Even if your firm’s overall revenue performance is improving through better productivity and increased hourly rates, the chances are good that the percentage of billed fees you collect--your realization rate--is falling.
Realization rates have been declining industry-wide for the last decade. (With 2021 as a notable but likely anomalous exception). There are a lot of factors at play. Sharp competition among law firms and clients more willing to move business or divide business among firms are two major ones. But a significant factor is lack of communication between lawyers and clients around fees.
Every lawyer has a client who makes billing a war of attrition. Even when the lawyer has given the client a solid budget and kept costs on track the client questions time and tasks on every bill, warns against “conga lines” in court or on conference calls and second guesses the value of a memo or a mandatory task like a “meet and confer” letter to opposing counsel. Since the client doesn’t understand the nature of the legal tasks she thinks the lawyers are churning the file.
The anxiety-inducing client often has very engaging work and is a significant source of business. Sometimes their concerns are well-founded. Despite best efforts some bills will include substantial fees that don’t reflect much evident value to a litigation or deal. Whether or not client complaints are justified, they lead clients to seek discounts and put downward pressure on realization. Faced with constant push-back on bills, lawyers become defensive. Their first instinct is to hoard data rather than share it.
We think keeping billing data from clients is the wrong approach to increased profitability. With the right tools lawyers can avoid--or at least limit--declining realization rates, even with difficult clients, by sharing more information. That’s why Feehive allows lawyers to collaborate with clients on price-setting in a way that helps to educate clients on the nature and timing of fees and the hidden value of mundane but necessary legal tasks. So Feehive is purpose-built for collaboration. Every Feehive budget is displayed graphically so the timeline of a matter and the fees associated with specific tasks are easy to read and understand. The platform will allow lawyers to share and collaborate on a budget within their firm. Lawyers working on a matter and lawyers not working on the matter but with relevant experience in similar matters can make tracked adjustments and offer comments. Lawyers can also incorporate elements of budgets from other matters to further refine their calculation. Every adjustment will update the budget numbers in real time.
Once the lawyers are satisfied with the budget, they can share it with their client. They can use flexible permissions to share just the right information. Depending on the permissions clients can comment on a budget, ask questions, make their own tracked adjustments or incorporate information from previous budgets. All in an intuitive graphical format.
Collaboration through Feehive has two immediate benefits. The first is that clients will buy into fee forecasts at the outset of the engagement. Even if budgets have to be adjusted as the matter progresses, the client will have a much better understanding of the process and won’t be faced with a black box that churns out bills. The other benefit will be that increased transparency and predictability will make the billing process a positive differentiator. Clients will choose--and recommend--a firm that includes clients in the pricing forecast.
We think using Feehive to increase collaboration with clients around billing will increase your realization rates. We hope you’ll let us know how we do.