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Mapping a Client's Financial Life Cycle: From Intake to Archive

Understanding how clients experience their financial relationship with a law firm is crucial for building trust — and every step in the client’s financial life cycle can strengthen or weaken this relationship. 

Gary G. Allen, Esq.
Gary G. Allen, Esq.

Founder and Head of Operations
LeanLaw

This article offers a guide to effectively map the financial life cycle of a client with a law firm, from client intake to case closure and archival. These guidelines build trust with clients by enhancing transparency, predictability and the client experience while boosting profitability and ensuring the firm's financial interests are met.

CLIENT INTAKE

The financial life cycle begins with client intake. Clear communication about fees, billing and payment terms is vital. Tips to keep mind include the following:

  • Initial consultation: Conduct a comprehensive consultation to assess the client’s needs. Clearly explain the fee structure, including hourly rates, flat fees or contingency arrangements. Approach this discussion with empathy. 

  • Engagement letters: Use the engagement letter to align expectations. It should outline the scope of work, staffing, expected costs and payment terms. Request a preauthorized electronic payment method to align with payment expectations. Ensure clients understand and sign these documents.

  • Retainer agreements: Reduce payment risk with a retainer agreement, defining how client funds will be deposited, held and billed against. Ensure your firm’s processes comply with ethical and legal standards.

BILLING AND INVOICING

Effective billing and invoicing maintain transparency and client satisfaction:

  • Time tracking: Track time accurately, regardless of billing method (hourly, fixed fee or contingent). Provide guidelines for descriptions that demonstrate the work’s value and comply with client e-billing guidelines.
  • Expense management: Monitor and record client-related expenses, preparing them for billing in accordance with client requirements.
  • Invoice generation: Create detailed invoices specifying services, hours, expenses, payment due dates and methods. Send invoices promptly to set expectations for prompt payment.
  • Regular review: Track work in progress, billed and collected fees in real time. Implement automated reminders and follow-ups for unpaid accounts. Consider outsourcing collection assistance if necessary.
“Mapping a client’s financial life cycle is essential for law firms to optimize profitability, maintain transparency and provide exceptional client service.”

PAYMENTS AND COLLECTIONS

Efficient payment and collection processes are vital:

  • Payment methods: Offer multiple payment options, including electronic methods. Ensure clients can easily pay electronically to reduce time spent on manual payment processing.
  • Timely follow-up: Implement a system for tracking overdue payments and follow up promptly. Automation can make this process more efficient.
  • Payment plans: Consider using payment processors that offer payment plans to clients, reducing payment risk for the firm.

EXPENSE MANAGEMENT

Effective expense management controls costs including:

  • Budgeting: Develop a budget for each case and monitor expenses to stay within budget constraints.
  • Expense authorization: Implement clear protocols for expense authorization and documentation to prevent unauthorized spending.

CASE CLOSURE AND ARCHIVE

Systematically wrap up financial aspects and archive relevant information with the following:

  • Final invoicing: Generate a final invoice that accounts for all billable hours and expenses, outlining any outstanding balances. Ensure clients receive correspondence confirming case conclusion.
  • Retainer reconciliation: If applicable, reconcile the client’s retainer balance, refunding any unearned portion.
  • Archive documents: Safeguard case-related documents, communications and financial records according to legal and ethical requirements, implementing a secure archiving system for easy retrieval.

Mapping a client’s financial life cycle is essential for law firms to optimize profitability, maintain transparency and provide exceptional client service. Effective client intake, clear billing and invoicing, efficient payment and collection procedures, rigorous expense management, and systematic case closure and archiving are all essential components of this strategy. By implementing these strategies, law firms can achieve financial stability while building client trust and maintaining ethical and regulatory compliance throughout the client engagement journey.

 

About the Author

Gary G. Allen, Esq., is a Founder and Head of Operations at LeanLaw, a legal timekeeping, invoicing and reporting software company, as well as a partner at Givens Pursley LLP where he has practiced law for 30+ years.  He was only three years out of Stanford Law School when the firm he was working for imploded. It happened again three years later. He was left without a job. Those experiences created a passion in Allen to help law firms be better businesses, with efficient operations, streamlined financial management and a laser focus on profitability.