You always hope that when you work it is doing something that you love and enjoy doing. That being said, I don’t know many people that voluntarily refuse a pay check each month or aren’t looking forward to pay day. However that’s exactly what I see many attorneys doing every day. Now I think that pro-bono work is a great way to give back and serve your community, but outside of a non-profit, you cannot operate a firm with pro-bono work.
So the question then is, why are so many attorneys making it so easy for their clients to not pay for the services they’ve been provided? I have asked many times for attorneys to tell me the last time they billed their clients. Almost half the time I ask that question the response is some variation of this, “I don’t want to answer that, it’s a little embarrassing how long it’s been.”
Taking it a little further, to the other 50% that have billed relatively recently, I ask the follow up question of how many of those bills are still outstanding? Far fewer have any real grasp on what percentage of their billed time they are actually getting paid, also known as the realization rate.
Simply put, very few attorneys are successfully completing the revenue cycle on a regular basis and as a result are leaving significant money that they have already worked for and earned sitting right on the table and eventually just blowing away with the wind. The truth is that by the time the work is done being performed, you’re only 30-40 percent of the way through the cycle.
I’ve seen what happens when client invoices are sent out in a timely manner and when there is monitoring and follow-up on the outstanding invoices. The result is a law firm that starts to make a profit and grow. Why work so hard just to leave the money sitting there? Completely the revenue cycle doesn’t need to be hard or painful; it just needs to get done.