There are steps you can take to help ensure you get paid by your client.
By Ann Guinn, Law Practice Management Consultant
For many years, family law attorneys got paid when the divorcing couple sold the family home, so they didn’t worry if they didn’t receive regular payments along the way. Then came the economic crisis of 2008, when attorneys saw clients go into foreclosure, or short sale, or simply walk away from an underwater mortgage. Many attorneys were left holding the bag (an empty bag, as it were) after providing their legal services to clients who simply had no way to pay them.
Family law is, arguably, one of the hardest practice areas in which to get paid when one household becomes two. Your client is now covering living expenses on one income – and, then, your bill arrives. You’re sympathetic, but you still need to get paid. So, what can you do to help yourself? These 10 tips can help.
Top 10 Keys to Getting Paid
1. Choose Clients Carefully
Before you agree to represent someone, ask yourself:
- Who is my ideal client? Why? Does this potential client match that profile?
- Is this a case I want to take?
- Can this person pay my advance fee deposit?
- Will the client have sufficient money after the divorce is finalized to pay the remaining money owed me?
- Are my potential client’s expectations realistic, and do they match mine? (If not, the client may run up your bill with lots of impractical demands, and then balk at paying you when he doesn’t get the result he wanted.)
- Is my need for money right now influencing my decision to take this client?
Qualifying your client as to ability to pay helps both of you: you know the client can afford the work, and the client isn’t going to get in over his head financially by hiring an attorney he can’t afford.
2. Use a Written Fee Agreement
A written fee agreement is the basis of the attorney-client relationship. If you ever have a fee dispute with a client, you won’t have much of a defense without written proof that the client knew your billing rate, how you billed, and his responsibility to pay. Protect both you and your client by getting clear, in writing, on the financial aspect of your relationship.
3. Take Money Up Front
Ask for an advance fee deposit (or retainer) in the form of an “evergreen deposit” (aka “a replenishing deposit”). With an “evergreen,” the retainer goes into your trust account, as usual. Regularly bill the client for fees and costs accrued, even though you have the client’s money in your trust account. Per your written fee agreement, the client is responsible for paying your bill when received. If the client doesn’t pay timely, withdraw your fee from the IOLTA account, and when the client’s check finally arrives, deposit it into the trust account to return the client’s balance to its original level. You get paid timely and in full every month. If your client doesn’t pay your bills, then withdraw, if possible.
Toward the end of representation, send bills with the notation “Do not pay,” and start consuming the funds in the client’s trust account. At the end, if there is money remaining, you pay the client; if there are unpaid fees, the client pays you. A clean, easy, and effective way to get paid.
4. Show the Value of Your Work
Detailed billing descriptions demonstrate the benefit to the client of all that you did during that billing cycle. “T/C with opp couns” doesn’t show a benefit. “Telephone conference with Mr. Brown, opposing counsel, to schedule children’s holidays (client to have the children for Christmas Eve, every other Thanksgiving and Easter, and six weeks each Summer) and fair division of parties’ stock portfolio and real estate holdings” not only says value, but it also reinforces why you were the best choice for the job.
5. Bill Regularly and Fairly
Keep contemporaneous time records and bill on a regular schedule. Monthly is good, bimonthly is better. A family law attorney I know switched to billing twice a month several years ago, and her clients love it. They find the bills more manageable when they don’t cover an entire month’s worth of work. Clients don’t like to receive bills only a few times a year because the bill is much larger than they were anticipating. Inconsistent billing practices can result in angry clients and slow payments – and that, in turn, results in an attorney with cash-flow problems.
6. Eliminate Past-Due Accounts
Develop a collections policy and enforce it. Review your accounts weekly and take action as soon as an account becomes past due. Place a call to your client that goes something like this: “I was just going through our accounts and realized we hadn’t received your payment yet. Is there some problem that we can help you with?” Depending on the circumstances, you might suggest breaking the payment in two, with half due this Friday and the other half due in two weeks. Seek agreement from the client to the proposed payment plan, and send a letter confirming the arrangement. Follow up if the promised payment isn’t received. The sooner you jump on past-due accounts, the better your chance of collecting.
7. Take Payments Online
Providing your clients with the convenience of paying your bill online can help speed up receipt of payments. Set up a client portal, or include a link to your online payment processor in an e-mailed bill. This saves you time in sending out paper bills and processing payments, and makes it easy for your clients to pay.
8. Talk to Your Clients About Money
Some of the more difficult conversations attorneys have with clients involve money. Start the attorney-client relationship out right by discussing money in the initial consultation. Talk about the projected cost of the matter, and your billing practices. Continue money discussions throughout representation. If you are going to send an unusually large bill one month, call to alert your client in advance and explain why the bill is so large. Your client will appreciate the heads-up, and the personal touch here can make all the difference on how your bill is received.
9. Excel at Communication
Staying in close contact with your client will go a long way toward getting you paid. The more your client understands about the process and why you are doing what you are doing, the more appreciative she will be of your work – and, appreciation often translates to prompt payment. Call with updates, or call just to check in – clients love hearing from their attorneys without giving them a nudge!
10. Always Give It Your All
Above all, always do your best work every time for every client. When clients see you putting 110% into their matter, it makes it hard for them to dispute your bill. They are paying for your best, and they deserve your best – so, make sure they get it.
By paying careful attention to your billing practices, as well as your case and client selection criteria, you can do a lot to help ensure you will get paid. Pro bono work is great – but, it’s not nearly as fulfilling if it’s inadvertent!
Principal of G&P Associates, Ann Guinn is a law practice management consultant.
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