Science of Collecting Fees

Science of Collecting Fees



You’ve got the clients. Now make sure they’re the paying kind. ...

You’ve got the clients. Now make sure they’re the paying kind.

Have you ever had a client who didn’t pay a bill? If you have, the good news is that there’s a way to minimize the chances of this happening again. And if you haven’t, well, there’s a good chance you’ll work with one in the future. In this free Clio webinar, you’ll learn how to bill in a way that’s efficient, straightforward—and most importantly, helps clients pay you in a timely manner.



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Science of Collecting Fees Science of Collecting Fees Presentation Transcript

  • Science of Collecting Fees Ed Poll – LawBiz Joshua Lenon – Clio
  • Agenda •  Billing Needs (5 minutes) •  Science of Collecting Fees (40 minutes) – Reasonable, ethical fees – Documenting billing and oversight – Billing best practices •  Tools to Aid with Fees (5 minutes) •  Questions (10 minutes)
  • Instructors Joshua Lenon •  Lawyer, admitted in New York •  Lawyer-in-Residence for Clio Ed Poll •  Founder of LawBiz •  Author of The Business of Law
  • Solo attorneys spend 40% of time on non-billable tasks. Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
  • Firms 11-20 spend 8% of time on unbillable tasks. Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
  • Unbillable Tasks •  Client development •  Licensing and subject matter maintenance •  Team development •  Business maintenance •  Billing
  • $21-30k lost per person per year spent doing time/billing. Billable Hours by Bruce MacEwen & Janet Stanton of Adam Smith, Esq.
  • Productive firms develop procedures to fast track non- billable work.
  • Collecting Your Fee: Getting Paid from Intake to Invoice © 2014
  • Law is Both a Business and a Profession “Law is not a profession at all, but rather a business service station and repair shop.” –  Adlai E. Stevenson, Senator 12
  • Law is Both Profession & Business “Law is subject to the same laws of economics as any other business. Having a great product is not enough.” Tower Snow, Chairman (2001) Brobeck, Phleger & Harrison San Francisco corporate law firm 13
  • 14 Getting the work Doing the work Collecting your billings
  • Overview 15Copyright ©Karr Associates Inc., 2011 Collecting your fee – from the start Dealing with slow payers When non-payment becomes serious•  Withdrawal •  Alternatives to secure payment •  Suit or arbitration
  • Collection Begins at Intake •  Understand what client wants – Seek that result for that client – Client expectations •  Want vs. Need – Want this client/matter •  “Competent” to handle the matter
  • Written Fee Agreements •  Explain fee arrangement •  Written engagement letter – Transaction vs. Contingent •  Consequences – Two way street •  Credit check
  • Fees •  “Reasonable” under Rule 1.5 – Excessive (ABA) – Unconscionable (CA) •  Types of fees – Time-based (usually hourly) fees – Fixed – Contingent – Value – Mixture of above
  • Retainers •  True retainers •  Advance deposits – Evergreen – Withdrawal •  After billing statement •  With notice per engagement agreement
  • Budgets •  Estimate future costs and expenses •  Make client part of the team •  Manage client expectations •  Memorialize course of action client approves
  • Billing Statements Include: •  Matter •  Person who performed work •  Time spent (if relevant) •  Amount charged •  When payment is expected •  What will happen if payment is not timely received
  • •  Can the client understand the bill?1 •  Value provided?2 •  Does the bill make the services sound meaningful and reasonably priced? 3 •  (If billing cycles are relevant) Has the firm sent the bill when client is likely able to pay? 4 Bills Influence Collections
  • Who Handles Collections? •  Lawyer involvement •  Staff involvement – Obligation to supervise •  Need for joint plan and staying informed
  • Bills Not Paid Timely Follow up – “Dial & Smile” – Did client receive the bill? – Did client understand what was done and what was billed? – Does client have any questions or problems with the bill or the services? – When will the client pay?
  • Interest on Delinquent Accounts Generally permitted but •  Must disclose possibility of interest fees at outset of representation •  Some jurisdictions require written client consent to arrangement
  • Stopping Work •  See engagement/fee agreement •  Impact on client and matter •  Impact on lawyer-client relationship
  • Withdrawal When Non-Payment 27 Permitted under Rule 1.16 Will not cause materially adverse effect on interest of clients Time sensitivity
  • Alternatives to Non- Payment •  Payment plans •  Revisit when client’s finances improve Avoid an arrangement that the client will almost certainly fail to satisfy
  • Lien on Client Files and Property Check your jurisdiction •  Can’t withhold client’s file for nonpayment •  Can withhold much or part of a file to obtain payment •  Can withhold only work product •  Can withhold only opinion work product •  May withhold file even if client prejudiced
  • Reporting Client to Credit Agency •  NYSBA Opinion 684 (1996) states that reporting is not permitted because the disclosure is not reasonably necessary to collect the fee
  • Promissory Note to Secure Payment Comply with Rule 1.8(a) •  Fair and reasonable •  Terms fully disclosed to client in (understandable) writing •  Advised in writing to seek independent counsel •  Signed agreement documenting informed consent
  • Filing Lawsuit •  Check jurisdiction regulations •  Review E & O insurance policy – Carrier may want/require notice •  Use outside counsel – Objectivity – Better protection for confidences
  • Risk of Cross- Complaints for Legal Malpractice •  Only 10-15% of suits for fees result in cross-complaint •  First loss is best loss •  Need to make sure case is one worth sending to suit •  Peer review of file before suit is filed
  • Process Summary •  First meeting •  Engagement letter •  Budget •  Internal collection procedure •  Peer review of file •  Arbitration if required •  Write-off •  Lawsuit
  • Resources •  Collecting Your Fee: Getting Paid from Intake to Invoice (ABA) •  Attorney & Law Firm Guide to The Business of Law® (ABA, March 2014) • • • •
  • Free Weekly Newsletter: LawBiz Management Co. (800) 837-5880
  • Practice Management
  • Practice Management
  • Practice Management
  • ZenCash & InvoiceSherpa
  • Thank You Joshua Lenon @JoshuaLenon