Creating an Effective Legal Invoice: Tips & Templates

Your law firm provides top-notch representation to your clients. You are experts in what you do. Still, some clients question the value they are receiving for the rate they are paying.

Every business faces a similar problem; however managing client perception is particularly challenging for law firms. After all, the industry language can be confusing, and the wheels of justice move more slowly than some clients would like to believe.

The good news is there's an administrative solution that can help – optimizing your law firm's invoicing. An invoice, done right, can foster client confidence as it improves cash flow. Read on to understand why effective invoices are critical for law firms, and how you can implement them in your own practice.

What Is a Legal Invoice?

A legal invoice is a document issued by a law firm that requests payment from a client. The payment request can be related to services already rendered, services that will be provided in the future, or reimbursable expenses paid by the law firm on behalf of the client.

4 Common Types of Lawyer Invoices

Your law firm should have different invoice templates, depending on the nature of the billing. Commonly, you'll use standard invoices, prepayment invoices, recurring invoices, and interim invoices.

Let's define each of these.

1. Standard Invoice

A standard invoice bills for services already performed. Your arrangement with the client dictates whether the invoice lists billable hours, flat fees, contingency fees, or something else.

2. Prepayment Invoice

A prepayment lawyer invoice requests funds for services that have not been performed. Your firm should use prepayment invoices to collect retainers.

3. Recurring Invoice

Recurring law firm invoices bill clients a fixed amount on a regular schedule. If your law firm provides subscription-based services, the periodic payment requests for those services would be recurring invoices.

4. Interim Invoice

Interim invoices request funds based on project completion or milestones achieved. Your law firm and the client would negotiate the project fee and the invoicing terms prior to starting the work. As an example, you might agree to bill 20% of the project fee upfront, 40% when the project reaches a specific milestone, and the remainder at project completion.

Legal Invoice Templates

Creating your lawyer invoices from a template is easier than starting from scratch. You will want to customize the documents, of course, to suit your practice. This customization starts with adding your firm's contact information, including physical address, website URL, telephone number, and email address.

Other key data points that should appear on every invoice include:

• Client name, address, and telephone number
• Invoice date
• Starting and ending date of the billing period
• List of services provided during the billing period
• Bill rate and quantity (usually hours) for each service, along with the date the service was completed
• Itemized reimbursables with descriptions, if applicable
• For retainer clients: starting retainer balance, amount drawn against retainer, and remaining retainer balance
• For installment arrangements and progress payments: the total project amount, how much has been paid, and the balance remaining
• Invoice amount due
• Payment terms, including the invoice due date and penalties for late payments
• Payment method options

The standard invoice template from the Louisiana State Bar Association has all these elements, except for the retainer reconciliation. The retainer invoice template from the Georgia State Bar Association shows how to incorporate a retainer reconciliation. LawPay also offers user-friendly and customizable templates for users.

These legal invoice templates demonstrate an appropriate balance between detail and brevity. From these documents, clients can clearly grasp the work being done and understand key milestones in their representation.

Law Firm Invoice Tips

Unfortunately, having the right legal invoice template doesn't guarantee you can create effective billing statements. Your firm also needs processes in place to track services and time spent. Other billing features, such as online payment options and invoice reminders play a supporting role. And finally, the more you can automate your billing process, the less time you'll spend on these non-billable tasks.

Track Accurate Billable Hours

Accurate, transparent billable hour reporting is a critical element in your invoicing. It shows clients exactly what you are doing for them and justifies the billing amounts.

Every law firm staff member should habitually track their billable hours, and associated tasks, in real-time. A billable hours chart can streamline the process somewhat. The chart converts minute ranges into hourly increments -- 13 to 18 minutes, for example, would be 0.3 hours of billable time.

Translating minutes into hourly increments at the time the work is completed is more efficient than making these calculations later. It also produces data that can populate your invoices, without adjustment.

You can also use a law firm time tracking system that integrates with your law practice management and billing applications. Ideally, the time data would then flow seamlessly into invoices that accurately reflect the work completed. A legal case management solution, like MyCase, has built-in time tracking features that can shave hours off the administrative task of invoicing.

Clearly Itemize the Invoice

No matter what billing system you use, you should itemize the invoice by date and by task. Each line item should also include a description that clearly communicates the value of the time spent.

As an example, you might describe deposition scheduling as, "telephone conference with defense attorney to schedule client deposition." This is far more communicative than "scheduling call" or, worse, lumping all phone calls together as one generic task.

Also include line-items for services your firm has completed without charge. You can see an example of this in the Georgia State Bar Association invoice template referenced above. Including line items for free work proves value and shows the client that your firm keeps accurate and complete records.

Make It Easy to Pay

If your invoice structure and billing language are clear and understandable, your client may be ready to pay it immediately. Leverage that readiness by providing easy payment options. Ideally, clients should be able to click a few links, provide a credit card or bank account number, submit payment, and then move on with their day.

Easy digital payments will get your firm paid much faster vs. asking your client to write and mail a check. By the time they find the checkbook, the motivation to pay the invoice may have faded.

This is why QR code payments are an increasingly popular option for law firms. Firms can use a solution like LawPay to efficiently add QR codes to their invoices. Clients can point their smartphone camera at the QR code and accept the device prompt to follow the link. The link then loads your firm's secure, custom payment page. With this system, the client can review an invoice and pay the bill in only a few minutes.

LawPay also has a Quick Bill feature to email clients a payment page link. The data proves clients like this system; more than half (57%) of paid Quick Bills are paid the same day.

Send Timely Invoices and Reminders

The timing of your billing also affects the invoice's credibility. Implement billing periods no longer than one month and send invoices shortly after the billing period closes. A regular cadence of invoices keeps your client informed. It also demonstrates professionalism.

Programmed reminders that restate late payment terms have similar effects. They inform clients of amounts due and create consequences for nonpayment. Even better, reminders that your billing software pushes out automatically require no manpower from your staff.

The table below shows a sample cadence you might implement to keep your clients informed about their payment status.

Automate Legal Invoices

Automating your entire billing process, from time tracking to invoice reminders, reduces non-billable work and gets your law firm paid faster.

Here are a few examples. MyCase case management software includes a time tracking feature that automatically links time entries to the appropriate case. The application then accesses that data to create client invoices easily and efficiently.

MyCase also has a "time finder" feature that creates an itemized report of billable activities logged in MyCase that don't have an associated time entry. If the report shows any overlooked time entries, the attorney can quickly add them. MyCase also prompts attorneys to add time entries when they send an email, log a phone call, or upload a document to a case. This ensures your invoices are not only informative, but also complete.

Integrate LawPay with MyCase and your clients will have modern, easy online payment options that are compliant with American Bar Association and Interest on Lawyer Trust Accounts compliance guidelines.

A reliable and automated billing system fosters trust with your clients and improves client experience. Additionally, it saves your firm time and improves cash flow.

Get Paid Faster with Effective Legal Invoices

Creating effective law firm invoice templates for your firm is an important step in streamlining your billing process. When invoices are confusing, clients will question the billing details, and possibly the work itself. On the other hand, when clients understand the work completed on their behalf -- and its value -- the bills get paid faster.

The systems your firm uses to track time, create invoices, manage payments, and follow up on outstanding bills are as important as the content of your invoices. Key strategies include tracking time by task in hourly increments, using technology to port time entries into invoices, and automatically reminding clients when invoices are coming due or past due.

Your firm can establish these supporting processes quickly with MyCase and LawPay combined. MyCase handles the case management, time tracking, and invoicing, while LawPay supports client-friendly payments. To learn more about how these applications can create new efficiencies in your law firm, contact us today.