January 31, 2019 practice point

Five Tips to Make Bill Collection Bearable

By Kelsey Heino

Accounts Receivable seems to imply that there’s actually going to be money being received, right? Unfortunately, getting paid for services provided can often be one heck of a headache, and solo and small firms often feel the pinch more acutely than BigLaw. It may be a foregone conclusion that a certain percentage of your firm’s accounts are going to be in delinquency at any given time, but there are steps to take to lower that number.

  1. Picky = Prosperous: Particularly when your office is brand new, it can be tempting and/or necessary to take any client that walks through the door (or submits an online inquiry—let’s be honest). But as your business grows, so should your standards. If your gut tells you that client isn’t going to be able to pay your fees, listen to it. There is usually going to be an attorney charging lower rates than you, so refer the client that way if fees are going to be an issue. Similarly, if you are your client’s third or fourth attorney, the problem likely isn’t with numbers one through three! Pay attention to your client’s history if you want to know what your future with him or her will look like.
  2. Bundle Up: More and more firms are offering fee bundling or a la carte services. While they may not provide the biggest payoff, these arrangements have an important benefit in their favor: payment up front! If your office provides estate planning, divorce, or other practice areas that lend themselves to flat fee work, consider adding that option to your roster.
  3. But First, Fees: Having your fee arrangements explicitly spelled out in your client engagement agreement is crucial for effective collection practices. Have it in writing and signed by the client before any services are provided, and lay out what is considered “late” and the consequences associated with an account falling 30, 60, and 90 days behind. Be sure the interest rates you cite in your agreement are enforceable in your state.
  4. Pick Your Battles: It’s an awful feeling when you realize a client is just never going to pay you. Whether it’s because they were dissatisfied with your services, they ran out of money, or they are simply bad natured, it’s never a happy day. But before you haul off and file a breach of contract action, consider whether the effort will be worth your time. If it is a particularly small bill, or if there could be a potential malpractice claim on the other end of that summons, stop and think about the cost-benefit analysis. While you don’t want to set a precedent of letting clients walk off without payment, your firm may be better served letting this one slide.
  5. Hire a Bill-Buster: If you are a person who avoids conflict or just too busy to sit down and make those collection calls, consider outsourcing your bill collection efforts. Whether that means designating that one person in your office with bulldoggish tenacity or contracting with an outside company, it doesn’t always have to fall on the CEO’s shoulders to get the firm paid. If contracting with someone else, be sure they are up to date on bill collection laws. The last thing you want is for the solution to become a problem when the Fair Debt Collection Practices Act is violated.

Kelsey Heino is a civil litigation attorney with Goosmann Law Firm in Sioux City, Iowa.


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