Lawyers, like most business people, often have difficulty getting paid for the professional services they have rendered. In theory, we have an advantage in that the ability to hold funds in trust should ensure a 100% recovery of billing. The reality is different and sometimes alternative procedures must be used.
When considering an effective strategy to getting paid, we must consider three main elements: Staying focused on our individual goals, communicating with the client, and following a standardized billing procedure.
We must keep in mind that every one of us expended a formidable amount of time, effort and resources to become an attorney. We have goals, many and varied, that are personally and professionally important. If you doubt this, take a moment to write them down. Also, remember that you are worth your fee and deserve to get paid.
One of the most important initial steps to ensuring the recovery of our fees is to appropriately guide client expectations regarding fees and costs. As lawyers, we want to help our clients. We want to solve their problems. It is easy to get caught up in the facts, but then overlook the important responsibility of setting client expectations at the very first meeting. Fees and costs should be discussed early. Moreover, the discussion must then be followed in writing, communicating the details clearly and concisely.
Communicating with the Client
It is surprising how shy we attorneys can be about asking for a healthy retainer. Don’t be afraid to request a reasonably large retainer for your service, appropriate to the scope of the work for which you are being retained. One recommendation is to frame a picture that helps you focus on your goals (e.g., a new car or an overdue vacation) and hang it on the wall immediately above where your client sits. Before asking for the retainer, take a deep breath, glance at that picture, and ask. It makes it easier. This way, you accurately communicate to the client the possible scope of the litigation expense, and at the same time appropriately visualize the value of your time to the client.
Trials, hearings and discovery are expensive tasks, quickly generating high fees. Clients will only know how expensive these items are if the attorney has appropriately explained the time and costs involved. When possible and if appropriate, make a list of the expenses the client might incur during litigation, so that the client knows what to expect and is not caught off guard. Keep track of these expenses and communicate them to your client as soon as you know what these expenses are likely to be. Insist on receiving all anticipated trial (hearing) fees and disbursements 30 days in advance, to be held in trust. This is a tricky balancing act, as we need to protect the client and protect our business. However, failure to manage these events can create upset for the client and risk payment for these services.
Funds held in trust accounts (IOLTAs) get depleted quickly. Depletion should prompt a cover letter with the bill asking the client to replenish the retainer, or consider putting an evergreen retainer provision in your contract.The communication should include a clear statement of the account balance and amounts billed.
Be firm and reasonable. Keep your clients informed about their billing. Always send out monthly billings with few exceptions. One is if you have a big win or loss – the best practice is to bill immediately. Further, clients tend to pay their accounts if they are frequent and smaller. Waiting too long to bill and having the client receive a big bill can result in client panic and confusion, which is not an ideal situation for the client or the attorney.
Get the work done and get it billed! It’s easier to demand payment when you have just accomplished something tangible. It was suggested to me by a partner at a large Silicon Valley firm to send a bill whenever one accomplishes some significant or positive outcome for the client. It works, largely because the client is clear on the tangible result or task that has been accomplished. While many clients have no problem paying for value, it is difficult for anyone to pay for services they are unclear have been rendered.
Keep the client informed. Educate clients on how to get the most for their legal dollar. Give your clients an ongoing cost benefit analysis of their situation. If the client feels that the time they spend with you was time well spent, they are happier, and happier clients are more likely to pay their bills.
Standardize billing procedures
Generally all law practice procedures should be standardized, but especially billing procedures. Draft an accounts receivable collection procedure to track your client billables, with the goals of a) ensuring accurate billing, and b) of getting paid. The procedure should, at a minimum, be monthly. Allow time for you to personally call accounts that need attention; and allow you or your assistant to track each account.
The standardized billing procedure must be scheduled, preferably in your practice’s calendar. For instance, every Tuesday you or your legal assistant should print off an accounts receivable listing. Keep it by your phone or readily accessible on your computer desktop. When your client calls, look up their name on the listing and talk to them during that conversation about their account.
On your law practice’s default calendar, mark off an hour every week to deal with your accounts receivable. Do not allow anything to interfere with that hour. Invest that hour in yourself and stay focused on your goals. If you don’t value yourself enough to get paid, your clients won’t either. It is very easy to “bury your head in the sand” and blindly send out your bills to clients wishing the bills will be paid. Experience shows otherwise, call the client.
Getting paid for the practice of law may be more challenging than other businesses, thus we need to stay focused on our goals. Our clients are not open checkbooks – they need to be able to budget their litigation expenses, and we need to personally communicate with them so that the bills are paid in a timely manner. To accomplish these goals, we need to put in place the tried and true procedures above to successfully manage our client relationships and our cash flow.
 But not too early – In 1994 the State Bar of California conducted research on former family law clients. Some respondents felt that their lawyers mentioned fees too early in the process, leaving a perception that the lawyer’s priority was only to squeeze money.
List of links and resources, which you may use to expand the information in this article:
- Guerilla Tactics on Getting Paid – The Canadian Bar Association: http://www.cba.org/cba/practicelink/mf/PrintHtml.aspx?DocId=1838
- Schedule Your Routine to Be More Efficient – allBusiness: http://www.allbusiness.com/sales/sellingtechniques-strategicselling/4019429-1.html#axzz1w8fLdz9n
- The top 10 things you can do to avoid a legal malpractice claim – The Busy Lawyer’s Guide to Success: http://lawyersuccesstips.com/?p=457
Luis M. Montes is the principle of the Law Offices of Luis M. Montes, you are invited to call at 510 . 749 . 1036 or email at lmmbuslaw@ gmail.com with questions, comments or recommendations.
Filed Under: Spotlight