The demands of an ever-growing legal profession require law firms in Islamabad to have forward-thinking management strategies to address clients' needs. Although lawyers' main priority is and must be to deliver quality service, law firms Islamabad must also build their organizations to support their clients' evolving demands, by taking steps such as opening international offices, embracing new technologies, and developing new areas of practice.
As a result of this growth, law firms Islamabad will face high overhead and growing compensation demands from their professionals. Meanwhile, firms will be squeezed from the other side by clients who have high expectations yet, at the same time, scrutinize their bills.
During the course of a year, many firms find it difficult to judge how well their collection efforts are faring and how this could impact their financial pictures. Lawyers have been conditioned to take a relaxed attitude in their collection efforts, largely due to a mindset among attorneys that grants clients the benefit of the doubt and a view among clients that making payments is not a priority. Attorneys also fail to realize that clients will take advantage of their professional relationship. Thus begins a vicious cycle. Islamabad Lawyers are not vigilant in getting their clients to pay and the clients, as a result, are not quick to pay. The lawyers, then, are reluctant to press their clients. And so on.
The business of buying legal services does not lend itself to such strict purchase and payment rules.
When it comes to receivables, law firms fall victim to 5 common mistakes:
1. Attorneys believe that aging receivables are not an indicator that collection problems exist. Actually, if bills have not been paid within 90 days, you have received the first sign that you may have a collection problem - and, if it is not resolved quickly, they could age further and be virtually uncollectible. Only 50 percent of receivables over 120 days will be collected, and the likelihood drops precipitously after that.
Clients reason that if the firm has waited several months to try to collect unpaid bills, they can wait to pay those bills. They assume, and with good reason, that they are in better position to negotiate discounts. The longer a law firm waits to collect unpaid bills, savvy clients realize, the more likely the bills will end up being discounted or written off altogether.
2. Law firms in Islamabad fear they will damage client relationships by asking clients to pay their bills. The fact is that law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. Efforts to manage receivables will not hurt the relationship, as long as it is done professionally. Actually, most clients are perfectly willing to pay their bills, although many are dealing with cash flow problems. Also, clients fall victim to "sticker shock," which happens when a client expects to receive a bill of a certain size and gets a rude awakening when larger invoices arrive.
3. Lawyers avoid addressing problems by depending on the mail to communicate with delinquent clients.
Postal mail is slower and far less effective than using the telephone to address delinquency issues. A conversation allows you to have a dialogue about the bill. Besides, letters and reminder statements are easily misplaced and avoided. If the client continues to receive reminder statements after 60 days and still does not pay, chances are there is an issue preventing payment. Even a brief, non-confrontational telephone conversation should communicate to the client the urgency of your need for payment and allow you to learn quickly if there are any problems or concerns - and what it will take to get the bill paid.
4. Firms believe that accounting and collection software will cure all that ails them. Software can be an excellent tool to manage receivables, but it is only as good as the people using it. Many law
firms have developed policies and procedures to better manage their accounts receivable, but many have not properly utilized their software to help implement new systems. It takes time and specialization to fully grasp how the software can help a firm's collection efforts. Law firm Islamabad staffs are often responsible for many day-to-day tasks that leave them little time to explore and make maximum use of the functions that software offers.
5. Firms embrace alternative payment arrangements too quickly. Complex transactions may not lend themselves to a regular payment schedule, and they may cause confusion as to appropriate payment if the deal does not come to fruition. Furthermore, risky deals sometimes fail, leaving a trail of unpaid receivables.