By Elizabeth M. Miller bio
Nothing strikes a nerve with clients more than having to pay legal fees. I am not sure why, but some clients think it is acceptable to expect their lawyers to work for free, something they don’t expect anyone else to do. In today’s economy, clients are looking for reduced legal fees and results. Value billing and flat fee billing structures are becoming more prevalent. Here are a few realities law firm administrators need to accept and address to improve your billing procedures.
Reality #1: Most clients pay their bills begrudgingly. Rarely have I had a client tell me they are happy to pay their legal bills, even if the results obtained are in their favor.
What you can do:Accept that clients will never be totally satisfied with their legal bills regardless of the satisfactory result and whether they won or lost.
Reality #2: It is easier to get one month of legal fees paid than to get two months of legal fees paid
What you can do: Establish a regular billing cycle of every 30 days, on or very close to the same date each month. This will help the client to expect your statement. It doesn’t mean they will pay any faster, but at least they know to expect it.
Reality #3: Nothing sends up a red flag for a client like getting a bill in May, with time on it from March that was not captured on the billing statement sent in April.
What you can do: Everyone’s time must be in for the period ending that you are going to bill for. If you find that someone’s time was missed, it might just be easier to charge off that stray billing.
Reality #4: Clients always want to know “what happened to my money.”
What you can do: Ensure that your billing statement reflects trust monies, unapplied funds, and costs held in trust. Clients are less likely to question how their funds were disbursed or what is remaining if everything is clearly spelled out for them.
Reality #5: Sometimes the only money you will see from a client is the fee retainer paid at the beginning of a case.
What you can do: Accurately estimate your retainer based on other cases you have handled. Do not forget to get a cost retainer, unless you plan to pay your vendors—i.e., process server, etc. out of your operating account and hope that the client will reimburse you later. Be sure to ask for a replenishment retainer. Whoever handles your billing should see that the current retainer fees are exhausted or near exhausted. This will give you enough time to get an additional retainer, or withdraw from the case if that is possible
Reality #6: Clients are not impressed by the number of billable hours that you worked on their case. The number of hours will always be too many, and the results, no matter how successful you were, will never be justified by the number of hours they were charged.
What you can do: While it will not address the comments about the number of billable hours, outline the billing arrangements with specificity in your retainer agreement. If the case is being billed on an hourly rate, be sure that the hourly rate for partners, associates, paralegals, legal assistant and any administrative fees are specifically set forth. And provide as much information as you can about how those hours were spent.
Conclusion
When you encounter difficulties collecting fees from clients, it is like having to work twice as hard for payment—first when you do the work, and then when you are trying to collect what is owed. Your time is better spent working on the next client file.
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