The hardest part of lawyering, arguably, is collecting the money owed to you. Certainly, sending out a bill does not guarantee that the bill will be paid.
So, what is a lawyer to do? Below are twelve specific ways that lawyers can increase the effectiveness of their collection efforts:
1. Know the reasons for failure to pay.
Clients may not pay for a variety of reasons, and these reasons run the gamut from anger concerning the quality or price of the legal services rendered to the client’s inability to pay not only the legal bill but also other bills as a result of economic reverses. Knowing the reason for the client’s failure to pay should assist the lawyer in determining the approach for future collection efforts.
2. Hire a cheerful, caring receptionist.
Most clients go to lawyers only when there is a problem that is stressful. The lawyer whose office staff members facilitate the reduction of that stress will experience an easier time collecting fees.
3. Discuss fees during the first lawyer-client meeting.
Clients appreciate not having to raise the issue. It is better for the lawyer to acknowledge that the issue must be dealt with and to obtain an agreement that both parties can accept.
4. Prepare a written fee agreement.
The written agreement should explain all charges to be made and the need for timely payment. It should be signed by both the lawyer and the client.
5. Do not promise work product sooner than realistically possible.
If, for any reason, the work cannot be performed in the manner and in the time promised, the lawyer must communicate with the client. The client will accept change if told in advance of the due date.
6. Tell the client what to expect each step of the way.
Do not “hype” the client. If possible, include a tentative or expected timetable of events. Educate the client: unless the client has a thorough understanding of the problem, the efforts of the attorney and the services rendered will not be fully understood or appreciated.
7. Tell the client what has happened immediately after it has happened.
If the client is told what is happening as it is happening, the client will then feel that he was a participant in the process, not a disinterested observer, and will fully appreciate the diligent efforts of the lawyer.
8. Age the accounts receivable weekly.
Determine who the “problem” clients are and determine an immediate strategy for dealing with the clients and their particular issues.
9. Send reminder statements if the bill is not paid within 30 days.
It is appropriate to send a friendly reminder to the client. For example, send a second statement showing the previous unpaid balance but add an imprint with a red-ink stamp that says “Reminder: Payment Due.” If the bill is not paid within the next two weeks, send another statement and imprint this one with a stamp that says: “Second Reminder: Payment Due.”
10. Delegate authority to someone to review each file.
Successful businesses do not send their salespeople to their customers to collect; that is handled by a separate credit department. If the lawyer must contact the client for payment, the client normally will be too embarrassed to return to the lawyer. Have your delegate pursue collection of the accounts receivable.
11. Stop work!
If the client does not keep the promise to pay as billed, do not continue to work for the client. Either notify the client or, in certain circumstances, make an appropriate motion before the court to be removed from the case.
Some statistics show that the lawyer/creditor is successful in more than 95 percent of the litigation against a client/debtor. Of course, when litigation occurs between a lawyer and a client, it is obvious that there will be no future relationship between the two.