Key takeaways
Legal e-billing software streamlines billing and payment processes for law firms by automating time tracking, invoicing, and compliance, helping firms reduce errors, save time, improve cash flow, and deliver a more modern, client-friendly experience.
Billing is often a sore point for law firms and in-house legal teams because it’s garnered a reputation as slow and painful. Between managing accounts receivable, creating new invoices, and tallying up billable hours, the legal billing process can be a huge time sink.
Thankfully, legal e-billing solutions have upended that notion, providing legal teams and independent law firms with convenient and fully compliant digital ways to manage billing processes and process payments.
Yet, many attorneys have yet to take the jump to digital billing processes, either worried that the solutions will increase their compliance risk or add complexity to their daily processes.
In this article, we’ll help you understand what legal e-billing software is, how electronic billing software for law firms works, and the major benefits of adopting legal e-billing.
What is legal e-billing software?
Legal e-billing software is a digital tool that allows legal teams to automate many different financial tasks, including tracking billable hours and expenses using UTBMS codes, receiving payments, processing invoices, and maintaining IOLTA trust account compliance—all within one system.
Until recently, legal professionals had limited options when it came to modern billing and accounting software since many business accounting tools aren’t built for the complexities of legal billing processes.
Though many software packages are available for invoicing, legal e-billing software is different because it is custom-built for the needs of a legal practice. This means that it not only contains basic information like the total amount owed, but it also captures granular information about specific tasks and when they were performed. This added context can help you substantially improve your firm's efficiency.
Why legal e-billing software matters
New industry-specific technologies have transformed almost every aspect of the legal industry. Everything from document generation to evidence presentation has been updated to reflect the needs and expectations of today’s clients and court systems.
Billing and payments are no different. Law firms that rely on traditional paper-based invoices, manual hour tracking, and other manual tasks are not only wasting time unnecessarily on admin, but they also risk coming across as old-fashioned to potential clients and collaborators.
For in-house legal teams, an outdated billing process makes setting budgets and controlling costs unnecessarily difficult. Without the visibility that digital tools provide, organizations may be flying blind when it comes to their legal costs.
Most importantly, the harder it is to pay for legal services, the less likely clients are to do it quickly. A modern, convenient payment process on par with what clients are used to in other industries is essential for getting paid faster and maintaining more consistent cash flow.
Key benefits of legal e-billing software
Adopting e-billing software and modern digital payments isn’t just good for a legal team’s reputation. It also provides several tangible benefits for law firms in the form of boosted efficiency, reduced errors and compliance risk, and better overall client experiences.
Here are some of the top reasons leading law firms are implementing legal e-billing solutions.
Reduce billing errors
While human beings are great at many things, one place we fall short is in processing large amounts of dense, intricate information. Manual data entry is extremely time-consuming and more error-prone—and when mistakes happen, it can take weeks or months to spot them, slowing down the billing process even further.
Automating data entry and creating optimized workflows helps dramatically reduce billing struggles and the potential for human error while also drastically speeding up the overall process.
Legal billing software also follows the Legal Electronic Data Exchange Standard (LEDS), which creates more consistency (especially as a firm or legal team grows) while also making it easier for automated tools to spot missing fields, incorrect codes, or duplicate entries before an invoice is submitted.
Save time with automation
An attorney has a lot to do in a given day, and your time is better spent thinking through the subtleties of cases and serving the cause of justice, not figuring out how to send bills and accept payments.
E-billing for law firms simplifies the process of collecting payment for legal services. It uses smart automations for communications, processing recurring payments, and tracking billing status.
Many legal e-billing solutions manage the majority of the accounts receivable process, with smart automations for tasks like:
Invoice routing for approval chains
Auto-reminders and communications for overdue payments
Pre-populated billing entries using case data and time tracking entries
Recurring payments and scheduled charges management
Real-time billing status tracking
Improve cash flow and payment speed
E-billing for law firms can also improve your firm's cash flow. There are a few ways this happens.
To begin with, it makes it possible for work to be submitted in real-time. This means your clients can make payments more quickly, taking advantage of discounts from settling a bill with less delay. Of course, the converse is also true, and you can receive payments more quickly by invoicing with legal e-billing software.
Moreover, sending bills electronically mitigates potential delays in delivering invoices and bill reminders, making the entire billing cycle more timely and efficient.
Don’t underestimate the positive impact on your cash flow of making it quick and easy for clients to pay you. 8am™ LawPay’s Quick Bill feature allows you to send a payment request that can be paid with one click. This makes a difference; of those Quick Bills that are paid, 57% are paid the same day the request is received.
LawPay also allows you to accept multiple payment methods, schedule automatic payments (whether a one-time charge at a future date or recurring charges), add QR codes to invoices, and much more.
Finally, there are many rules about what a law firm will or will not bill for, and they vary between firms. If you fail to account for all these differences when processing invoices, you could end up overcharging for your services. And that’s just bad business. A good legal e-billing platform will make it possible for a legal team to set up rules that automatically check an invoice and approve, reject, or flag it for further review.
Increase transparency and data insights
Without a clear, bird’s-eye view of your outstanding invoices, realized hours, and other financial metrics, it can be difficult to understand your firm’s financial performance and health. After all, you could have an excess of clients but a negative cash flow due to a high number of unpaid invoices.
Using legal e-billing consolidates all your billing processes and data, giving you an unbiased overview that will help you set attainable financial goals, improve processes, and boost efficiency.
Specific reports, such as the ability to view reports by matter, phase, or timekeeper, will also help you get a granular understanding of how specific cases and tasks affect your bottom line. This will allow you to make more confident and smarter budgeting decisions moving forward.
Boost client experience
People today have high expectations when it comes to a client-focused experience, and there are several ways legal e-billing software can enhance the overall client experience.
Offering modern, convenient payment methods dramatically improves the experience of paying for legal bills. By sending bills out at a consistent time, making it easy to pay them, and creating unobtrusive reminders for bills that need to be settled, legal e-billing software substantially reduces the burden your clients experience as they settle their accounts with your firm.
Additionally, electronic billing software for law firms allows for greater billing transparency when sending invoices, providing clear hour breakdowns and notes to avoid miscommunications and surprises.
The more a client trusts you, the more they’ll feel taken care of, which will lead to referrals, repeat business, and a stellar reputation.
Legal e-billing workflow: How it works
For those who haven’t used e-billing software before, here is a quick breakdown of how the process works:
Log billable time accurately: Legal software makes it easier to enter time using appropriate UBTMS task and phase codes, enabling faster invoice approval, accurate reimbursement, and reduced guideline violations.
Generate your invoice: You can generate an invoice automatically using your time logs and notes.
Submit the invoice: Submit an invoice to the client through a secure payment portal. The invoice will also be logged on your billing system so you can track its status.
Collect payment quickly: Send an invoice to clients directly through a secure payment portal. Legal payment software also allows attorneys to save their clients’ preferred payment method or (if your business model supports it) set up payment plans directly on the payment portal, facilitating quick payments.
As you send more digital invoices, continue to monitor the overall process on your legal billing software to see if any areas are causing friction or slowdowns. The more you can optimize the billing process, the easier it will be to get paid.
How to implement legal e-billing software
Consistency is the key to effectively implementing legal e-billing software at a law firm or within an in-house legal team. Every organization has slightly different needs based on practice area, location, or other unique factors, so it’s crucial to create workflows that fit your business.
While every organization is unique, here are some basic steps for a successful legal e-billing implementation.
Define your billing guidelines
First, start by defining clear billing processes and guidelines. If you don’t already use some form of billing software, take some time to write down all the steps in your billing process—from initial time tracking of billable hours, to client communications, and final approvals. This will help you translate these processes digitally.
Don’t include any circumstances where you may skip a step or avoid the usual process to get things approved faster. The goal of a digital billing system is to be consistent (and to make things more efficient and therefore eliminate the need to take shortcuts in the first place).
Clearly define:
What type of work is billable
How billable (and non-billable) hours should be tracked on your system
How expenses should be tracked and assigned to matters
Billing language to use with clients
Approval processes
Specific invoice formats to use (and all necessary fields)
Having defined workflows in your legal e-billing software will help make processes more consistent and avoid gaps, and speed up approvals.
Ensure LEDES and UTBMS compliance
You’ll need to set it up to use UTBMS codes and LEDES formatting to ensure your invoices and time tracking entries are standardized and fully compliant with compliance standards.
LEDES: LEDES formatting was developed in the mid-90s to create a standard framework for legal e-billing information and is widely used.
UTBMS: The Uniform Task-Based Management System (UTBMS) is a set of codes developed by the ABA to classify the various legal services performed by a law firm. These codes help create standardized entries for tracking billable hours and expenses.
If you’re using an industry-specific legal billing solution, the specific LEDES formatting you need will be handled. However, if you’re using a more generic e-billing service, you’ll need to ensure your invoices are set up to comply with the LEDES system.
One best practice for using legal e-billing software is to create standardized invoice templates. Regardless of your firm’s size and client base, having a single, consistent layout for bills will make processing easier.
Choose the right software for your firm
Software solutions need to be evaluated based on several factors. An important one is the kind of integrations it supports.
There’s nothing worse than spending weeks incorporating a new tool into your process, only to find out that you have to start over because it won’t work with another software that’s crucial to your workflow.
More generally, try to imagine things from the perspective of your future self. Will this tool make things easier and more secure for you?
When evaluating legal billing tools, consider factors like:
Ease of use: Is the software intuitive to use for both you and your clients? Is it modern, secure, and easy to understand?
LEDES & UTBMS support: Does the solution automatically comply with invoicing and reporting standards?
Integrations with case management: Does your e-billing solution connect directly with your case and matter management software?
Payment flexibility: Does the solution support standard payment methods like credit cards or ACH transfers? Does it support additional payments like payment via QR code or contactless payments?
As always, we highly recommend using an e-billing solution that is purpose-built for the legal industry. Solutions like LawPay ensure that your billing meets trust accounting rules and other legal-specific standards while also improving the overall client experience and helping law firms get paid 39% faster.
Train your team
Simply implementing e-billing into your law firm or legal team’s technology stack won’t improve your billing processes—you also need to take the time to train your team on how to use the software and billing best practices to create consistency, reduce confusion, and ensure your processes can scale.
Most importantly, it’s vital to train teams on how they fit into the overall e-billing lifecycle and what the expectations are before submitting an invoice to the next step. This includes creating standardized review processes to ensure invoice requirements are being met. Despite legal e-billing software automating a great deal of the overall process, it’s vital to set clear expectations for when human review is required.
This is especially important if you’re moving from a manual billing process to a digitally assisted one, as it will clearly define how the old and new processes compare.
Also, help outline which billing communications will be templatized and which should be handled by a person. You’ll also want to standardize the language used for any billing line descriptions.
Set clear client expectations
Transitioning from a manual billing process to a digital one will help make the overall process faster and more convenient—but that doesn’t mean there isn’t a learning curve.
It’s important to overcommunicate with clients when it comes to billing. At a minimum, make sure you take time upfront to let clients know:
When and how invoices will be sent
What payment methods can they use and expected timelines
How and when payment reminders are sent
Combining billing with a secure client communication portal is another great way to consolidate important information so invoices aren’t missed.
Additionally, it can be helpful to create blogs, videos, or other brief educational content to walk clients through the billing process and show them how to pay an invoice.
Again, the easier and less confusing the process is for clients, the faster they’ll pay.
Common e-billing software use cases
Thousands of firms and organizations already use legal payment software to streamline their billing and accounts receivable processes. More importantly, there’s no wrong time to implement a legal billing solution, and making a digital transition benefits firms and organizations of any size.
Solo practitioners and small firms Many small firms or solo practitioners don’t have the resources for a dedicated billing and accounting department. Leveraging e-billing software enables them to eliminate large amounts of manual data entry and automate tasks with tools such as payment reminders and payment links to help with collections.
Midsize law firms As a firm’s client list expands, its billing and accounting processes become more complex. A centralized billing solution allows them to consolidate and standardize billing workflows, maintain compliance on a larger scale, and monitor their financial status using comprehensive dashboards.
In-house legal reams
In-house legal teams can sometimes be disconnected from the rest of an organization’s finances, leading to overspending and challenges when communicating budgeting needs. A centralized billing platform immediately provides more visibility into the billing process and projected finances. It also makes it significantly faster to review outside counsel invoices.
Simplify legal e-billing with LawPay
Technology has upended the legal industry, both in terms of how legal professionals work and how clients interact with law firms. Modern billing software is essential for meeting client expectations, improving transparency, and maintaining compliance.
Most importantly, a legally compliant billing solution will help your organization get paid faster, allowing you to maintain healthy cash flow and create data-based budgets.
Whether you’re a solo practitioner or a member of a large in-house legal team, a legal e-billing platform is vital for staying competitive and relevant in today’s legal landscape.
Schedule a demo today to learn more about how the right legal e-billing software can help you eliminate admin and get paid faster—or if you’re ready to make the jump, sign up now.
About the author
The LawPay Team