Sarah Schaaf, founder and CEO of e-billing platform Headnote, believes that attorneys in small and midsize firms are finally beginning to treat the law as a business.

One clear sign of that? While she built Headnote as a stripped-down platform that eschews complex features irrelevant to smaller operations, she's prioritized adding components in response to user demand. The single-most requested addition, she said, has been a function allowing firms to slap interest rates on late payments.

Consequently, Headnote⁠, which targets firms under 100 attorneys, with its core business in the 20 to 50 range⁠, says it's poised to be the first e-biller to provide the capability to charge interest.

"My dad, who recently retired, used to say something along the lines of 'A good lawyer doesn't collect. The job is to be there on same side of the table, help them through a hard time, a  traumatic time.' All of that is true," said Schaaf, who is a lawyer herself. "But this is about incentivizing on-time payments, not about making more money."

Schaaf added that while late payments are standard in the legal industry, that does not have to be the case. Other industries are more successful in ensuring prompt payment not because consumers are better organized, but because they are penalized if they don't comply.

Although lawyers have historically resorted to discounts or write-offs when dealing with late payments, there is wide agreement that they are within their rights to charge interest, as long as this is agreed on at the start of a representation. (Some jurisdictions also allow lawyers to revisit fee arrangements and seek interest for future work in the event of existing unpaid bills.)

"People are looking at what other businesses … do, and how come they work so much better than ours," she said.

Schaaf emphasized that Headnote urges customers to be on top of the rules in their jurisdiction with regard to the particularities of interest fees. But she indicated that some firms are already being proactive about the matter, pointing to a conversation she had with a client at a midsized firm.

"The issue is that we have hundreds of clients and invoices that go out monthly. We don't have the bandwidth to manually add interest to each invoice and then aggregate those interest charges over time," the client said. "Having the ability to automatically add and track interest charges to overdue invoices would be a game changer for us, and would likely result in our clients paying on time much more often than they do today."