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Paying your clients bills?

8 July 2010

At some point in time every professional services firm, irrespective of their industry, has to pay for things on behalf of clients - there is just no getting away from it ... unless you are a legal firm that it is!

Discounting the changes forced by certain clients (such as those in banking) with regard to the recovery of costs, the legal industry has the perfect basis for 100% recovery of costs spent on behalf of clients. It's called your trust account - and if you ask every client of yours for a deposit before you start working for them you can basically recover costs incurred on behalf of clients immediately.

So why then do so many legal firms not recover some or all of the costs they incur on behalf of clients? It is simple really as the following reasons show:

  • People forget: Firms rely on their staff to ensure that every cost, that is recoverable, is billed to the client - and since people are forgetful this doesn't always happen.
  • Poor processes: Firms employ manual processes to ensure cost recovery takes place - these processes are often poorly conceived and poorly managed resulting in the process being inadequate and circumvented, again resulting in costs not being recovered.
  • Poor technology decisions: Firms buy and install technology to try and reduce their reliance on people and processes and to assure a 100% cost recovery. Often the tools selected are not properly designed, implemented, used and/or integrated with other technologies deployed in the firm, resulting in non recovery of costs.

This tells us that even if firms insist on taking a deposit before commencing work, they are not guaranteed the recovery of 100% of the costs incurred on behalf of clients. Unless you take a deposit and bill for every recoverable cost incurred against a matter, you will always be paying some or all of your client's bills.

Enter tools like Softlog and GhostPractice - both are new generation fully integrated legal practice management tools designed to ensure your firm recovers 100% of the recoverable costs incurred on the behalf of clients. As this article focuses on cost recovery, we will be focusing on Softlog - a world class internationally developed cost recovery solution (that fully integrates with GhostPractice - the leading practice management solution in South Africa).

Softlog is a specialised software solution for cost recovery and expense management. It's a solution capable of managing all your office expenses including copy, fax, print, email, scan, sundries, fixed and mobile phone costs.

From a cost recovery perspective alone, Softlog will increase your bottom line by allowing you to improve the levels of costs that you recoup from your clients; control your own internal expenses more effectively; save valuable staff time and reduce wastage.

Apart from the recovery of traditional costs such as photocopies, faxes, printouts, etc - the really exciting opportunities lie in Softlog's innovativeness ...the latest being mobile phone solutions.

In a world first, Softlog has developed mobile phone technology that captures and records billable time when lawyers talk to clients from their mobile phones. This new technology is fully automated and integrated with the firm's practice management solution (GhostPractice). Through Softlog's innovative technology, individual client and case information is updated regularly ensuring first class synchronisation between a firm's practice management solution and it.

A survey conducted at one legal practice (in Australia), revealed that with mobile phone records of nine lawyers taken into account, a total of Au$21,888 additional revenue could be captured per month using softlog mobile. This would result in a total of Au$262,656 a year for the firm, a significant amount of revenue, which without the tracking of mobile phone calls would not have been billed - this effectively means that your cost recovery tool now doubles as a revenue earning tool.

Some might argue that despite having all of these tools at a lawyer's disposal, clients may not be willing to pay additional fees and costs incurred in the execution of work by lawyers on their behalf. Whilst this may be true in some instances, one has to look at the reason why. In the past lawyers have not had the tools to justify the bills they charged - would you honestly pay a bill without question based on the thickness of a file or the length of a document? However, with quantifiable and auditable supporting documents and information, the likelihood of a client rejecting a bill is dramatically reduced - water tight evidence! Softlog is a tool to generate quantifiable and auditable evidence supporting your invoice/fee note and clients will have the comfort of knowing that that evidence is available should they request it.

Given the rapid changes in technology and the availability of a trust account no legal firm should ever have to carry the costs of their clients (unless they have agreed to); rely on their staff to ensure that costs are fully billed or have cumbersome processes and layers of management to ensure cost recovery happens. Tools like Softlog and GhostPractice simplify your firm's day-to-day operations. They are also going to improve productivity by enabling staff to focus on their core activity of providing legal services and reduce the admin burden of having to worry about recording and billing for costs incurred. This is a huge added advantage that enables a firm to do the same amount of work with less staff or more work with the same amount of staff- given the new economy in which we live and the increased competitiveness of the industry; having the option to scale back on costs or deliver more work without additional costs is an enviable position to be in!

The maths is simple - a practice management solution like GhostPractice is going to increase your revenue by at least 20% if used properly and a cost recovery solution like Softlog is going to ensure that you don't spend your increased revenue on footing your client's expenses; resulting in more money in your pocket!

If you would like to know more about GhostPractice, how we can help you with debt management or how GhostPractice is driving change in the legal industry feel free to call Matthew Spagnoletti on 082 568 4738 or email him matthews@korbitec.com.

Kuben Naidoo

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