October 2012 | Billing & Collections
Collecting Your Fees With Ease
Successful collection of a fee involves more than taking remedial action after a problem arises. While traditional collection policies may be necessary, they do not enhance the lawyer/client relationship and will never represent a good solution to the problem. The real answer is taking a comprehensive approach, with the goal of avoiding the problem altogether.
Lawyers who collect fees without issues have:
Get it right and you will avoid collection problems.
Law firms should have a policy on the standard topics to be covered at intake. Develop a checklist to assure that all lawyers in the firm conduct meaningful discussions with clients about objectives, risks, the plan for going forward, and the cost.
The discussion about fees must be clear and candid. The lawyer should provide an estimate or range and agree to call the client if anything occurs that will affect the estimate. Let the client participate in any decision about whether to expand the intended work, which would result in unexpected fees. If the additional work is necessary to achieve the desired result, the client will likely agree to the extra fees. Having the client participate in the decision means the client will never be surprised by the amount of a bill.
Let the client know that if payment of a bill becomes a problem, the client should call you. It is important to let the client know if you offer payment by credit card as an option to defaulting on the bill. All of these subjects should be covered in the intake discussion.
The initial client meeting is when the lawyer will be in a strong position for a clear and candid discussion about the costs involved in pursuing the matter. Once the arrangement is set, the client may have the upper hand. As a result, the lawyer should be candid in the initial meeting and request the desired fee arrangement and/expected fee deposit.
The requirement of a fee deposit serves two purposes. First, it secures the prompt payment of fees, once the lawyer’s bill is rendered. More importantly, it tests the client’s willingness or ability to pay for legal services. Any hesitation by the client is a clear warning sign.
The client needs to be fully apprised of all the ramifications of moving forward with representation. The lawyer’s goal is to be sure the client’s enthusiasm for proceeding hasn’t masked some harsh realities involved in going forward. Have a heart-to-heart discussion to determine if the client is prepared for and comfortable with the realities of the anticipated legal action and the financial commitment involved.
Keeping Clients Thankful
Surveys show that what clients want their lawyer to care about them and their legal problems. Care and concern score as more important to most clients than the result achieved or even the amount of the fee. There is an important lesson here. Provide personalized care and service and clients will be thankful and appreciative of your efforts, regardless of the difficulties that may be inherent in their legal problems. Clients who can see that their lawyers are genuinely concerned are relatively content and are more likely to pay their bills on time.
Use the Billing Process to Communicate Value
Focus on Client Service
These events may seem minor to the lawyer, who is trying to balance the demands of a busy practice. To the client, the failure will be a defining event and will affect the lawyer’s chance of payment.
As the matter proceeds, client communications become critical. Key ingredients include:
It is incredibly easy to do something that disappoints a client and causes them to lose confidence in the lawyer or the process. That loss of confidence must be avoided at all costs.
Adopt a Collection Policy
Most firms with collection problems lack a standard policy or fail to consistently apply an existing policy. The longer an overdue receivable goes without attention, the more courage the client will gain for further delay of payment. Most lawyers make the mistake of not addressing receivables until they are in the 60- to 90-day range. Unfortunately, at that stage the client is conditioned that timely payment does not seem to be particularly important. The best approach is for the firm’s policy to address overdue receivables in quick order and consistently.
Find the Magic: Payments by Return Mail
Think back to some of your best client relationships. What do you remember about them? You may remember that payments of your legal fees came back by return mail. The bill was hardly out the door, and there was the check! It was probably so unusual that the immediate payment continues to stand out in your mind. That prompt payment of your fee also likely didn’t go unnoticed. You began to treat that client a little better than the slow-pay clients. You probably returned that client’s telephone call more promptly than the others. And, you may have tended to lowball the time when filling out your timesheets. The client frequently expressed appreciation for the services you rendered and you probably expressed thanks for the prompt payment. It was a good situation all around.
What was it that caused the client to pay so promptly? Most likely, the client understood the process and had realistic expectations as to outcome and cost. You had done a good job at the initial client meeting and the case had progressed as expected. To the extent any changes occurred, you kept the client involved and gave advance warning of those changes. The client was satisfied and appreciated your services. This represents the dynamic that you want to replicate, over and over and over.
Arthur Greene is a Principal with Boyer Greene LLC, which provides management consulting services to law firms.