Billing Best Practices for Law Firms

Billing—it’s essential for your law firm, but let’s be honest, it’s not the most exciting part of running a practice. You didn’t go to law school to spend your days chasing unpaid invoices or deciphering cryptic time entries. Yet, without strong billing practices, cash flow slows, clients get frustrated, and your firm’s profitability takes a hit.

Optimizing billing processes may not be your superpower (yet!). But by implementing some best practices, you can streamline invoicing, improve collections, and ensure that every billable hour counts—without losing your sanity. Let’s dive into the strategies that keep your firm’s finances running smoothly.

1. Set Clear and Transparent Billing Policies

A client should never be surprised by their bill. Clear, upfront billing policies set expectations from the start and prevent disputes down the road.

• Use engagement letters to outline payment terms, billing frequency, and what counts as billable vs. non-billable work.

• Explain your rates upfront—hourly, flat fee, contingency—so there are no surprises.

• Define your billing structure for expenses like filing fees, expert witnesses, and administrative costs.

Superhero tip: When clients understand your billing process, they’re more likely to pay on time. If invoices are vague or confusing, expect pushback.

2. Timekeeping: The Key to Accurate Billing

You can’t bill what you don’t track. Missing billable hours (or logging them inaccurately) is one of the biggest reasons law firms leave money on the table.

• Record time as you work. Don’t rely on memory—track billable hours in real time.

• Be specific. Instead of “Legal research – 2 hours,” write “Researched case law on contract breach defenses – 2 hours.” Clients (and courts) appreciate clarity.

• Use legal time-tracking software like Clio, MyCase, or PracticePanther to streamline this process.

• Set clear expectations as a team so everyone knows what to use to track, the level of detail, etc.

Superhero tip: If your firm struggles with capturing time, check out Becoming a Data-Driven Leader in Your Law Firm to learn how tracking the right data can improve efficiency.

3. Streamline the Invoicing Process

A slow, inconsistent invoicing process leads to slow, inconsistent payments. Make invoicing a well-oiled machine.

• Standardize your invoices with clear descriptions, breakdowns of charges, and due dates.

• Set a billing schedule (e.g., monthly, at project milestones, or after case resolution) and stick to it.

• Proofread every invoice—mistakes lead to client disputes and delayed payments.

Superhero tip: Review and improve your firm’s lockup rate. Longer lockup rates mean tighter cash flow.

4. Offer Multiple Payment Options

Want to get paid faster? Make it easy for clients to pay. Paper checks and wire transfers are outdated—modern law firms use digital solutions.

• Accept credit cards, ACH transfers, and online payment portals for quicker processing.

• Use LawPay, Clio Payments, or similar platforms designed specifically for legal billing.

• Set up automatic payments for recurring clients to avoid constant follow-ups.

Superhero tip: Firms that offer multiple payment options see fewer late payments and a healthier cash flow.

5. Strengthen Collections and Follow-Ups

Even the best clients forget to pay sometimes. Having a collections strategy in place ensures overdue invoices don’t pile up.

• Send automated reminders before and after the due date.

• Implement late fees (if your jurisdiction allows it) to encourage timely payments.

• Have a clear collections policy—escalate unpaid invoices professionally and consistently.

Superhero tip: Firms that track Accounts Receivable (A/R) metrics and follow a structured collections process recover more payments. Learn more about Financial Reporting for Law Firms to understand how A/R impacts your bottom line. 

Bonus Superhero tip: Firms that include an ACH authorization form along with language allowing auto-drafts after a specified amount of aging time in their engagement letters spend less time chasing A/R and have increased productivity metrics.

6. Avoiding Common Billing Disputes

Billing disputes are a major cause of late payments. Clients challenge bills when they don’t understand the charges or feel overbilled.

• Be upfront about costs. Clients should never feel blindsided by a bill.

• Provide detailed invoices. List what was done, why it was necessary, and how long it took.

• Communicate proactively. If unexpected costs arise, inform the client before the invoice arrives.

Superhero tip: Track client profitability—if a client constantly disputes bills and pays late, it may not be worth keeping them. Learn more in Law Firm KPIs: How to Focus on What Matters.

7. Technology and Automation for Billing Efficiency

If your firm is still relying on manual billing, it’s time for an upgrade. Legal billing software improves accuracy, speeds up invoicing, and integrates with accounting systems.

• Use tools like Clio, CosmoLex, or FileVine for legal-specific billing solutions.

• Automate recurring invoices to eliminate manual work.

• Integrate billing and accounting software for real-time financial tracking (See how in How to Implement Law Firm Accounting Software).

Superhero tip: Billing automation doesn’t just save time—it ensures consistency, reduces errors, and gets you paid faster.

8. Ethical and Compliance Considerations in Billing

Billing is key for demonstrating strong ethics and in compliance with bar regulations.

• Follow ABA and state bar billing rules (of course!)

• Handle client trust accounts (IOLTA) properly—don’t mix client funds with firm accounts.

• Avoid unethical billing practices like block billing or double billing.

Superhero tip: Ethical billing practices build trust and prevent regulatory headaches. Financial Forecasting for Law Firms can help you project revenue without cutting ethical corners.

Conclusion: Optimize Your Billing for a More Profitable Firm

Strong billing practices help build a financially stable and efficient law firm. Make billing better by:

• Setting clear billing policies and track time accurately.

• Using automation and legal billing tools to speed up invoicing.

• Offering multiple payment options to reduce A/R lockup.

• Following up on late payments consistently and professionally.

If billing is slowing your firm down, Accounting Girl is here to help. We specialize in law firm financial management, from billing best practices to cash flow optimization and compliance.

Schedule a Consultation with Accounting Girl today. Accounting for law firms is our superpower, let us take the stress out of billing for your firm!