Despite a recent report that Pennsylvania-based law firms have seen collections cycles shorten, several large law firm leaders in the region say they have not been immune to the industrywide lag in client payments.

A survey covering the first three quarters of 2019, released last month by Citi Private Bank's Law Firm Group, said the collections cycle continued to lengthen nationally—by 1.5% in the first nine months—but Pennsylvania firms saw the collections cycle shorten by 4.6% in the same period.

The survey included 13 firms founded in Pennsylvania, though further information on the size of those firms and timing of their fiscal years is not included in the report. (Several Am Law 100 firms based in Pennsylvania do not end their fiscal years Dec. 31.)

Pennsylvania firm leaders say they're making an effort to collect all throughout the year. But that doesn't keep clients from delaying payments to fit their own financial strategies, and it hasn't allowed them to fully escape the December collections crunch.

Matt Taylor, CEO of Duane Morris, said he and other Philadelphia law firm leaders have been discussing what they perceive as a slowdown on the client side in paying legal bills. Joseph Dougherty, the Philadelphia-based CEO of Pittsburgh-headquartered Buchanan Ingersoll & Rooney, said he, too, has noticed a longer collections cycle across the board.

"There was a little bit of a different feel this year," Taylor said. "Thankfully we sensed that early on and we've got such a good collections group. Working with our lawyers we spotted it and got on it."

Taylor estimated that his firm collects about 15% of its annual revenue in December each year.

"It's actually gone down over the years, where it's less and less," he noted, crediting clients' insistence on more sophisticated budgeting, both in their own legal departments and by their outside counsel.

Cozen O'Connor CEO Michael Heller said his firm historically has needed to collect about 17% of its revenue, on average, in the last month of the year. He said that seems to be below the industry average.

"Some firms have taken the stick approach to accelerating collections throughout the year, [but] we've always taken the carrot approach," Heller said, referring to how the firm rewards accelerated collections. "We also track the collections cycles of our attorneys and reward those who are collecting more evenly throughout the year as opposed to in the last month of the year."

Heller said he is "cautiously optimistic" that 2019 will turn out to be a "terrific" year for the firm.

Dougherty said December remains "a really important collections month" for Buchanan Ingersoll. He declined to quantify how much revenue is collected in the last month of the year, but he said it's "substantial."

He said the firm has "a significant amount" of accounts receivable, but that's more a reflection of its lawyers' busy year. The firm has been striving to improve its collections cycle over the years, he added.

"We every year have an internal effort where we have a team of lawyers that we task with staying in touch with other lawyers and their collections. We started that earlier this year, in November," Dougherty said. "I've really been impressing on people that it's really important to get in touch early instead of waiting until mid-December and hoping they're there."

Mark Stewart, chair of Ballard Spahr, said on the client side, e-billing alone has created a more predictable collections cycle. And, he noted, his firm has been more disciplined about collecting in the first three quarters.

"Your ability to affect things by the fourth quarter is diminishing. With electronic billing you submit them and it's all done electronically," he said. "In some ways it's not quite as hectic as it was, but still a substantial amount of revenue comes in," just before year-end.

Stewart estimated that at least 25% of the firm's revenue is collected in December. Still, he also noted that clients are oftentimes on a set payment schedule of 30, 60 or even 75 days.

"We could be doing everything absolutely right … and if [the bill] goes out let's say November 10, and if the client is on a 60-day pay, we won't see it until January," he said.