A lawyer's biggest challenge: Collections

 Edward Poll, The Daily Record Newswire

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 12 specific ways that attorneys 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, running the gamut from anger over the quality or price of the legal services to inability to pay. Knowing the reason for the failure will assist in future collection efforts.

2) Hire a cheerful, caring receptionist.

Most clients go to lawyers only when there is a problem that is creating significant stress. The attorney whose office staff facilitates 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 and the need for timely payment, and 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 time frame promised, communicate with the client. Simply being told in advance of a change is usually enough for a client to accept it (and a sneak attack is often enough to scare him off).

6) 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 feels like a participant in the process, not a disinterested observer, and will fully appreciate the diligent efforts of the attorney.

7) Tell the client what to expect each step of the way.

As referenced in the previous two entries, an informed client is a client who is more at ease. So include a tentative or expected timetable of events. Do not “hype” the client; educate him. Unless the client has a thorough understanding of the problem, the efforts of the attorney and the services rendered will not be fully understood, appreciated or even accepted.

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’s handled by a separate credit department. If the lawyer must contact the client for payment, the client can 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. Either notify the client or, in certain circumstances, make an appropriate motion before the court to be removed from the case.

12) Sue.

A last resort, to be sure, but an effective one: Certain 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, there will obviously be no future relationship, so make sure the monetary gain is worth the client loss. 

—————

Edward Poll is the principal of LawBiz Management. He coaches lawyers to greater profits with less stress and is the creator of the new “Life After Law” coaching program, which enables lawyers to plan for profitable exits. He can be contacted at edpoll@lawbiz.com. Also visit www.lawbiz.com.