3 Tips for Getting Your Law Firms to Participate in Accrual Estimates
Legal accruals and how to manage them is a common topic brought up in conversations with our customers. On our blog, we’ve shared a brief introduction to accruals management and have discussed best practices for managing accruals – a presentation given to legal professionals at the 2017 CLOC Institute in Las Vegas. Yet, one aspect of accruals that we want to hone in on is how to get your law firms to participate in accrual estimates.
Accrual Estimates Move Up a Value Chain
The accrual number that law firms share with your legal operations team goes up a value chain. It’s passed to your GC, and then on to your CFO, CEO, and shareholders, which makes accuracy and timing extremely important. In fact, public companies have had to restate earnings because of missed legal accruals. That’s definitely something you want to avoid!
Accrual estimates, when accurate and submitted within a window that satisfies financial requirements, are also key in telling the story of your legal department. It gives the organization insight into your current legal spend, the projects being worked on, and which law firm is handling specific matters.
Tips for Working with Your Law Firms
Your law firms aren’t just vendors. They’re strategic business partners who are an extension of your legal team. As such, your goal shouldn’t be to collect an accrual number from them at the end of the month, quarter, or year, but to foster a long-term relationship that’s focused on achieving your departmental and company-wide goals.
Building strategic partnerships with your law firms and getting them to actively participate in accrual estimates boils down to three key points:
Communication is key in guiding your law firms to become active participants in accrual estimates. Without providing feedback on the numbers they submit, it’s hard for them to know where to be accurate and why.
Share the importance of accruals and stress the idea that it’s not just an accounting exercise. Timely billing and accurate forecasts are a critical factor when measuring quality of service and for determining which law firms are best suited to help achieve your goals.
Open communication must also extend to the individuals that compile your unbilled estimates. At mid-size and smaller law firms, it might be the partner. At large law firms, it’s common for the billing department to put together your accrual estimates. In either case, make sure to have open communication with these individuals for improved compliance.
Whenever your corporate legal department adopts a new process, training your team is a top priority. This mindset must also extend to your law firms.
Schedule ongoing trainings with your law firms to share how to calculate accrual estimates and include details like whether or not to include tax. Providing clear and concise direction ensures you receive consistent accrual numbers from all the law firms you work with. The data doesn’t provide value if each of your law firms calculates unbilled estimates differently!
What are some ways to train your law firms? Some of our customers run a monthly training webinar that firms can sign up and join for free. We also have this training deck which you can download and customize to your specific invoicing processes and share with your law firms.
Feedback, both positive and negative, is one of the most important ingredients in building an effective working relationship and obtaining positive outcomes. If you’re getting inaccurate accrual estimates from your law firms, but aren’t showing them where and how they’re off, you won’t be able to create a continuous feedback loop and you’re not going to see improvement.
Strive to provide feedback as soon as possible. If you identify an outlier or red flag – something that is clearly not right – respond immediately. This helps eliminate issues as soon as they occur, and you can work toward proactively changing law firm behavior.
Creating Strategic Partnerships
At SimpleLegal, we believe law firms are a valuable resource to legal departments. They’re a key constituent in helping you protect your company, minimize risk, and achieve your short and long-term goals.
If you’re looking to increase law firm participation with accrual estimates, legal e-Billing software can streamline and automate the accrual collection process, saving you and your legal department time while reducing errors.
Don’t have an e-Billing solution? Or maybe your current solution doesn’t handle accruals to your satisfaction. Download our guide, 8 Ways to Evaluate e-Billing for Law Firm Adoption and make sure you have the best solution for both you and your law firms.