Show Me The Money: Keys To Getting Paid!

Presented by Irene Leonard, Lawyer Coach,
5th Annual KCBA Solo & Small Firm Sections Success Strategies Conference April 2005

Money is not a dirty word, although it is interesting how difficult it is for some people to talk about and that often results in them not generating the income they desire. This paper includes keys that, when used, will result in you making more money. If you want to improve your effective hourly rate, reduce wasted time, or just make more money it is essential to have a plan. Include these techniques in your plan.

1. Have good relationships with your clients.

One of the most important keys to getting paid is having your clients know, like and trust you. If they trust, know and like you, you will more likely be paid. Or at the very least they will feel guilty if they are not paying you! Not everyone hires lawyers because of their hourly rate. They hire a lawyer because they think that lawyer can deliver the service or product they want. They hire lawyers they believe are good, effective and will achieve what they want efficiently and expeditiously. Clients are more likely to believe their lawyer is a good lawyer and deserves to be paid if they like their lawyer. Attorneys that maintain good relationships with their clients have clients that like them. Delivering good work is only a part of the way to maintain good relationships with clients. Being responsive, trustworthy, a good listener and interested in your clients are other attributes to maintain good relationships with your clients.

2. Make sure you talk about money.

Make it routine for you to bring up the issue of payment during the initial phone call or meeting. If it makes it easier, have a medium to use to broach the subject. For example mention your fee agreement policy and discuss a few of the terms of your fee agreement with the potential client.

Find ways to get over your own fear of asking for money. What are your beliefs around asking for money? Here are some common beliefs:

Let go of your beliefs that are not helpful. Replace them with new ones. Like "The client will appreciate me raising the issue of money". Consider alternative billing methods that might result in you being more comfortable asking for payment such as a flat or project fee. Know what you are going to say. Use a script until you get comfortable talking about the financial terms with your clients. Here are some ways you can ask for money:

Ask for a retainer before you start work. Advise the potential client up front it will cost a lot of money - they may as well have the bad news when they are in the best position to assess the financial burden - at the beginning. Make sure the retainer is of an appropriate size. Asking for a small retainer might seem helpful to the client but actually is not fair. The client makes assumptions that your representation is going to cost x based on the retainer. If the bill turns out to be 3x that often results in difficulties in receiving payment from the client.

Clients will get a sense that you are treating them fairly when you are willing to openly discuss how you charge for your services. Trust from the client is critical in the ongoing professional relationship. You set the stage for trust in those initial meetings and all ongoing meetings. Being able to talk about the difficult subject of money evidences your strength of character to your client. You model how you handle awkward situations by how you handle asking them for money.

3. Be willing to turn new clients away.

Don't take a client that your gut is giving you warning signals against. Your gut is usually a better judge than you of those clients that are going to be headaches. Don't work for a client you question. Trust that another client will come along to fill the void of that potential client. Spend your time marketing or building relationships with other clients or referral sources that will send good work your way rather than working for a client that may not pay you or is difficult to work with. A client that does not pay is not worth it. If you are going to perform pro bono work make sure it is a conscious decision and not as a result of a situation that comes up because of your client's failure to pay.

If a potential client is reluctant to give you a retainer interpret that as evidence that they are not likely to pay you after you have done the work either. Ask yourself why you would do the work if they aren't willing to pay you up front? Most people understand that attorneys require retainers. For those that don't like the concept, question what that means. Do they think you won't do the work? Then that probably means they don't trust you and that is not a good way to begin the relationship.

If you are not the first lawyer they have hired find out why they left their previous lawyer. Did they not pay the other lawyer?

At some point it may be time to let go of overly demanding and non-cooperative clients especially if they don't pay your bills. That will free you up to focus on your other more cooperative clients.

4. Inform your client.

In addition to discussing costs at the beginning of the relationship it is also important to discuss the following with clients:
  1. Scope of your work - what you will do when; what are the client's responsibilities; how often and how do they want to hear from you.
  2. Schedule - How long with this take?
  3. Expectations - Do not guarantee the outcome. Discuss the level of quality of work you deliver- they might decide to go to someone that does not deliver a Cadillac version if you only offer a Cadillac product when they feel a Chevrolet product is all that is needed.
  4. Details of payment - Depending on the client a frank discussion on whether they have the money to pay you is important.

Educate your client about the extent of the work you are doing for them. Let the client know the value of your services. Keep them informed as to what steps are necessary in the situation. Help them understand how complicated or difficult what you are going to do for them really is. It may seem straight forward to you, but not for them. That is why they need your services. It is up to you to help them see the value of your expertise.

Try to give them a "product" for their money. Correspondence along the way, copies of your work product, a closing binder. What can you think of?

5. Make sure you are good at what you do.

This might seem to be fairly basic. But that is why it is included as a key. Because it is so basic it is extremely important. If you are good, people will not have complaints and they will be more willing to pay you. Being good at what you do also helps build your confidence so it is easier to ask for money and expect to get paid. Clients will not have any leverage to not pay you if you performed as promised. In other words don't give them an excuse to not send you a check. If you do need to take action for nonpayment you will not have to worry about the client having a valid cause action if they threaten to counter sue for negligence or to report you to the Bar Association.

On a scale from 1 to 10 with 10 being exceptional how would you rate your legal skills? What do you need to do to improve your skills? Do you think you are worth what you charge? If not, what do you need to do about that?

6. Raise your rates when reasonable to do so.

The time to raise rates is when you have become an "expert" in your area, you have more business than you can handle, your clients want the best and you are the best, other lawyers send you work because their fees are too high for the clients they are referring to you, when you are successful, when the economy is good, if it would be competitive to do so (without price fixing). Raise your rates as part of a strategic your plan. When you are ready to raise your rates raise them for new clients to start then to existing clients with new matters.

7. Record all your time promptly.

Be conscientiously honest in recording your time so that clients will not have to question your account. Record your time moment to moment during the day - at a minimum record all your time daily. Trying to recall your time the next day or week will lead to you not capturing all of your time. That might be good for the client, but not good for you or your firm. If you capture just 30 minutes more a day at a billing rate of $200 an hour you will add approximately $24,000 to your annual revenue. That is a substantial amount of money to gain by improving your recording skills.

After carefully capturing all your time for recording purposes review your bills with the big picture in mind. In order to provide the client with value are there things you should not bill? In some cases you may want to show some work as a "no charge". That is good relationship building. You may decide not to write down any of your time in the end especially if you got a particularly good result for your client. You will be glad you captured all your time.

Learn how long it takes for you to actually complete matters for your clients. In time you can advise clients more accurately what something is going to cost them. That makes them happier in the end when they get the bill - it will be closer to their expectations. You can also use this information to start charging flat fees for various matters. Flat fees can help you take advantage of technology and make more than your hourly rate if done well.

8. Bill promptly and frequently with appropriate detail.

Provide the detail for your time in such a manner that the client has a clear and appreciative understanding of the work you are performing for your client.

Clients pay bills sooner if they receive the bill close in time to when the work was performed. Send your bill out when the matter is completed. Don't wait until the end of the next billing cycle. Consider spreading billing throughout the month.

Have systems in place that reduce your administrative time spent on billing matters. If you do your own billing don't let it (or anything else) pile up to a large job. Do it daily. The harder the job becomes by not doing in the moment the harder it becomes to get to it. Be disciplined about this.

Don't let your receivables get over 45 days. Follow up on overdue accounts promptly. Deal with the problem early by calling your client directly. If you don't treat the non payment of your bill as important the clients may not treat paying you as important. Personal contact is a good opportunity to find out what they think of how you are doing and you can course correct if necessary. Or you might find they think you are doing a great job and appreciate the reminder and will get the check to you.

Stop working for the client when they fail to pay. Let them know you will be stopping. Make sure you comply with the Rules of Professional Responsibilities when you do so.

9. Find ways to be more efficient.

How much of your day is spent in non income generating activities? Delegate these activities - get assistance whether part time or full time. The opportunity cost of you doing something that someone else can do for one-quarter of your hourly rate does not make sense. If you have work that you can bill at $200 an hour waiting for you but you can't get to it because some administrative tasks need to be done - get them handled elsewhere. This will also keep your clients happier. You will be focusing on delivering your services to your clients that only you can perform.

10. Comply with the rules of Professional Responsibility.

11. Put polices in place.

Put polices in place that will help you get paid. Write your plan out and stick to it. Decide to stop being your client's banker. If you are make sure you charge interest. Choose to get paid and follow your plan.

Have a collection policy and enforce it. If you have delivered good legal services at a reasonable cost you should not have to worry about the client suing you. Unless you choose a bad client. So don't work with dicey clients!

What policies do you need to put in place? When will you do that by?

Bibliography, Resources and Suggested Readings

James A Calloway, Mark A Robertson, Winning Alternatives to the Billable Hour: Strategies That Work, Second Edition, The American Bar Association, 2002.

Edward Poll, Collecting Your Fee: Getting Paid From Intake to Invoice, The American Bar Association, 2002

Jeffrey Liss (co-chair) with Anastasia Kelly, The Commission on Billable Hours Report the American Bar Association, 2001