Science of Collecting Fees

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Science of Collecting Fees

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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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  • 1. Science of Collecting Fees Ed Poll – LawBiz Joshua Lenon – Clio
  • 2. 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)
  • 3. Instructors Joshua Lenon •  Lawyer, admitted in New York •  Lawyer-in-Residence for Clio Ed Poll •  Founder of LawBiz •  Author of The Business of Law
  • 4. BILLING NEEDS
  • 5. Solo attorneys spend 40% of time on non-billable tasks. Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
  • 6. Firms 11-20 spend 8% of time on unbillable tasks. Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
  • 7. Unbillable Tasks •  Client development •  Licensing and subject matter maintenance •  Team development •  Business maintenance •  Billing
  • 8. $21-30k lost per person per year spent doing time/billing. Billable Hours by Bruce MacEwen & Janet Stanton of Adam Smith, Esq.
  • 9. Productive firms develop procedures to fast track non- billable work.
  • 10. SCIENCE OF COLLECTING FEES
  • 11. Collecting Your Fee: Getting Paid from Intake to Invoice © 2014
  • 12. 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
  • 13. 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. 14 Getting the work Doing the work Collecting your billings
  • 15. 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
  • 16. 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
  • 17. Written Fee Agreements •  Explain fee arrangement •  Written engagement letter – Transaction vs. Contingent •  Consequences – Two way street •  Credit check
  • 18. Fees •  “Reasonable” under Rule 1.5 – Excessive (ABA) – Unconscionable (CA) •  Types of fees – Time-based (usually hourly) fees – Fixed – Contingent – Value – Mixture of above
  • 19. Retainers •  True retainers •  Advance deposits – Evergreen – Withdrawal •  After billing statement •  With notice per engagement agreement
  • 20. Budgets •  Estimate future costs and expenses •  Make client part of the team •  Manage client expectations •  Memorialize course of action client approves
  • 21. 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
  • 22. •  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
  • 23. Who Handles Collections? •  Lawyer involvement •  Staff involvement – Obligation to supervise •  Need for joint plan and staying informed
  • 24. 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?
  • 25. 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
  • 26. Stopping Work •  See engagement/fee agreement •  Impact on client and matter •  Impact on lawyer-client relationship
  • 27. Withdrawal When Non-Payment 27 Permitted under Rule 1.16 Will not cause materially adverse effect on interest of clients Time sensitivity
  • 28. Alternatives to Non- Payment •  Payment plans •  Revisit when client’s finances improve Avoid an arrangement that the client will almost certainly fail to satisfy
  • 29. 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
  • 30. 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
  • 31. 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
  • 32. Filing Lawsuit •  Check jurisdiction regulations •  Review E & O insurance policy – Carrier may want/require notice •  Use outside counsel – Objectivity – Better protection for confidences
  • 33. 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
  • 34. Process Summary •  First meeting •  Engagement letter •  Budget •  Internal collection procedure •  Peer review of file •  Arbitration if required •  Write-off •  Lawsuit
  • 35. Resources •  Collecting Your Fee: Getting Paid from Intake to Invoice (ABA) •  Attorney & Law Firm Guide to The Business of Law® (ABA, March 2014) •  www.lawbiz.com •  www.lawbizblog.com •  www.lawbiztips.com •  www.lawbizregistry.com
  • 36. Free Weekly Newsletter: www.lawbiztips.com LawBiz Management Co. (800) 837-5880
  • 37. TOOLS TO AID WITH FEES
  • 38. Practice Management
  • 39. Practice Management
  • 40. Practice Management
  • 41. ZenCash & InvoiceSherpa
  • 42. Thank You Joshua Lenon joshua@goclio.com @JoshuaLenon Linkedin.com/in/joshualenon