Attorney Invoicing Workflow using LeanLaw
Attorney invoicing is the topic of this post, which is part three of a series on how to work with your first attorney-client, what you need to know. In Part One, we jumped in at the very beginning talking about the terminology around working with law firms and attorneys. Part two was all about the law firm expenses, and specifically, around proper accounting for costs in the case or matter that the lawyer is handling. This week is the billing workflow for the attorney using my favorite app, LeanLaw.
Attorney invoicing can be tricky. There are entries for time and also costs. But the main thing to know is how to enter them properly with enough detail for the attorney's client. In two weeks (next week is the holiday), we will jump into Trust accounts and how to handle the billing for that tricky account. But this week it is all about the attorney's side of billing along with how I manage the work as the accountant.
The Calendar View
The first page you land on is the calendar. The calendar view is so easy to use. There are so many ways to enter time into LeanLaw:
- Click/Drag (my favorite!)
- Time entry tab
What is great about this is the Admins for the law firm can book these appointments, if they are set up as a timekeeper, and log to set it as billable time. The attorney can edit these screens to modify what transpired, so it pushes to the invoice at billing time. Remember the time entries are only in LeanLaw. They do not get entered into QuickBooks until they are billed.
The Invoicing Workflow
Click the billing tab and you are ready to rock this workflow. Here is my typical scenario as an accountant:
- The attorney or admin log in the time into LeanLaw.
- The admin also enters the soft costs like copying, faxing, stamps, etc.
- Billing day comes (usually on the 5th or the 10th of the following month you are billing)
- The accountant prepares the draft invoices.
- Attorneys approve the drafts
- Once approved, the accountant submits to QuickBooks.
The beauty here is that at any time in this workflow, I can undo it and push all the data back to draft or back to ready to be billed. Something to note, do not make changes to the invoices in QuickBooks directly. If you need to change an invoice, find it in the open tab in LeanLaw, push it back to draft and make the changes there. Then resubmit it. That way the data will stay pristine in both programs.
Sending the Invoices via QuickBooks
Once the invoice is created, sending them is a snap!
- Just log into QuickBooks
- Go to the Sales tab on the left
- Click on “all sales”
- Filter it down to show the invoice as the type, filter the date and filter by the delivery method
It is essential when working with attorney billing that the level of detail is significant. Do not summarize! Each line item should describe precisely what the client is being billed.
Time gives good advice. (El tiempo da buen consejo.)
Know how the law firm bills and in what increments. This list is what you will commonly see:
Time Billing Increments (for more detail, see this article from the ABA)
1/10th of an hour or 6 minutes. If a task takes less time than this, you will generally see this rounded up to this increment. Like a phone call that lasts only 3 minutes.
1/6th of an hour or 10 minutes. If a task takes less than 10 minutes, again it will be rounded up to the 10-minute billing. If the attorney reviewed a document and it took 7 minutes, then you would charge the client 10 minutes.
1/4th of an hour or 15 minutes. The same applies to this increment with respect to rolling up.
Remember, an attorney will not bill for making copies or faxing, etc. That cost is part of the soft costs and is included in that fee.
Fixed fee billing is another alternate way of billing a client that is becoming more and more popular just as it is taking the accounting industry by storm. Fixed billing is for an agreed-upon service for a set price. Clients like it because they know what the fees will be in total.
Contingency Fee Arrangement
The other method of billing is the contingent fee. The attorney's fee is contingent upon winning the case. This arrangement is used primarily for personal injury cases.
There can also be retainer billing, which is billing for work not performed yet. It is an upfront deposit.
I hope that gives you some guidance on the workflow using LeanLaw and some good information on billing with attorneys. If you have any questions, or if you would like to hire our firm to do your books, feel free to reach out! Call me at 239-349-2004. You will be glad you did!