If you’re running a law firm, you’ll probably want to automate certain aspects of your business model. Many companies and niches choose to automate parts of what they do these days. It means you can usually scale back your human workforce and save money. 

To that end, you might want to start using legal billing software. 22% of law firms don’t use legal billing software yet, and those that don’t run the risk of falling behind their competitors. 

By using legal billing software, you send a message to your clients that you’re running a modern law firm. If you don’t use it, that indicates you’re not willing to embrace current technology.

We’ll talk about legal billing software in more detail in the following article. We’ll discuss what it does, how it works, and we’ll also talk about what specific features you want to see from the one that your law firm decides to use.

What Does “Legal Billing Software” Mean?

The term legal billing software means any kind of software package or suite that you use to bill your clients. In other words, if you’re using a software program to send a bill to your clients, that’s what we mean when we use this term. 

How Does Legal Billing Software Work?

Usually, if you’ve embraced legal billing software as a law firm, you will pay for it in one of two ways. You can either buy it from a company that makes it and use it from that point forward, or else you can rent it.

If you rent it, then you’re using SaaS, or the software as a service model. SaaS makes sense for many law firms because if you rent the software suite or package rather than buying it, then the company that manufactures it can automatically handle any upgrades for you. It can also answer any questions you have when you talk to its customer service team.

If you buy the software instead of renting it, then that might work as well. You’ll pay a one-time fee rather that continuing to pay for the software every month, quarter, or year.

However, if you do that, then you might not have the same attentive customer service team who can help you if you’re having an issue with the software. You will also probably have to handle any necessary software updates manually, which some law firms don’t like. 

You will have to consider whether buying the software or renting it makes more sense. Now, let’s move on to talking about what you’ll probably feel your legal billing software should feature.

Itemized Lists of Expenses

First, you will want your law firm’s legal billing software to have itemized lists of expenses when you use it to send a client their bill. Maybe you charge this client an hourly rate for your services. Perhaps you charge them a percentage of their winnings if you work in the personal injury niche.

No matter how you charge them, you will want your software to send them an itemized list that includes all the services you provided in detail and how much they owe you as a result. The client should look at their bill and not have any questions or confusion about how much they owe and why they owe it. 

If your software has this functionality, you should keep your clients happy. Having this feature also saves you from having to rely on outdated billing formats like calling a client and telling them how much they owe you or sending an itemized invoice through the mail. 

Easy Payment Methodology

Your legal billing software should also have easy payment methodology set up for your clients. The client will probably want to pay that bill as easily as possible. The software should let them do that with no issues.

If they want to pay by credit card, it should allow them to do that. If they would prefer to use Chime, Zelle, PayPal, or any of the other more popular methods that exist today, your clients should have that ability as well. 

The software should notify you on your law firm’s end when a client pays you. At the same time, it should automatically send the client a receipt that they can keep for your records. This way, both your firm and client will know the money changed hands, and you’ll know that client no longer has an outstanding debt to you.  

A Client’s Billing History

On your end, you should have the capability to look at your legal billing software and see a client’s billing history. The software should keep a record of that going back several years.

You will want that to see what services you rendered for this client, when you did it, and how much you charged. You might have to deal with an IRS audit at some point, and having all of that information available might come in handy if that ever occurs. 

Financial Reporting Capabilities

That’s why you also want financial reporting capabilities from your legal billing software. It should have features that allow you to quickly and easily report to the IRS or any other authoritative bodies what clients you have, what services you did for them, how much they paid you, and when they did so.

If you can create one of these reports and send it any time you like, then you will cover all your bases. The IRS and any other entity to which you must report can stay in the loop, and you can feel confident that you’re following the law.

Your legal billing software should have all of these features, and possibly some other ones as well. You will find many bespoke software systems of this nature available today, and you’ll need to pick the one that suits you best. Every law firm will have different needs, and you can probably find the right software to match yours.