By Peggy Gruenke, Owner – LawBizCOO
A lawyer’s job is more than offering sound advice or making a persuasive argument. An important role for every lawyer seeking to improve their level of profitability is to manage expectations from intake through getting paid at the conclusion:
1. Expectations about service;
2. Expectations about how long it will take;
3. Expectations about results;
4. Expectations about cost and getting paid.
#4 is an active process that really is going on behind the scenes during the entire engagement. In my previous blogs, I talked about getting paid on cases using retainers and hourly billing and the importance of communication in these processes. LawBizCOO
Today, let’s talk about the clients who are habitual late payers and ask for discounted bills once the bill is beyond 90+ days. One reason you may be in this position is due to the flow of communication being driven by the client rather than you, the lawyer. By not firmly implementing your collection policy throughout the engagement, you have caused your own collection problems. A firm-wide written collection policy will set the stage for getting paid. Including this information in your fee agreement is the way to address the getting paid for your work part of the engagement.
So many times I see a client’s account creeping up to 60 days past due and the attorney assures me they are “good for it”, they will pay. Or “they are a good friend or a friend of a friend who will refer me more business”. The attorney continues to work on the case. Then the next month it’s 90 past due and same responses from the attorney. Now we’re six months into the engagement with no payment. You have clearly sent the message to the client that it’s OK not to pay you for the legal work you are doing on their behalf. Keep in mind, clients respect working with lawyers who have a good business sense and firmly adhere to the guidelines set in the initial client meeting. And as a small business owner, getting paid is an integral part of your business.
Clients who get no pressure to pay their late bills, generally will not pay them. Then when the attorney finally does decide he wants to get paid for the services he provided, the getting paid process becomes a time consuming effort that:
• Leads to confrontation with the client;
• Opens the door for the client to question this work;
• Is ultimately less profitable because in order to keep the client happy, you discount the bills.
Not setting and managing expectations has created an environment where the client has effectively put themselves in control of your collection policy. Take the time early in the engagement to set the stage to make this matter a profitable one.