Calculating Law Firm Collections ROI

Let’s illustrate the value of focusing on your firm’s collections, the fourth stage of the Law Firm Cash Flow Relay, with some quick numbers highlighting the results that we typically see by introducing automation and process. This may be one of the most straightforward ROI calculations you’ll ever see in law firm administration. 

Collection rates in small and mid-size firms average 89% (from a high of 97% in worker’s comp to a low of 72% in bankruptcy). That means our example law firm loses almost $5M a year in write-offs. Every stage of the cash flow relay influences write-offs, but the most straightforward is consistent, respectful follow-up combined with easy online payment options. It’s crucial that A/R Notices not only summarize the outstanding A/R, but also include the copies of the past due statements to avoid further “I don’t have the statement” or “I’ve never seen this statement” conversation loops. In the first year, reducing write-offs by 12% is more than a reasonable goal, resulting in an increased cash flow of $594,000. For one firm, just automating the manual process of sending reminders saved 97 hours per month of staff time, an additional savings of $46,800 per year.

That’s a realistic 3% increase in cash flow in the first year. With numbers like that, it’s time to put automation and process to work on your firm’s collections! Of course, this is easier said than done. Law firms often face six big challenges when improving their cash flow process, and while these challenges can be daunting, they are absolutely surmountable with the right tools and workflow. 

Learn more about the automation process in CollectionQ.


Bill Bice

CEO | nQ Zebraworks
Recognized as a legal tech industry visionary, receiving Thomson’s innovator of the year award. Founder of ProLaw Software (acquired by Thomson Reuters), West km (used by 70% of the top 1000 law firms worldwide) and Exemplify (acquired by Bloomberg Law).

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