Use a Separate Billing File to Keep Your Client Informed

We have been talking over the last several weeks about “tips” regarding the area of “administration.” You will remember “administration” is one of the five parts that make up every business in the world. “Administration” is the second part right after the first part, which is having “clients” or “customers.”

As I said in last week’s article with regard to client matter files, it is important to have the information pertaining to a specific client and a specific matter in your office in an organized fashion, so you can always go to the source of information you need in order to handle your client’s legal business!

It is equally important, as the actual client’s matter file on a particular matter, that you have a billing file for each client and each matter. Clients constantly want to know how much a specific matter is costing them, and breaking your client’s billing down into individual matters that can be billed on an individual basis creates a set of circumstances where you can always look at exactly how much is being billed on a particular matter. You are also able to project to your client you are handling their legal matters in an efficient and economical way. If you throw everything into a “hodge pot” it is nearly impossible to try to communicate with your client about what a good job you are doing with regard to a cost benefit analysis on any particular matter.

When I first began the practice of law, the firm I practiced with had time slips in the back of each file where the lawyers were supposed to write up the time they were using on a particular matter. For those of you who have practiced any period of time, I’m sure you will see the problem with this concept immediately. If you lose the file, you have also lost the ability to write up your time. If there is anyone out there who has never had a lost file in his or her office, please call me immediately and tell me how you have been able to achieve this marvelous feat.
Happily, this original law firm who kept their time in their client files “saw the light” and began to use time slips that were filed in individual client billing folders. Believe me, life became a lot easier with regard to being able to write up time.

The advent of the use of computers in law offices in the early ‘80s brought on much greater ability to keep your clients billing files separate from the clients’ matter files, and to be able to do away with the paper backup for the electronic version of your time slips.

Early on it became clear to me that having separate billing folders for every client, and for every individual client matter, simply made great sense. Not only could you put the monthly pre-bill in the client file showing it had been reviewed and who it had been reviewed by, but you also could put in a copy of the final monthly bill as well as any correspondence of any kind regarding payments on the bill or any other pertinent matters.

I cannot even begin to number the times it was very convenient for me to not even have to look at the client’s matter file, but to just go to the billing file being kept by our bookkeeper and be able to immediately get the information I wanted.

I have purposely elected not to put the client’s contract or their engagement letter in the billing folder. I always felt it was most important to try to keep together with the client’s matter file an historical paper trail of exactly how the matter was received, how it was opened, and how it was being handled.

There is a file retention system for the billing files just like there is for the client matter files and which we will be discussing in a later article.

One other added bonus that comes from keeping billing files separate from matter files is the “ownership” the bookkeeper can take in these files, with regard to billing file maintenance and integrity. Having the convenience of a billing file located right there in a file cabinet for the bookkeeper to look at whenever the bookkeeper wants to, without the necessity of even trying to have the bookkeeper locate the client’s matter file, has been very helpful and productive.

The current client time keeping system we use in our office is the latest release of TABS. I have been using the TABS system for over 25 years. I have found this to be an incredibly useful software package that lends itself to having individual client billing files for each client and each client’s matter. The TABS system also allows you to print out a client ledger, more of which we will be able to talk about later, and gives you an opportunity to see an overview of the client’s matter as it has been handled in your office from “day one.” If a ledger is run on a particular matter, it can be stored in the client’s billing file if it has any notations on it, but if there are no notations on it, it can be discarded because there is an available electronic version of it.

Ever since I have set up individual billing files for each matter for each client, I have never once had a set of circumstances where I was unable to get the financial information that I needed, when I needed it, to discuss the billing situation with anyone in our office or with the client. I would say that’s an excellent track record.

As I have stated in many previous articles, I hope you are continuing to see a thread of a “theme” through all of these articles. I have mentioned previously, my famous Michener quote: “when the space is ordered you are free to live creatively.” Again, this is very true when it comes to having individual matter files for individual client matters and having individual billing files for individual client matters. Even though setting up these separate filing systems may seem like a little extra work at first, it is amazing how much more efficient they become over a period of time in a growing practice with multiple clients and multiple matters. You always know where to put things, and you always know where to go to find things.

I have often commented to multiple audiences about using computers when it comes to client file maintenance; in a computer it is “junk in, junk out!” In client file maintenance, whether it be the client matter files or the billing files, the adage of “junk in, junk out” is still true. What I have tried to do is to think of my client matter files and my client billing files as paper computers. If you maintain the file properly by putting the information into the file properly, you will always be able to find the information and be able to pull it out of the file for review. A computer is nothing more than an electronic file. Your paper client matter file and your paper client-billing file are nothing more than a paper computer.

If you think through each system in your office the way that we have described the utilization of billing folders, you will begin to see there is hopefully some beneficial “method to my madness.” Remember, you only set up office systems for things that are ordinary, not things that are extraordinary. The basic client file scenario in our office is one client matter file for each client for each matter and one billing file for each client for each matter. If it sounds simple, it’s because it is.

Next week we are going to talk about date and document chronologies, and how we use these in our office on almost every matter that lends itself to some kind of a date-oriented storyline. I think you will find the way we have used these chronologies to be very beneficial in your practice. We are going to talk about how these chronologies impact your relationship with your client, your relationship with your staff, and how you can use these chronologies to identify important related dates, causes of action, and other interesting factual relationships.

One of the phrases we are going to talk about is “putting the CAT on another person’s back.” I think you will find it interesting what the acronym CAT stands for. Chronologies are just another tool to get your office organized and to allow you to handle your client matters in an efficient, organized, and economic way. I think you will find after you read next week’s article that both you and your clients will really like an extensive use of chronologies.

Talk to you next week!

Jim Wirken is a civil trial attorney and the Chairman of the Board of The Wirken Law Group in Kansas City.