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