The expenses associated with running a legal firm here in Ireland are now among some of the highest in the western world. If you’ve worked in law for a while here, then you’re already aware of this and the types of legal costs you undoubtedly find challenging to recover. In all cases, it becomes a lot like debt recovery trying to recover costs to keep your law firm profitable. Yet, you do have some ways to bring some cash flow in without falling into debt. Sometimes you have to use a little ingenuity through the aid of legal costs accountants. Here’s six legal cost recovery tips from our team to give you a basic roadmap on your approach.
Adding an Administration Fee
To keep your head above water, you shouldn’t hesitate to add an administrative fee to your bill since this usually requires payment immediately. You’ll find many legal firms worldwide that do this as an ethical way to recover costs without doing any “nickel and diming.” Some clients don’t appreciate being charged for things like photocopies, faxes, or research. However, they don’t always mind paying a reasonable administrative fee to gain your legal services. Adding this as a percentage to the bill brings some money in now if the client can’t pay other expenses immediately.
Recording Everything to Prove Your Costs
A major faux pas you may make is not recording every expense you incur during a legal case. Don’t rely on paper-based systems since paper documents can become easily lost. Any digital source (like tracking software) helps you keep tabs on everything you do. However, be sure to record everything offline as well, despite often requiring manual entry into a digital device to keep proper tracking.
Requiring Interim Payments
By agreeing with your client to do interim payments before settling any damages, you won’t have to wait to bring cash in. Cash flow is absolutely essential to keep your legal firm operable, and waiting for any expenses to get paid could end up placing you in financial jeopardy. Work out a contract agreement on interim payments with the client before services begin so you won’t face disputes later.
Outsourcing Soft Costs
Don’t feel too proud about doing outsourcing to help pare down your legal costs. Evidence shows many law firms gain the most revenue from process and content buckets. Regardless, most clients expect these services to remain free, if not low cost. Outsourcing soft costs like this, you usually get a reliable team charging a mere flat rate for these services. You’ll immediately cut costs, and be able to pass on a cheaper bill to clients.
Detail Benefits of Your Services to Clients
Clients often refuse to pay for legal costs because they think they don’t hold any value. Not communicating with clients about the real benefits you bring to them is a major mistake that can lead to misconceptions. Before doing legal work for the client, discuss what you’ll charge them for and the value each service brings.
Discussing the Value of Online Services, Like Research
As an extension to tip #5 above, be sure to note to your clients the online research services you provide are extremely valuable and not available anywhere else. Remind them the research you do helps create a more successful case and aids in finding information not available in print. Prove to your clients your legal team has proper training for legal research and you’re capable of doing it in a cost-effective manner.
For more legal costs accounting tips visit our website or get in touch with us to discuss how we can help you get on top of your legal costs accounting.