The Billing Problem
Law firms leave money on the table every month. Time goes unrecorded. Invoices sit in draft. Write-offs become routine. Collections drag.
Billing automation addresses each failure point. But it must be built with ABA Rule 1.5 in mind—fee reasonableness is not optional.
ABA Rule 1.5: The Fee Framework
Rule 1.5(a): A lawyer shall not make an agreement for, charge, or collect an unreasonable fee.
Factors for reasonableness include:
- Time and labor required
- Novelty and difficulty
- Skill required
- Fee customary in the locality
- Amount involved and results obtained
- Time limitations
- Nature of professional relationship
- Experience and reputation of lawyer
What this means for automation: Your billing system must support documentation of these factors, not obscure them.
The Five Billing Automation Opportunities
1. Time Capture Automation
The problem: Attorneys reconstruct time days later. Memory fails. Billable time disappears.
Automated approach:
- Calendar integration (meetings automatically create time entries)
- Document activity tracking (time spent in documents captured)
- Email tracking (time on client correspondence logged)
- Mobile capture (voice-to-time entry)
- End-of-day prompts (capture before memory fades)
Ethics safeguard: Time capture suggests entries; attorneys verify and adjust. No automatic billing of unverified time.
Typical recovery: 15-25% more billable time captured when automation assists versus pure manual entry.
2. Time Entry Validation
The problem: Block billing, vague descriptions, impossible hours.
Automated approach:
- Real-time validation rules
- Block billing detection with prompts to itemize
- Task code enforcement
- Description minimum requirements
- Hours-per-day reasonableness alerts
- Duplicate entry detection
Ethics safeguard: Catches problems before client sees them. Creates audit trail.
3. Invoice Generation
The problem: Draft invoices sit for weeks. Partners delay review. Invoices go out incomplete or late.
Automated approach:
- Scheduled invoice generation (monthly, at matter milestones)
- Pre-built invoice templates by client
- Automatic application of fee arrangements
- Work-in-progress aging alerts
- Partner review queue with deadlines
- One-click approval workflow
Ethics safeguard: Consistent application of fee arrangements. No ad hoc markups.
4. Fee Arrangement Compliance
The problem: Discount agreements, fee caps, blended rates—hard to track manually.
Automated approach:
- Fee arrangement database by client/matter
- Automatic discount application
- Budget tracking against caps
- Alert before cap is exceeded
- Alternative fee arrangement calculations
- Detailed reporting on fee arrangement performance
Ethics safeguard: Client gets the benefit of their negotiated arrangement every time.
5. Collections Automation
The problem: Invoices age. Follow-up is inconsistent. Partners avoid awkward conversations.
Automated approach:
- Automated payment reminders (friendly progression)
- Aging reports with escalation triggers
- Payment plan tracking
- Online payment options
- Collections activity logging
- Automatic statements
Ethics safeguard: Rule 1.5 allows reasonable collection efforts. Automation ensures consistency and documentation.
State-Specific Billing Rules
Interest on Unpaid Bills
- California: Must be disclosed in engagement letter
- New York: Permitted but regulated
- Texas: Generally permitted if disclosed
Automation requirement: Configure interest rules by jurisdiction. Never apply interest without proper disclosure.
Trust Account Rules
- All states require IOLTA compliance
- Earned fee transfer rules vary
- Replenishment requirements differ
Automation requirement: Integration with trust accounting. Automatic earned fee transfers only after compliance verification.
Fee Sharing
- Rule 1.5(e) governs division of fees between lawyers not in same firm
- Specific disclosure and consent requirements
- State variations apply
Automation requirement: Flag matters with fee-sharing arrangements. Ensure documentation.
Building the Automated Billing Workflow
Daily: Time Capture
- Morning: Review yesterday calendar for unbilled meetings
- Throughout day: Time tracking running on active work
- Evening: Review and submit time entries
Weekly: Time Review
- Automatic reminders for missing time
- Partner review of team time entries
- Correction of entry errors
Monthly: Invoice Cycle
- Day 1-3: System generates draft invoices
- Day 3-7: Partner review and approval
- Day 7-10: Invoice delivery
- Day 10+: Collection cycle begins
Ongoing: Collections
- Day 31: First reminder
- Day 45: Second reminder
- Day 60: Partner notification
- Day 75: Escalation conversation
- Day 90+: Alternative collection measures
Measuring Billing Performance
Capture metrics:
- Time entry completeness (% of calendar time captured)
- Same-day entry rate
- Entry adjustment rate
Invoice metrics:
- Days to invoice after work completion
- First-pass approval rate
- Edit rate on draft invoices
Collection metrics:
- Collection rate (collected vs. billed)
- Days sales outstanding
- Write-off rate
- Payment plan utilization
Targets:
- 95%+ time capture rate
- Invoices out within 10 days of month end
- 90%+ collection within 90 days
- Write-offs under 5%
Common Automation Pitfalls
Pitfall 1: Garbage In, Garbage Out
Automating bad data just produces bad invoices faster.
Fix: Address time entry quality before automating invoicing.
Pitfall 2: Over-Engineering
Complex billing rules that no one understands.
Fix: Start simple. Add complexity only when proven necessary.
Pitfall 3: Partner Resistance
Partners who "do not do email" will not use billing systems.
Fix: Mobile access, delegation options, minimal required actions.
Pitfall 4: Client-Specific Exceptions
Every client is special. Systems cannot handle exceptions.
Fix: Build exception handling into system design. Document exceptions.
Pitfall 5: Integration Failures
Time system does not talk to billing system does not talk to accounting.
Fix: Integration first. Standalone tools create manual work.
The Ethics Audit
Periodically review your billing automation for:
- Are all fees reasonable under Rule 1.5 factors?
- Are fee arrangements applied correctly?
- Is time entry documentation sufficient?
- Are trust account rules followed?
- Are collection practices appropriate?
Document the review. This is your defense if questions arise.
The ROI Calculation
Hard savings:
- Additional time captured (10-20% lift = significant revenue)
- Faster collections (cash flow improvement)
- Reduced write-offs
- Administrative time savings
Soft benefits:
- Consistent client experience
- Better fee arrangement compliance
- Reduced billing disputes
- Partner time freed for practice
Typical payback: 3-6 months for comprehensive billing automation.
The Bottom Line
Billing automation is not about billing faster or billing more. It is about billing accurately, consistently, and in compliance with ethical obligations.
The firms that bill well collect well. The firms that collect well are profitable. Automation makes "billing well" systematic rather than heroic.