General Practice, Solo & Small Firm DivisionMagazine

 
Volume 17, Number 2
March 2000

PRACTICE MANAGEMENT

REFLECTIONS ON COLLECTIONS

BY LINDA J. RAVDIN

There are three key components of a strategy of improving fee collections: careful selection of clients; establishment of payment expectations at the outset; and early intervention to prevent small collection problems from becoming big collection problems.

Be Selective. Screen out clients who are not prepared to pay the fees required to get the job done. Take a few minutes to speak on the telephone with potential clients. Ask questions that permit you to assess the client's situation, such as whether the client and his or her spouse are separated or still living together; whether they had any discussions about terms of settlement; whether the client presently has counsel; whether the case is pending at the present time; and whether there are any scheduled court hearings or court filings due. Give the client detailed instructions about what to bring to a first meeting, such as a net worth statement, tax returns, account statements, and documents evidencing assets. Eli-minate from your potential client pool those who are obviously wrong for you and concentrate on landing good clients.

That First Call. If there is any question about the client's ability or willingness to pay your fees, have a preliminary discussion about fees during the first telephone call. If you charge by the hour, tell the potential client your hourly rate. Conducting a preliminary screening before offering to make an appointment will eliminate a number of clients who are not right for you and conserve your time for better prospects. Consider charging for the initial consultation and expect payment at that time. Before making an appointment, tell potential clients they are under no obligation to hire you, that you charge for the consultation at your regular hourly rate, and that you expect payment at the conclusion of the first meeting. The client who balks at paying for the first consultation is a potential troublemaker.

Get an Advance. Get an adequate fee advance based on the complexity of the matter, time constraints, whether you will need leave of court to withdraw from the matter in the event of nonpayment, and other factors. Do not underestimate the amount of work required in setting the fee advance. Expect the client to replenish the fee advance as it is used. That way, you will be alerted to potential collection problems and will have an opportunity to solve problems while they are still small.

Get It in Writing. A written fee agreement helps to prevent disputes later on. The agreement should contain the following elements: a description of the scope of the matter; the hourly rate or other basis for the fee; the amount of the fee advance and whether you will bill against it; how the fee advance will be handled in terms of whether it will apply to the initial billings, the last bill, or some of each; firm billing practices and policies; the client's responsibility to advance certain costs before they are incurred; that the attorney does or does not intend to charge a minimum increment of time for all tasks; and that the attorney cannot guarantee the outcome and, unless a flat fee is being charged, the attorney cannot guarantee what the total fee will be.

Prepare Detailed Bills. Time should be recorded contemporaneously, accurately, and in detail. The description of work should evidence what was done and why, in a way that shows the client how the work advanced the case. It should include the reasons for the work, the purpose or subject of the telephone call or meeting, the subject and reasons for legal research. In addition to documenting your time, document the work you have done for the client. Maintain organized files. Keep detailed, contemporaneous, accurate records of oral communications in chronological order. Your files should track your time records and vice versa.

Bill by the Month. Bills should go out promptly after the close of the billing cycle. With a computerized time-and-billing program, a lawyer who has consistently recorded time spent on each client matter will have no problem getting bills into the mail the day the billing cycle ends. If your bills are current and the client is unhappy with the bill or the quality of the work, he or she has an opportunity to stop you before you have done a lot more work on the matter.

Prompt for Payment. Act early to establish your expectation that bills will be paid promptly. At the conclusion of each billing cycle, get a list of all accounts receivable. Note everyone who has not made a payment in the last 30 days. Determine who should receive a personal telephone call. Some clients with accounts over 30 days may not need to be called immediately, for example a client with a good payment history who occasionally pays late. New clients without established payment histories should be designated for calls, as should all old clients who routinely need a reminder to pay their bills. Someone other than the lawyer should make the calls.

Be Diplomatic. The staff person who makes the calls should politely remind the client that payment has not been received and ask when it may be expected. If a payment schedule is appropriate, the caller should ask the client to propose a schedule of payments and get a clear understanding as to the dates and amounts of payment. If the staff person is unsuccessful at getting a payment commitment from the client, the lawyer must step in and insist that the client address the problem. The client must be made to state whether she is or is not going to pay the bill. There must be a commitment as to whether the client can pay with a credit card, or, better yet, an authorization to charge the bill to the client's credit card. If the client is not going to pay in full, there must be some alternative arrangement or representation should be terminated.

Continue Calling. The calls should continue on a regular basis until payment is received. For those clients who start to run out of money before the case is over or who suffer an unexpected financial reverse, work out payments over time. However, if the client proposes to pay an amount far below what you consider reasonable with an inadequate excuse, consider terminating the representation or suspending work. If you terminate the representation, you may not collect any of the amount due. However, it is better to cut your losses early than to keep working and have an even larger uncollectible account.

If the Client Complains. If the complaint is about the bill, resolve the problem with the client. Agree on how much the client owes, or how much the client will pay in settlement of the bill. Make the client tell you when you can expect to get paid. Insist that the client state clearly whether she is satisfied with the representation. Sometimes the client is simply disputing the amount of the bill. These disputes can be settled easily. If the problem is dissatisfaction with the quality of service, you must withdraw from the case. If you get out of the case at this point, you may not collect anything more from the client.

Terminate Representation. If efforts to collect fees and resolve fee disputes have failed, withdraw from the representation or make the client fire you. If you have entered your appearance and the tribunal's rules require leave to withdraw, you must seek such leave. Early identification of clients who will not meet their commitments allows for early enough withdrawal such that, in most cases, the client and other parties will not be prejudiced by your withdrawal. If the client has fired you, ask him or her to put it in writing and sign a consent to your withdrawal if leave of the tribunal is required.

You Must Withdraw. Where leave of the tribunal is not required, you may simply withdraw by terminating the representation. Rule 1.16 of the Model Rules of Professional Conduct permits withdrawal if the client fails to meet an obligation to the lawyer as to fees even if withdrawal would prejudice the client. To withdraw, you must notify the client, take steps to avoid any prejudice to the client, and return any papers and property the client is entitled to receive.

Linda J. Ravdin is a principal in Ravdin & Wofford, P.C., concentrating in family law and estate planning and administration in Washington D.C., Maryland, and Virginia.

For more Information About the Family Law Section

  • This article is an abridged and edited version of one that originally appeared on page 17 of Family Advocate, Fall 1999 (22:2).
  • For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.
  • Website: www.abanet.org/family/.
  • Periodicals: Family Advocate, 64-page quarterly magazine; Family Law Quarterly, quarterly journal.
  • Books and Other Recent Publications: Child Sexual Abuse in Civil Cases; Assigning Retirement Benefits in Divorce, 2d ed.; Military Retirement Benefits in Divorce; Competing Interests in Family Law; 1040 Handbook, 3d ed.; Understanding Business Tax Returns; A Lawyer's Guide to Mediation; 101+ Practical Solutions for the Family Lawyer; The Joy of Settlement; Practical Solutions for Family Lawyers (audiotape).

Back to Top

< /