Professional Services Accounting ARTICLE -
How Effective is Your Business Intake Process?

Target Audience: Accounting Consulting Firm News and Updates Interest, Law Firm Professionals, Lawyers, Law Firm Associates, Business Intake Process Interest, Process Improvers, Strategic Risk Assessors

A well-crafted business intake process can improve the quality of a firm’s clients, enhance client relationships and streamline other business processes — all of which contribute to an increase in the firm’s bottom line. Yet some firms’ intake processes are hit and miss, or nonexistent.

Whether you need to refine your existing process or develop a new one altogether, there are several important points to consider.

Address Key Questions

When your firm is considering taking on a new client or handling a new matter for an existing client, the intake process should flow seamlessly from vetting the potential new business from a strategic and risk standpoint to getting a jump on the billable work.

An effective intake process addresses key questions, such as:

Will accepting the new business be in line with the firm’s objectives?
Will the firm be able to provide the necessary services?
Will the benefits outweigh the risks?
Will the new engagement be a wise investment of the firm’s time and other resources?
Will the relationship be a good fit?

To help you answer these and other important questions, ensure that your business intake process takes into account:

Your firm’s capabilities. Consider an independent review — ideally by a practice leader in the appropriate legal area — of whether your firm has the technical expertise and resources needed to perform the new engagement.

Profitability. Make sure that the matter will be a profitable one for your firm. Don’t just look at the potential fees you’ll be bringing in. Also consider the potential opportunity cost of saying “yes” to new business that is clearly outside the firm’s objectives. Accepting the work — even if it will generate profit — may hurt your ability to achieve your strategic goals.

Conflicts of interest. Your conflict-clearance procedure should include gathering all relevant information about a potential client or new business matter, such as the names of their clients, other parties involved in key transactions or lawsuits, and organizations from whom your firm may have acquired confidential information. So when potential clients consult a lawyer, the names of the parties can be run through your conflict-checking system to see if a duty of confidentiality or loyalty — and a potential conflict — is present. Of course, simply circulating regular memos when your firm takes on a new client or matter is another layer of protection.

It’s also essential that your process remain objective, so have someone other than the originating attorney oversee the review process and conflict resolution.

The client’s ability to pay. Require a recent financial statement and a credit report by Dun & Bradstreet or another reputable information provider. In addition to reviewing credit ratings, look for previous bankruptcies, judgments, litigation and regulatory action. For existing clients bringing in additional business, review their payment history.

Due diligence. Firms with more high-risk clients naturally face more fee disputes, a larger proportion of unpaid fees and increased claims. So establish effective due diligence guidelines and procedures that expose possible risks, such as an increased threat of malpractice claims or other legal action, or damage to your firm’s reputation.

For example, determine why a potential client selected your firm and if it is professionally or socially acquainted with any of your lawyers. Find out the nature of the client’s business and competitors and its experiences with other law firms. Your due diligence investigation should also include reference checks and Web site reviews.

Letters of engagement. A signed engagement letter should be required for all new clients and for existing clients with new matters outside the scope of their typical services. The clearly outlined document, which should include the nature of the engagement and estimate of fees and expenses among other things, deters risk because it eliminates any misunderstandings of the nature and extent of your firm’s duties and responsibilities.

Be sure that the engagement letter is in your firm’s possession before a file is opened, and the managing partner or a member of the business intake committee approves any variations from your firm’s standard form letter.

Make It a Team Effort

At some firms, the business intake process involves detailed written policies and mandatory independent approvals. At others, decisions are made solely by the partners. Ideally, the intake process should involve professional and administrative staff working together. A firm wide approach has many advantages, including increased focus on financial and strategic considerations, and reduced exposure to risk.

Appoint a team of intake decision makers to keep the firm’s interests forefront and whose decisions the partners will respect. If a high-risk prospective client is identified, your firm’s intake decision makers must be able to exercise the authority to reject the new business.

It’s important that your firm adopt a policy for rejecting certain types of clients and particular kinds of matter, such as clients with last-minute emergencies or life-and-death matters that could make your firm more susceptible to time-element malpractice claims, or clients who jump from firm to firm or have unrealistic expectations and demands.

You should also have safeguards for situations when you accept clients that need monitoring. These safeguards may include special retainers and increased documentation of work and billings.

Generally, the entire intake process should take no more than a few days. Clear guidelines, electronic forms and a well-allocated staff will help ensure decisions are made in a timely, fair and uniform manner.

Strengthen Your Firm

Establishing a strong business intake process can help your firm avoid conflicts of interest, collection issues, professional liability matters and inconsistencies with its long-term strategies and goals. Take steps now to build and implement a more structured process to enhance realization and profitability and reduce risk while strengthening your firm overall.

Find out how our expertise in professional services accounting can add value to your business. Email us or call us at 1 (888) 875-9770.

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