I’ve been using Clio since I started my own solo firm, and for the most part, I really like it.
Except when it comes to trying to bill clients on a flat-fee basis. Plain and simple: Clio works best with the billable hour.
To be clear, Clio does have a flat-fee option, but depending on your billing preferences, this method could have a negative effect on your client invoices and reporting features.
The Issues:
Time entries will be tracked as ‘non-billable’ time.
If you follow Clio’s flat-fee workflow, you can create the matter with a flat-fee option, and bill the client a flat fee just fine.
But your time entry activities are tracked as non-billable time, so they will not show up on the client’s invoices. For example, if your client, Elvis Presley, needs legal services, and you set his rate at $5,000, he will only sees the flat fee charge instead of an itemized list of the individual steps you went through for his matter. So, if Mr. Presley later has an issue with pricing and asks you to itemize your bill, you’ll run into a problem. (If you’re not tracking your time for flat-fee matters, you may want to consider doing so. [link to article/helpful info here]).
Also, if the project takes you more than a month to complete, your second monthly invoice will have no time entry activities to show for your work.
Further, non-billable time will be tracked as just that…non-billable. So if you’re hoping to track the amount of time it takes you to perform a flat-fee project to be able to adjust your pricing up or down, or you want to track an associate or paralegal’s time on a matter, your reporting will not accurately reflect billable/non-billable time.
Flat-fee retainers must be held in trust until ‘earned.’
Let’s say that you are going to Mr. Presley $800 to create a basic will and ancillary documents (powers of attorney, advance directive, etc.). Your fee agreement states that $400 is earned when you draft the will and the other $400 is earned when you finish drafting the ancillary documents.
If you use Clio’s flat-fee feature alone, you invoice Elvis for the full amount up front: $800. But let’s say it takes you a couple months for him to get back to you regarding a few of the items needed for the will (after all, he’s busy). You finally get it drafted in month two. How do you show him what fees you earned?
When you invoice the client, you’ll need to show that you debited the $400 from the trust account because you drafted the will. But you can’t show that you’ve drafted the will because the activities are non-billable, and do not appear on the invoice.
The Workarounds:
Option 1, Discount Each Line 100%
One option to remedy the above issues is to categorize each time entry as ‘billable,’ but discount each line item 100%.
This allows you to show the client that he or she is not being charged, while still showing the itemized listing needed to verify you’ve earned your fees. But for complicated matters, this can be visually cumbersome and may be confusing.
Option 2, Create a Activity Category with a Rate of $0.00
This is the option I use.
So, in our above example, let’s say