Five ways to boost your firm’s realization rates

In terms of real dollars and cents, the drop in realization rates from 93 to 83 percent means that now, instead of collecting $93,000 on every $100,000 a firm bills, it collects only $83,000. However, it seems that hope trumps experience at most firms. In a survey by Altman Weil², more than 68 percent of respondents said they expected their firm’s effective realization rates to be up in 2015. Yet, in the very same survey, more than half of the respondents thought decreased realization rates were a permanent trend.

Are your firm’s realization rates where you want them to be? Wherever your numbers fall, there is probably room for improvement. 

Here are five ways to improve them:

1. Make it easy for clients to pay promptly.

By enhancing billing workflows, firms are able to bill clients accurately and in a timely manner. Inefficient workflows typically delay the payment process as the services provided have the tendency to lessen over a given time period. The ability to audit activities to help keep track of and bill for services can help ensure that firms are not absorbing costs that should be paid by clients. A prompt, accurate invoice makes it easier for a client to process payment quicker.

2. Keep attorneys involved in the process.

It may seem like a no-brainer, but because they have the relationship with the client, attorneys should be involved in the collection process. At most firms, the collection process is managed by accounts payable (AP), and in some cases legal assistants, administrative assistants or clerical staff. Typically, AP manages the billing workflow, tracks the amounts owed by each client and sends a monthly bill. When payments are late, additional notices are sent. At some point, an admin may start calling the client to “remind” them payment is due. But it’s the attorney(s) and associates working on the client’s matter that have the key relationship(s) with the client. They are trusted advisers whose services the client is buying. Because of this valuable relationship and the frequent communication between attorney and client, attorneys may need to become involved and reach out to the client regarding outstanding invoices.

Mark Davey, Vice President, Legal Enterprise Solutions, Ricoh USA, Inc., is responsible for strategy, development and execution for Ricoh’s portfolio of document management and technology solutions for the legal industry. He has more than 30 years of experience, including pioneering the creation and development of Pitney Bowes Legal Solutions. Davey has a Bachelor of Arts degree in Political Science from The College of Wooster, as well as multiple certifications from the Jesse Jones Graduate School of Business at Rice University and The Stephen M. Ross School of Business at the University of Michigan.