Process Improve Your Payment System

12/07/2015

Author: Kenneth Grady

Lean thinking is a key tool in a 21st century law practice. If you haven’t heard about it, let me give you the 10 second course. Lean thinking is a philosophy built on two pillars: continuous improvement and respect for humanity.
LeanThinking-Pillar

The continuous improvement pillar involves examining processes for waste and then removing it. You are left with a process consisting of tasks that add value. Value is anything that a client is willing to pay you to do. The respect for humanity pillar incorporates the ability of people to contribute through their ideas. Lean thinking is an inclusive philosophy that says, in effect, we do better when we include everyone’s thoughts as part of the improvement process.

When I was a general counsel, my law department used a law firm that sent five copies of a letter, to five different employees in my company, each time the U.S. Patent and Trademark Office registered one of our company’s trademarks. On the law firm side, that meant a secretary printed five copies of the letter, then five envelopes, put each letter in an envelope, put postage on each envelope, and mailed the letters. Of course, on the client side we had to process five letters, read them, store them, and then years later clean them out.

Why five? Because “that was the way it had always been done.” Our in-house legal team looked at the process and asked the law firm to take the letters from five to one, then to an email attachment, then to an email without the attachment. As the client, we didn’t need to pay the law firm or employees for all that waste.

Some things we do are necessary, but if we examine how we do them (the process) we can find less wasteful ways to accomplish the task. In fact, we all do this. It is what we mean when we say “I just got more efficient.” Lean thinking helps us get there, but in a more consistent way. Lean is an efficient way of getting lean.

As a solo practitioner, I had to invoice clients and process payments. I delighted in receiving payments. So, the tasks associated with processing a payment were not the worst chores on my list. But, processing invoices and payments took time away from other, more valuable activities. I prepared and sent an invoice. The client prepared a check and then sent me the check with a copy of the invoice. I opened an envelope, entered information about the payment in the financial management system, and then had to process the payment by taking it to the bank. Lots of time; lots of waste.

Today, we have the option to skip much of the waste and handle the invoice and payment process more efficiently. All of those manual steps to invoice, receive payment, enter information into the financial management system, and go to the bank can be automated.

LawPay is a nice example of taking a process – invoicing and payment processing – removing much of the waste and automating many of the remaining steps. The total time involved in the payment process is significantly reduced. Much of the waste (driving back and forth to the bank) has been eliminated. You can allocate that freed up time to other, value added tasks, such as building a client base or handling legal matters.

Many lawyers think efficiency is about finding large blocks of time that are devoted to inefficient tasks and finding ways to do those tasks more efficiently. Sure, that can work. But we find most efficiency gains through continuous improvement. Take all the things you do each day and trim some waste from each one. Repeat that continuous improvement process day after day, and you build a sizable amount of time that becomes part of your inventory to spend on value added activities. Much of that inventory comes from administrative tasks, such as invoicing and payment processing. Why spend your time doing administrative tasks computers can handle, when you could spend your time with your next client?