We just got through the end of the year, and we all faced the pressure to collect any outstanding invoices. A new year has arrived, and firm leadership, and particularly equity partners, are going to be making a push to get as much collected as possible; and, depending on the firm’s compensation structure, young lawyers also may be rewarded for their cash collected.
It is important to lay a good foundation for your client relationships in order to make billing and collecting fees smoother—and to help you avoid a big outstanding invoice and an intimidating conversation with a client coming between you and your year-end bonus.
If you’re looking for a New Year’s resolution, here’s a suggestion: Start having more productive conversations with your clients about your bills. As a late gift from me to you, below are five tips that will increase your chances of collecting your fees in full.
- Set clear fee expectations from the beginning. Whether you’re billing by the hour, at a flat fee, at a discounted rate, or at your regular rate, it is important that you set expectations about the fees at the very beginning of the relationship. Even if this is an existing client, if you’re entering into a new matter, it is still important to have a conversation about your fees.
The engagement letter is the perfect place to do this. Clearly set forth not only your hourly rate but also the rates of anyone whom you expect will bill time to the project. Being clear about your clients’ potential investment can help avoid that sticker shock when they first get the bill.
- Send the clients your work product even if they won’t totally get it. If your client is in-house counsel, he may want to review your work product for edits on substance.
But, even if your client is an individual, the HR director, or the CEO of a company, send him your pleadings, your briefings, and the summaries of depositions. Even if the client is a nonlawyer and doesn’t understand the ins and outs of your motion to dismiss, he will be more appreciative of the time you billed when he can see the results of your labor. Your client is spending a lot of money, and you should be sharing what you’re doing with the client’s money.
- Show your value in your time descriptions. While clients may not always read everything they’re sent, you can be sure that the client will read every bill. Good time descriptions are a vital way to demonstrate your value. Your time descriptions should do several things.
First, they should describe the client’s problem and how you solved it. A description that you drafted a letter or reviewed a document does not tell the client anything about the value of your services. If you make a recommendation to the client or draft something specific stemming out of a conversation with the client, describe what it was and how it moves the ball forward in your client’s case.
Next, the description should not only explain what you did but also why you did it, especially if a client specifically asked you to do something. Clients are busy and often forget that they’ve asked you to do something. Have a phone conversation with a client? Include her name in the description, including her instruction to do a task.
Finally, avoid descriptions that make you sound like a messenger. Clients expect to pay for legal advice. Clients hate to pay for administrative functions, even if they are small amounts of time. If you’re relaying a message, such as a settlement offer, be sure to describe the analysis and advice that you provided the client, rather than just noting that you passed along a message.
The need for detailed time descriptions is even more pronounced for young lawyers. At the earlier stages in your career, you may not have a lot of direct contact with the client. Because of this, your time descriptions might be the only direct exposure between you and the client. Use the opportunity to make a positive impression.
- Call the client before a big bill hits. Receiving a bill should not be the first communication that your client gets about your work. Your bill also should not act as your update to the client on the matter. If you have laid a good foundation by following steps 1–3, a bill shouldn’t be too big of a surprise to the client. The client will know your rates at the outset, will know that you may be using other lawyers and paralegals to help out, will have seen your work product, and will have the chance to understand your work by reading your strong and detailed time descriptions.
To close the loop on the effective delivery of a bill, pick up the phone and let your client know that your invoice is coming. It can be tempting to have your accounting department stick an invoice in the mail without any extra work on your side, but I promise you that the extra five minutes it takes to call the client will pay off. The client will appreciate your addressing the matter of payment head-on and will appreciate that you’ve opened up a line of communication about the fee.
- Don’t be shy about the time you’ve put in. For young lawyers, it can be a shock to see how fast their legal fees can build up. Some lawyers may feel self-conscious about their high hourly rate adding up to thousands of dollars on an invoice.
Over time, it’s vital to develop the confidence to stand behind your work, knowing that you’ve delivered something valuable to the client for which you deserve to be paid. Don’t be apologetic for the cost or write off time that was legitimately used. Your confidence in your own work will, in turn, generate client confidence in your work.
New Year’s Resolutions
In this new year, while you’re eating healthier, saving more, taking more time for yourself, or whatever other resolutions you’re setting—one resolution that you should actually keep is to lay good foundations in your client relationships by having better fee conversations.
Jane Gleaves is a litigation attorney at Kegler Brown Hill + Ritter in Columbus, Ohio.
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