Ignore the specific content. This is merely to show a simple bar graph that compares two factors at a glance. For you, it will be actual vs. planned service-usage and actual vs. planned budget-consumption.

Ignore the specific content. This is merely to show a simple bar graph that compares two factors at a glance. For you, it will be actual vs. planned service-usage and actual vs. planned budget-consumption.

Wrapping up (pun intended) our end-of-year A/R collection advice, here's a practice that those who bill hourly can use to reduce the incidence of client confusion, payment delay, and monthly negotiation.

To my many critiques of hourly billing (here, here, and here) I'll now add, "unbelievably time-consuming" for outside counsel to prepare, validate and submit invoices, and for inside counsel to review, understand and approve them. I can't imagine how a sizable company reconciles multi-page bills from dozens of law firms. I realize that billing software is much more sophisticated now, and probably integrates to a great degree. However, if it requires your client to review detailed time entries, you're almost guaranteeing slower payment.

Still, before authorizing payment, your client must conclude that the amount she's paying is reasonable relative to what you accomplished that month. To make it easy for her to conclude that that's likely the case, I encourage you to add an executive summary to your invoice.

The summary should include a list of open matters and, for each, a description of

  • Progress achieved since the end of the previous month or billing cycle
  • The percentage of the projected budget used so far (you agreed on a budget estimate, right?) vs. the percentage of the projected duration. "We've used 71% of the projected budget through month 7 of the projected 12 months (58%)
  • Explain any lack of alignment between duration and budget, e.g., "While it might appear that we're on pace to be over budget, we project a serious decrease of [activity type] in month 9 that will bring things back into line with projections by month 10." 
  • Explain what progress you expect next month, and how it will affect budget- and completion-date projections.
Exec summary- progress v budget.jpeg

This kind of big-picture summary will allow your client to visualize that things seem to be about right. It also makes it easy for her to spot areas to ask you about, e.g., why we appear to be over budget with Litigation A. Even if she's in the habit of spot-checking the detailed time record, you raise the odds that she'll authorize payment now and conduct her spot-check later. The idea is to raise her confidence enough to sign off on your invoice rather than wait until after she reviews it. Delay makes you the bank; you don't want to be the bank.

Finally, this kind of discipline communicates to your client that you're on top of things, and gives greater credibility to any subsequent projections you make for future work you're trying to get.

Mike O'Horo

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