 2021 ABA Legal Technology Survey Report, 85% of legal firms have some sort of digital timing and billing system in place.
Despite the widespread adoption, Thomas Reuters reports that the average law firm experiences up to 18% revenue loss caused by billing inefficiencies. This is nearly one-fifth of potential income loss.
To put it into perspective, if your legal practice potentially makes $500,000 annually, you could be losing a whopping $100,000.
Fortunately, you can seal your practice’s revenue leaks by adopting attorney invoicing software. But it’s not just about implementing the most popular or most expensive legal billing software you come across. It’s about finding the best one for your practice.
In this article, we’re going to walk you through what you need to know to select the right invoicing software for your legal practice’s needs.
Understand Your Practice’s Needs
| Billing Method | Description | Best Suited For |
| Hourly Billing | Charges clients based on the amount of time spent working on the case (by the hour). | Most common legal processes and ongoing legal work. |
| Flat Fee Billing | Sets a standard fee for the entire scope of work, regardless of time spent. | Quick legal processes (e.g., drafting tax documents, wills, LLC setups). |
| Contingency Billing | Payment is a percentage of the damages or settlement, only if the case is won. | Civil suits (e.g., medical malpractice, motor vehicle accidents). |
Choosing the right attorney invoicing software begins with understanding your practice’s needs. This process involves evaluating several factors, such as your firm’s billing methods, integration capabilities, size, and case volume.
Typically, law firms use one or a combination of the following billing methods:
- Hourly billing – This is the most common billing method for most law firms and it involves charging clients based on the amount of time spent working on the case (by the hour).
- Flat fee billing – The firm sets a standard fee for the entire scope of work provided, without considering time. This method is most suitable for quick legal processes, such as drafting tax documents and wills or setting up LLCs.
- Contingency billing – The firm only receives payment as a percentage of the damages or settlement. In other words, attorneys only receive payment if they win the case. This is mostly used in civil suits, such as medical malpractice and motor vehicle accidents.
Once you’ve understood your pricing model, consider integration with other tools in your tech stack, including case management, such as Clio and MyCase, and accounting software, like Quickbooks Online or Xero.
Integration is an important part of streamlining your billing processes. It allows the seamless flow of data between different departments of your practice. You also enjoy comprehensive reporting by getting access to analytics, such as caseloads, profitability, and employee performance.
So, make a list of tools in your current tech stack and check whether your preferred attorney invoicing software integrates seamlessly to avoid manual data entry.
Also, the size of your law firms and the volume of cases you handle determines the complexity of your invoicing needs. If you’re a solo practitioner or run a small firm, look for an affordable billing solution with basic invoicing features.
For medium to large practices with more invoicing needs, you can look for advanced software with more complex features, such as multiple users, bulk invoicing, custom workflows, and advanced reporting.
Estimate the number of users and invoices sent per month to choose software that matches your needs.
Key Features to Look For
Here are some top features you must look for when choosing attorney invoicing software:
Time tracking and automated billing
Accurate time tracking is a crucial pillar for a law firm’s success. Inaccurate time tracking leads to overbilling or underbilling. You’ll experience dissatisfaction with clients, damage your practice’s reputation, and ultimately hurt your bottom line.
The best attorney invoicing software allows you to track your billable hours from anywhere, whether you’re online or not. If you’re not connected to the internet, the tracked hours should automatically upload and integrate into the larger system once you regain connection.
The time-tracking features should help you automatically log billable activities, including client meetings, research, and document drafting, on multiple devices including PCs, tablets, and smartphones.
Tracking time spent on tasks as they occur not only increases revenue but also improves timekeeping accuracy, ensuring every billable minute is accounted for.
The legal billing system should also have automated billing capabilities. It should allow you to use as many billing methods simultaneously on the same case. This feature is important even for practices that only use one billing model. Software with multiple billing models allows you to expand.
You should be able to create detailed invoices that itemize services and expenses. This builds trust with your clients since you give them a clear account of the work performed.
Trust accounting compliance
Attorneys are legally required to manage client funds through trust accounts. This calls for strict compliance with legal and ethical standards. This is why it’s important to consider trust accounting compliance.
Look for software that allows you to separate your firm’s operating funds from trust accounts. You should be able to monitor retainer balances, allocate expenses, and reconcile accounts seamlessly.
Ensure the software supports IOLTA (Interest on Lawyers Trust Accounts) compliance, provides audit trails, and generates trust ledger reports.
Verifying that the software is compliant with your jurisdiction’s trust accounting rules helps you avoid ethical violations and penalties.
Customizable invoice templates
Professional, customized invoices boost client satisfaction and reflect your firm’s dedication to professionalism. For example, if you run a boutique law firm specializing in intellectual property, you may want your invoices to show specific copyright consultation details and hourly rates.
Look for software that provides customizable invoice templates. You should be able to add your firm’s logo, contact information, color scheme, and payment terms.
The flexible invoice templates should allow you to edit to include various billing structures or specific case details. Find software that lets you add or delete line items or adjust payment terms accordingly.
The software should have multi-currency and multi-language support to help you communicate clearly with international clients. There should be options to send the invoices in various formats, such as PDF, Word, or client portals, to match their preferences.
Integration with payment processing platforms
Offering your clients multiple payment options makes the payment process convenient for your clients and encourages faster payments. Integration with payment processing platforms is essential for cash flow management and reducing administrative tasks.
The software should seamlessly integrate with a payment processing platform, like Stax Bill, allowing your clients to make payments via debit and credit cards, ACH, wire transfers, and online payments.
Look for a system that allows for automated payment reminders for upcoming and overdue invoices. This helps your practice maintain a healthy cash flow while eliminating manual follow-ups.
Also, look for platforms that provide secure payment links embedded in the invoices to help your clients easily make payments with less hassle.
Reporting and analytics capabilities
Comprehensive reporting and analytics give you a comprehensive insight into your practice’s financial performance, helping you optimize your billing practices. For example, reporting and analytics can help you spot clients who constantly make late payments or underperforming areas of your practice to help you adjust accordingly.
Look for attorney billing software that gives you access to crucial KPIs and metrics, like revenue, profit margins, billing efficiency, and outstanding invoices.
The software should also allow you to generate reports specific to your practice’s needs, such as trust account reconciliations or billable hour summaries. Choose a system with easy-to-export reports that lets you quickly share insights with your partners, accountants, or stakeholders.
The right invoicing software gives you access to customizable dashboards allowing you to view real-time data on billable hours and trust balances at a glance.
Ensure you schedule periodic reviews of invoicing data using the software’s reporting and analytics capabilities to identify opportunities for improvement.
Evaluate Ease of Use
Ease of use should be one of the top priorities when choosing attorney invoicing software. You want a user-friendly system that doesn’t overwhelm your attorneys and staff with complexity, whether they’re newbies or experienced professionals.
Look for an intuitive interface that facilitates fast data entry and invoice generation. It shouldn’t be too hard to navigate between different functionalities and business processes, such as time-tracking, invoice creation, and finding client details.
Intuitive features like auto-fill invoice fields can boost accuracy and streamline administrative tasks, enhancing efficiency and productivity. This helps your staff to focus on more productive processes like client service and case management.
Since you want a cloud-based system that’s accessible across different devices, consider its mobile-friendliness. A mobile-friendly system helps you manage invoices, communicate with clients, and track payments on the go on your smartphone, tablet, or laptop.
In addition, check whether the software provider eases your learning curve by providing training resources, such as video tutorials, case studies, and whitepapers. They should also have 24/7 support via multiple channels, like live chat, phone, or email, to help you solve any issues promptly.
This ensures that you and your team seamlessly adapt to the system.
Assess Security and Compliance
Your practice regularly handles sensitive client data, like credit card details and social security numbers. This is why you need to find attorney billing software that prioritizes data security with measures like data encryption and two-factor authentication (2FA).
Data encryption protocols protect data during transmission and storage, avoiding unauthorized access. 2FA provides an extra layer of protection by requiring users to provide additional verification beyond a password.
Evaluate the software provider’s dedication to upholding customer privacy and complying with payment industry regulations like the Payment Card Industry Data Security Standard (PCI DSS) and the General Data Protection Regulation (GDPR).
Also, check whether the system complies with legal billing regulations like the American Bar Association’s (ABA’s) Model Rules of Professional Conduct which provide guidelines on transparency and fairness in fee arrangements.
For example, charging multiple clients for overlapping tasks (double billing) is illegal in most jurisdictions. It can lead to serious repercussions, such as penalties and disciplinary action.
On top of that, check whether the provider offers regular data backups to avoid loss of data if compromised.
Compare Pricing Models
Different attorney invoicing software providers offer different pricing models, such as monthly subscriptions and annual licenses. It’s important to compare different pricing models from different providers to ensure you choose one that fits your budget while prioritizing your needs and functionality.
Most providers adopt the subscription-based model, which offers you access to cloud-based storage, 24/7 support, and software updates. Other providers may offer one-time purchase pricing, especially for on-premise systems.
Some providers also adopt a user-based pricing model, charging based on the number of users. You’ll have to calculate the number of users in your firm to understand how much the software will cost you.
Others may structure their pricing model based on features. Basic pricing plans give you access to basic features, like invoice generation and time tracking. Advanced plans will have advanced features like trust accounting, integrations, and custom reporting.
When evaluating and comparing pricing models, consider pricing transparency. You don’t want to encounter any hidden fees you had no idea about. Look for a provider that’s transparent when it comes to the initial and recurring fees.
Also, check whether the provider has additional costs for support, training, updates, backups, or integrations.
Don’t forget to consider the scalability of the pricing as your pricing grows. For example, the feature-based or user-based pricing models may be a hindrance when you grow since they become costlier as your feature needs or number of users grow.
Comparing pricing plans ensures you get the best value for your money and helps you make a cost-effective software investment.
Read Reviews and Seek Recommendations
Gathering insights from different sources can aid your decision-making process when searching for attorney invoicing software. You can leverage reviews and recommendations to see other people’s experiences when using the software.
Review platforms like Capterra and G2 give you access to user insights on the software’s strengths, weaknesses, overall ratings, and common pain points when it comes to areas like user-friendliness and customer support.
Filter reviews to only see feedback from law firms similar to yours in size and practice area. Also, be sure to read both positive and negative reviews to get a balanced view.
Note down any recurring themes to get a clearer picture of what to expect.
Also, personal recommendations can be incredibly valuable when looking for invoicing software. Remember, your colleagues share the same challenges and goals. That’s why you need to utilize your professional networks to get recommendations from your colleagues.
Ask other attorneys about their experiences with billing software. Ask them what they love most about their favorite tools and if they’ve faced any challenges when using them.
Join online communities on platforms like LinkedIn to get diverse perspectives from real-world experience. Also, attend legal industry events, conferences, and webinars featuring discussions on legal technology.
In addition, look for review case studies and testimonials to get concrete examples of how the software has helped other law firms solve their invoicing and operational challenges.
Test the Software
Before committing your practice’s money, you need to thoroughly test the software to confirm it meets your needs. Take advantage of free trials and demo versions to get a hands-on experience of the software’s usability, interface, and performance in real-world scenarios.
During the trial period, focus on daily tasks like invoice generation, time tracking, and trust account reconciliation. Note any limitations or challenges when carrying out these tasks.
Also, assess how well the software handles the features vital to your practice, such as time tracking and billing, invoice customization, and integration. Preferably, use a live client case to see how well the software’s features align with your workflows.
Your team’s input is crucial since they interact with the software daily. Share the trial or demo with your administrative staff, paralegals, and attorneys. Gathering their feedback helps you collect diverse perspectives.
Plan for Implementation
Successful attorney invoicing software implementation requires careful planning to ensure a smooth transition. Have a timeline in place for onboarding and training, thishelps set expectations with everyone at the firm.
Depending on the complexity of the software, onboarding and training might take anywhere between a few weeks to several months. For smooth onboarding, break the process down into manageable milestones, such as installation, initial setup, staff training, and full deployment.
For example, a small law firm might allocate two weeks for setup and another week for staff training.
Migrating your data from your existing system to the new one is another important step that requires keen attention. Start by preparing your data by organizing and cleaning records to avoid duplications and errors.
Most software providers offer migration support or tools to help with the process. Some services might have templates or direct import options to optimize this process.
You can decide to test the migration with a small dataset to spot any issues before the full-scale migration.
After migration, it’s time to set up integration with other tools, such as accounting, payments, case management, and legal practice management software. Work with your in-house IT team and the provider’s support team to ensure seamless integration.
Conduct thorough tests to ensure data flows smoothly between the systems.
Monitor and Review Performance
Adopting attorney invoicing software is a marathon, not a sprint. Even after implementation, you should regularly monitor and review the software’s performance to ensure it continues to meet your needs effectively.
Set quarterly or biannual reviews to assess how the software supports your billing processes and whether it aligns with your current operational requirements. Gather feedback from your staff who interact with the software daily.
For example, if several members of your team find some crucial features cumbersome or difficult to use, it might be time to look for other alternatives or invest in more training.
Evaluate the ROI offered by the software in terms of time saved, billing accuracy, and improvements in cash flow. Also, evaluate how the software impacts your revenue collection either through faster payment cycles or reduced overdue payments.
In addition, keep up with software updates and new features. Make it a priority to review release notes and newsletters to stay on top of updates, new features, bug fixes, and enhancements.
Conclusion
The process of finding the right attorney invoicing software for your practice might be a bit overwhelming. However, armed with an understanding of important considerations like usability, invoice customization, security and compliance, integration, and reporting and analytics, you can confidently find the best software for your firm.
While there are many legal billing software options in the market, you need to prioritize your needs and goals. The right tool can potentially enhance productivity and cash flow for your practice.
Most importantly, start your selection process with a free trial or consultation.
