By Nerino Petro at 28 April, 2008, 8:00 am
Ed Poll has written a number of books on law practice management including his book Collecting Your Fee: Getting Paid from Intake to Invoice which should be on every lawyers reading list in my opinion. Ed shared some of his advice from that book in Is the Check REALLY in the Mail? Only If You Bill the Right Way! article in the ABA’s Law Practice TODAY electronic newsletter.
Ed believes that there are five specific reasons clients don’t pay their bills:
- They didn't get your bill/statement
- They didn't understand your billing and/or what you did for them and/or the value to them of what you did for them
- They didn't ask you to do what you billed them for
- Their cash flow is temporarily interrupted, despite the best of their intentions to pay you quickly
- Their business has gone "south" and they can't afford to pay you.
While it is hard to condense all of the things you should do, Ed provides some useful suggestions for dealing with clients who are avoiding paying your bill under one of his 5 scenarios. One of his suggestions that I really appreciate is:
Sending out invoices on or about the 25th of the month is a good example. It shortens the receivables stream because clients receive statements on or before the first day of the following month. Since most people pay their bills on or about the first of the month, a bill that comes after that is frequently kept for payment until the following month. Another idea is to bill one-fourth of the alphabet each week. That way the firm receives money from one-fourth of all clients weekly, which evens out cash flow over the month, rather than once per month.
In addition to the five scenarios that Ed poses, I think that a sixth reason should be added – the client is planning on “beating you up” on your fee i.e. they think everything can be re-negotiated after they’ve previously agreed to your fee structure. In these instances, you need to follow Ed’s advice and also be ready to stand firm. Depending on the situation, you may need to be prepared to sue for your fees.
While many malpractice carriers and State Bar’s recommend that you never sue a client over fees, I believe that this only encourages folks who know this and seek to use this fact to their benefit. If you have properly documented the file, performed the agreed upon legal services and your fees are reasonable for the type of case in your community, then you need to stand firm. It has been my experience that if you have a reputation of being prepared to take all steps necessary to collect a fee that has been properly earned, you are less likely to attract these types of clients or to have them try this ploy with you.