October 2012 | Billing & Collections
Systemizing Your Shop and Presenting Palatable Prices
Setting up systems to manage expectations from the onset of the client relationship is the key to successfully collecting fees. Developing a distinct image, creating a clear fee schedule, establishing competitive rates, communicating the terms clearly, capturing the agreement in writing, and consistently collecting are all tools to build into your billing and collections plan. Putting this plan into writing will provide understandable and accessible guidelines assisting your firm in presenting an appetizing menu of options which your clients can afford.
Know Your Market: Daytime Diner or Fine French Fare
With your target audience in mind you must begin building (or rebuilding) your brand. If you are charging premium rates, you must convey this from the onset of the relationship. This begins before you even meet perspective clients. Presenting a professional website, existing in an executive office space, using support staff and technology, and employing experienced and expert advisors are just a few ways to establish this image. When you enter a fine dining establishment, dimly lit with candles, greeted by the maitre d' and led to a table decorated with more silverware than you can count, you immediately expect that your bill will exceed fast food fare. If this is the client that you would like to capture, ensure that your image expresses that up front. Without any additional effort this will filter out your daytime diner looking for a burger and shake. Alternatively, if your market is the “jean and t-shirt crowd” make sure you create a comfortable and welcoming environment for all.
Making Your Menu: The Recipe for Success
You are not done yet. How do you bill your clients? Are you tied to the traditional time-keeping trade? Consider alternative billing structures such as flat fees, task, value or project-based billing, subscription billing, and blended fees. If a client asks you to consider an alternative fee structure would you know the cost? In the progressive legal market this could be the difference between signing or losing a client. Educate yourself regarding the alternative fee structures and build them into your plan so you know what you are able to offer as a viable alternative. Also, detail potential payment plans and know what that model entails. If you are willing to discount services, set internal limits so that you do not sell yourself short.
Next, you must assign an associated cost. This can be average or absolute but it cannot be abstract. Providing a client with an hourly rate, but with no expectation regarding potential hours needed, does not allow you or your client to know if they can commit. Setting your rates can be a challenge, with few clear guidelines since the Supreme Court decision in Goldfarb v. Virginia State Bar, finding the publication of fee schedules by the bar association to be an antitrust violation. The Model Rules of Professional Responsibility have attempted to provide guidance regarding the ever-nebulous standard of “reasonableness” set forth in Rule 1.5. Highlights include: the complexity of the matter, potential for conflict, customary fees charged, amount involved, results obtained, immediacy, professional relationship, experience of the lawyer and type of fee. Assign each ingredient a price, write out the alternatives and understand the typical charge for the entire meal.
Greeting Your Guests and Presenting the Plates
Bringing the Bill
Building an integrated billing system can be an extreme undertaking, but if you can execute the plan and foster realistic client expectations, the resulting rewards will be worth their weight in gold (or white truffles at $100,000/pound).
Sofia S. Lingos, Esq. is the principal and founding attorney of Lingos Law, a boutique business law firm located in Boston, Massachusetts, representing small businesses and entrepreneurs in forming, protecting, maintaining and expanding their ventures. Attorney Lingos is also an adjunct professor at Northeastern University School of Law, where she teaches a course on Law Practice Management and Access to Justice. Additionally, she is actively involved with numerous bar associations and philanthropic organizations.