As someone who previously worked in the billing department for over 25 years and has a good understanding of all the different billing arrangements, learning pricing this year has given me a better understanding of how important this process is for law firms.
Listed below are a few tips on integrating pricing efforts with the accounting/billing department.
Matter Arrangement: Ideally the pricing group is involved with all alternative fee matters from the outset, but that doesn’t always happen. It is important to find matters that slip through the cracks by looking for new matters with an alternative fee arrangement coming out of the Client Intake System. Once identified, the matters can be tagged, including billing notes, in the accounting system. This will help the billing coordinators properly process the client invoices and enable reporting. The pricing group can use the matter arrangement from the accounting system to set up reporting for those missed alternative fee arrangements. As the odds of the alternative fee working are greatly improved with regular monitoring and reporting, this is a best practice for profitability preservation and project management. Reporting can be automatically set up for a client or matter for the attorney and accounting manager to receive on a daily, weekly or monthly basis. Note the emphasis on the accounting manager receiving the reporting too. The reporting provided to the lawyers is often very valuable to the accounting manager as well when making billing decisions.
Task Codes: Applying task code requirements on a matter will help the billing coordinators with invoicing. The pricing group also utilizes the task codes in constructing pricing proposals, matter budgeting and client reporting. The two groups need to work together to ensure that custom task codes are understood and implemented in the time entry system.
Matter Timekeeper List: Limiting the timekeepers allowed to bill on a matter will help prevent team creep and is a best practice for blended rate and fixed fee engagements. The pricing group works with the attorney in selecting the team members to ensure the matter is profitable for the law firm. These plans can easily fall apart if the team members working on a matter do not resemble those selected while planning. Alternatively, reporting on team composition is another option as long as the audience receiving the report closely monitors the data.
If your law firm’s billing and pricing personnel are not in the same department, there are many benefits gained, including these, by having the two groups work closely together. I would also recommend the billing managers and/or accounting managers learn basic pricing and reporting practices.