Credit Management & Billing Issues in Law Firms Law Institute of Victoria Melbourne Prepared & Presented by Colin Prosser FICM CCE The Credit Professionals August 2010

My Background 35+ years in Credit & Office Management & Accounting 35+ years in Credit & Office Management & Accounting Hold Diploma in Business Studies in Accounting Hold Diploma in Business Studies in Accounting AICM Member since 1985 AICM Member since 1985 Fellowship Membership with A.I.C.M Fellowship Membership with A.I.C.M Hold Certified Credit Executive ( CCE ) Status – 1998 Hold Certified Credit Executive ( CCE ) Status – 1998 AICM Councillor – Vic / Tas Divn – 1997 to 99 & 2003 to 2006 AICM Councillor – Vic / Tas Divn – 1997 to 99 & 2003 to 2006 AICM President – Vic / Tas Divn – 2005/6 AICM President – Vic / Tas Divn – 2005/6 Currently AICM Director – Member Services – 2006 to now Currently AICM Director – Member Services – 2006 to now Worked in various Industries over the years including Manufacturing, Media, Finance & Title Searching, Telecommunications, Local Govt, Supplier / Distribution – Retail, Wholesale & Service, Accountancy, Electricity Supply, Plant and Equipment, Construction / Building Worked in various Industries over the years including Manufacturing, Media, Finance & Title Searching, Telecommunications, Local Govt, Supplier / Distribution – Retail, Wholesale & Service, Accountancy, Electricity Supply, Plant and Equipment, Construction / Building My Own Business The Credit Professionals – Consulting ( Policy & Procedures, Staffing & Systems ), tailored In House Training, Business Continuity Plans & Credit Bureaus. My Own Business The Credit Professionals – Consulting ( Policy & Procedures, Staffing & Systems ), tailored In House Training, Business Continuity Plans & Credit Bureaus. Assist Law Firm practices with Collection Issues Assist Law Firm practices with Collection Issues

Credit Management & Billing Issues in Law Firms Credit Policy & Procedures Credit Policy & Procedures Partners ( Equity ) Support Partners ( Equity ) Support Engagement / Retainer Letters Engagement / Retainer Letters Opening Accounts Opening Accounts Billing Customers Billing Customers Collection Follow Up Collection Follow Up Handling Disputes Handling Disputes WIP & Disbursements WIP & Disbursements Trust Accounts Trust Accounts

Credit Policy & Procedures Example Credit Policy & Procedure; is part of handout paperwork. Example Credit Policy & Procedure; is part of handout paperwork. Must have Equity Partners agreement & sign off Must have Equity Partners agreement & sign off Cover Credit Department function & authority Cover Credit Department function & authority Reporting – DSO figures; Aged Trial Balance; Disputed & Legal Accounts Reporting – DSO figures; Aged Trial Balance; Disputed & Legal Accounts Internal Communication lines Internal Communication lines What is required to Open an Credit Account What is required to Open an Credit Account Terms & Conditions ( what is stated in Engagement Letter ) Terms & Conditions ( what is stated in Engagement Letter ) Payment Terms; Credit Limits & handling Disputes ( IDR / EDR ) Payment Terms; Credit Limits & handling Disputes ( IDR / EDR ) Reminder & Demand Letters; Debt Collection & Legal Action Reminder & Demand Letters; Debt Collection & Legal Action WIP & Stop Work on Files WIP & Stop Work on Files Handling of Trust Funds Handling of Trust Funds

Partners ( Equity ) Support Copy of Credit Policy & Procedures, agreed to by Partners. Copy of Credit Policy & Procedures, agreed to by Partners. Gain sign off, so no disagreements in the Future. Gain sign off, so no disagreements in the Future. Organise Monthly Meeting with each Department head Organise Monthly Meeting with each Department head Any Collection or Dispute issues refer to Equity Partners Any Collection or Dispute issues refer to Equity Partners

Engagement / Retainer Letters Initial Discussions ( Quote on Matter, Hourly Rate$, Payment terms, disbursements, dispute resolution, review of WIP etc ) Initial Discussions ( Quote on Matter, Hourly Rate$, Payment terms, disbursements, dispute resolution, review of WIP etc ) Letter ( cover above, signed copy returned, review status ) Letter ( cover above, signed copy returned, review status ) Ongoing Business, reminder Letter covering main points. Ongoing Business, reminder Letter covering main points. Upfront monies for Trust Account, to cover Disbursements as a minimum. Upfront monies for Trust Account, to cover Disbursements as a minimum. Watch for Type of Matter & / or Client – Insolvency – Individual or Commercial, Interstate / Overseas. Watch for Type of Matter & / or Client – Insolvency – Individual or Commercial, Interstate / Overseas.

Opening Accounts Identify Client / Business Identify Client / Business Part of Terms allow for Credit Check of the People & / or their business. Part of Terms allow for Credit Check of the People & / or their business. Businesses check ABN refer Businesses check ABN refer Letter sent to Client advising of Account No & initial Credit Limit ( Matter to be reviewed regularly – initial Letter best guess & current WIP situation ) Letter sent to Client advising of Account No & initial Credit Limit ( Matter to be reviewed regularly – initial Letter best guess & current WIP situation )

Billing / Invoicing Customers When to Bill, How often, Disbursements only, Monthly etc? Finance available When to Bill, How often, Disbursements only, Monthly etc? Finance available Always attention Bills to whom you have been dealing with. Always attention Bills to whom you have been dealing with. Details in the Bill ( Which Matter, Interim or Final Bill ) Details in the Bill ( Which Matter, Interim or Final Bill ) Billing Periods ( as Customer requests, by 25 th of each month or Departmental Monthly by staggered Dates 7 th, 14 th, 21 st ) Billing Periods ( as Customer requests, by 25 th of each month or Departmental Monthly by staggered Dates 7 th, 14 th, 21 st ) Ensure Payment terms are stated Clearly on Bills & Statements; standard T&Cs should be on your Website. Ensure Payment terms are stated Clearly on Bills & Statements; standard T&Cs should be on your Website.

Collection Follow Up Part of Credit Policy Part of Credit Policy Computerised Reminder & Final Notice Letter/s & Monthly Statements. Computerised Reminder & Final Notice Letter/s & Monthly Statements. Follow Up Phone calls, SMS, Fax or s Follow Up Phone calls, SMS, Fax or s If an Individual Refer Debt Collection Guidelines on number of contacts & undue harassment clauses If an Individual Refer Debt Collection Guidelines on number of contacts & undue harassment clauses Cannot Collect need 3 rd Party interact ( consider Debt Collection ) Cannot Collect need 3 rd Party interact ( consider Debt Collection ) Use Terms & Conditions as Tools of Trade Use Terms & Conditions as Tools of Trade Try to keep relationship or not Try to keep relationship or not

Handling Disputes New Credit Laws ( NCCP ) require Internal & External Dispute resolution processes. ( IDR & EDR ) for Individuals New Credit Laws ( NCCP ) require Internal & External Dispute resolution processes. ( IDR & EDR ) for Individuals Usually 60+ days before aware of Dispute ( Client hasnt paid or advised of dispute ) Usually 60+ days before aware of Dispute ( Client hasnt paid or advised of dispute ) Need to act quickly to resolve Need to act quickly to resolve Review of File by Responsible Partner with Credit Department ( Quoted Price vs Charged; WIP; result on Matter etc ) Review of File by Responsible Partner with Credit Department ( Quoted Price vs Charged; WIP; result on Matter etc ) Supply details requested by Client. Supply details requested by Client. 3 rd Party involvement maybe needed to resolve issues or find solution. 3 rd Party involvement maybe needed to resolve issues or find solution.

WIP & Disbursements Should run off weekly Report on WIP & disbursements by Department & Matters ( who is handling etc ) Should run off weekly Report on WIP & disbursements by Department & Matters ( who is handling etc ) Discuss with Solicitor handling, if missed previous months WIP or Disbursements ( Write Off ? ) Discuss with Solicitor handling, if missed previous months WIP or Disbursements ( Write Off ? ) What has been Billed, what hasnt & What has been given as Guesstimate. What has been Billed, what hasnt & What has been given as Guesstimate. Final Accounts to go; check status on WIP & Disbursements nothing missed. Final Accounts to go; check status on WIP & Disbursements nothing missed. Billing ( no time recorded ) but WIP ? ! ; still need to Bill for Disbursements ( recoup outlay or Creditors still need to be paid ) Billing ( no time recorded ) but WIP ? ! ; still need to Bill for Disbursements ( recoup outlay or Creditors still need to be paid )

Trust Accounts Print weekly Reports by Department & Matter, remind those handling Matter to complete Journals & gain signoff; not just deduct from Bills raised. Print weekly Reports by Department & Matter, remind those handling Matter to complete Journals & gain signoff; not just deduct from Bills raised. Discuss with Department Head partner on any issues. Discuss with Department Head partner on any issues. By transfer of trust monies when able; helps Cashflow & / or payment of Creditors ( Barristers Fees etc ) By transfer of trust monies when able; helps Cashflow & / or payment of Creditors ( Barristers Fees etc ) Found Accounts to be closed with Still money in Trust. Found Accounts to be closed with Still money in Trust.

Questions Happy for you to ring or me; if I can be of any further assistance Happy for you to ring or me; if I can be of any further assistance or or Website Website Ph / Fax Ph / Fax Mobile Mobile