Lawyers are bad at being paid on a timely basis. According to a 2023 report published by Clio, concerning mid-sized law firms: 

• 11% of legal fees go unpaid on average across the industry. 

• The average time gap between sending an invoice and getting paid in full is 52 days.

This tells us that most law firms don’t recognize that even seemingly modest reductions in the payment cycle will make a large impact on cash flow. However, in our experience, many of the most egregious problems can be avoided by changing one aspect of the invoicing and collection process.  

Too many firms create a general system and then expect specific cases to fit neatly into them, treating them as being uniform or very similar. That approach is fatal to effective collections and to avoid increasing your accounts receivables. Treating every client as fungible is like betting the same amount on every poker hand. 

A better and more effective approach is to treat clients not as uniform but as essentially and predictably variable.  Some clients are more likely to have problems paying you on time; for example, for practice areas like Family law, it’s common to see cases dragging longer than expected, with an increasing emotional and financial toll that needs to be taken into account, especially when the result is not shaping up to be what the client wants.  

Thus, the best systems identify these red flags and adjust to them. You need collection systems that measure and vary alongside the risk of non-payment. This allows your firm to be proactive about the issue, creating strategies to deal with potentially problematic clients from the very beginning. For high-risk clients or cases, consider requiring a larger retainer upfront, getting paid in full before any court decision, or setting shorter payment deadlines with more frequent, even daily, billing intervals. 

In other words, client management is an important part of the collection process, and lawyers should be more sensitive to the risks of non-payment that every client can present. Technology can be a key aspect to streamline this. Billing software can automate reminders, track payment deadlines, and provide clients with easy-to-use payment portals to reduce the administrative burden on your firm. And they can also provide valuable insights into payment patterns, helping you refine your risk assessments over time. 

The bottom line is that a well-organized invoicing and collections process is key for your law firm’s cash flow and overall financial stability. Start recognizing the variability of your client’s payment behavior and maintain clear communication to significantly reduce the risk of non-payment. After all, a law firm that is diligent about its own financial health is better positioned to serve its clients effectively.