Why was there always a slow pace of innovation in the legal industry? Here’s a history lesson to consider. The French political scientist and philosopher Alexis de Tocqueville observed in the 19th century how lawyers were trustees of law and public order and were thus conservative by nature.
As businesspeople operating their own law firms and corporate legal departments, they maintained that conservatism. They weren’t prone to making great leaps of innovation without a reassuring precedent to follow. But recent events have changed all that.
The pressure on law firms for improved billing practices
Even before the pandemic, corporate legal departments were under pressure to perform more like efficient business units. They passed that pressure along to their outside counsel, who are now expected to be more accountable and accurate in their billing practices. The pandemic only accelerated that change.
The average Fortune 1000 company spends $96 million per year on outside law firms. This shouldn’t shock anyone that in large companies, the procurement department now influences 57% of all legal services. Not long ago, having them involved in the relationship between client and counsel would have been unthinkable.
With so much money changing hands between corporate clients and law firms, law firms face increasing pressure to digitize and innovate their accounts receivable. The expertise of law firms lies in justice, not technology. But today there’s significant demand for law firms to embrace the digital age. One key way to do that is by automating accounts receivable.
The need for AR automation for legal firms
Increasingly, a consistent request from corporate clients is the ability to pay for outside counsel legal services with a credit card. Many law firms are lagging behind other vendors who’ve been taking credit card payments from these same clients for years. The continued cautious approach of the legal industry toward automating accounts receivable functions has many downsides:
- Many law firm AR departments are overwhelmed with time-consuming, manual processes. This includes invoicing, applying payments and matching remittance data to an ERP.
- Although popular in the legal industry, ACH payments can be difficult to reconcile and have other limitations.
- Credit card payments made using emails that include cardholder information may not be PCI compliant, creating undue risk for clients.
- Unapplied payments can squeeze the credit line of your clients even though payment was made.
Outside counsel is under pressure to provide more timely and accurate billing and reconciliation processes to their corporate clients. By adopting new technologies like an automated accounts receivable (AR) solution from Billtrust, firms can retain clients who expect low-friction invoicing and payment processes from their vendors.
The opportunities from automating AR
There are myriad benefits to automating AR, none bigger than simply making life easier for corporate clients. When payments and invoicing are easy, clients are happier, and happy clients provide greater lifetime value to a law firm.
Automated invoicing cuts out time-consuming, error-prone manual work. It achieves more accurate invoices, fewer queries and disputes, faster payments and easier reconciliation.
In addition, automation lets you offer your clients every invoicing format — from print to accounts payable portals — through a single, unified solution.
With automated payments, clients can pay with whatever method they prefer. They can make secure, compliant payments quickly as soon as they receive the invoice, instilling confidence that your firm is easy to work with.
With facilitated payments through Billtrust, you’ll reduce friction between clients and your AR department by decreasing interchange fees for credit card payments, providing an online payment portal, and integrating seamlessly with ERP systems.
Finally, AR automation for legal firms can help you replace spreadsheets with a digital collections solution that reduces the manual collection processes, lessening the chance for error. It also minimizes the stress on your AR team while prioritizing collections, improving success rates and protecting client relationships.
With automation, your highly-paid talent is freed up to focus on client work and financial strategy so you can prioritize and maximize key accounts while providing a modern customer experience.
Law firm AR automation accelerates success
In the changing landscape of client-counsel relations, legal firms should accelerate their adoption of accounts receivable digital automation to provide more timely and accurate billing and reconciliation. This offers an elegant solution to streamline AR processes and maximize your talent usage and client relationships.
To learn more about how accounts receivable automation can help your legal firm thrive, check out Billtrust’s new white paper, Automating Law From AR.
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