Six out of 10 small law firms say getting paid by their clients is a “significant problem.”
And firms that don’t offer their clients payment options like online billing and credit cards experience even bigger headaches.
Even so, an encouraging 88 percent of small firm lawyers say their practice is “successful” or “very successful.”
Those findings are from the “State of Small U.S. Law Firms Report” from Thomson Reuters Legal Executive Institute.
“Firms also are optimistic about the prospects for continued growth, with a majority of lawyers saying they expect increased demand for legal services, and growing revenues and profits over both the next year and the next three years,” according to the report.
There are two main reasons lawyers don’t get paid, the report says. The first is that the firm has poor or nonexistent systems for recording time and sending bills. The second is that lawyers spend too much of their workday on non-billable time.
“Nearly 80 percent of firms report they have not yet determined how to address the problem of spending too much time on administrative tasks,” the report says. “Only slightly more firms have implemented a plan to address their business development challenges.”
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10 Reasons Law Firms Lose Revenue
- Not capturing all time spent on a matter.
- Not billing clients regularly.
- Not billing clients according to the fee agreement.
- Not offering payment options.
- Not screening prospective clients thoroughly.
- Not sending bills immediately when services are rendered, thereby lowering the odds of getting paid.
- Not using billing software.
- Not training your staff on the firm’s time-billing system.
- Not using cloud-based billing solutions.
- Not recording all expenses and advanced costs.
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