A family and friends plan for your law firm

A family member or close friend calls you one day with a “quick” question. Seems she has a dispute with a neighbor or she just got denied a promotion or she needs to tell the renter of her duplex to stop smoking in his unit. She knows you are really busy but was wondering if you would mind looking into it or just writing a letter or making a phone call for her. She hates to bother you but she does not know any other attorneys and really needs some help with this problem.

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Collecting fees in difficult economic times

managing accounts with glasses11 Collecting fees in difficult economic timesWith the stock market gyrating and the economy sinking, many lawyers are already starting to see clients fall behind on paying their bills.  Here are a few ideas for managing fee collection through troubling times:

Comfort clients

First of all, and to put the strategies below in context, make contact with your clients, particularly the ones who have typically paid their fees. Everyone’s nervous about the economy; you are one of their trusted professionals. Call them. See how they’re doing. Find out if there is anything you can do for them. Give them your ear. Don’t bill them for the call.

Send statements

Now is not the time to let invoices sit around unsent.  Yes, your clients maybe hurting financially, but they need to know what the status of their bill with you is. A big surprise later certainly won’t help.  If the clients have many bills, you need to make sure you’re figured into the mix. If clients don’t see a bill from you, they may think they don’t owe you anything or that your bill can wait a couple of months.

Review receivables

Take a look at your clients who are more than 90 days behind on their payments. With a down economy, some of the clients who have not been paying never will. Take a look at those clients’ cases and determine whether there are any you would be better off withdrawing from.

You need to find the files that have no pending discovery or trial deadlines, venued in state court rather than federal court (because you may not be allowed to withdraw from federal court because of unpaid fees), and may require a lot of uncompensated work if you don’t make some tough decisions. Make sure you’ve asked for payment first.

For clients who are less than 90 days behind, call or write them.  Don’t ignore their overdue bills and don’t threaten them either. Just remind them that you’ve done good work for them and that you need to be paid. If you ask for a partial payment or a payment plan, they may appreciate your flexibility and you might get some money that would otherwise have gone to their other creditors.

Require retainers

If you sometimes begin a representation without an advance retainer, start requiring one, and if you currently get retainers, set the initial retainer higher. By making better use of advance retainers, you are reducing your risk of nonpayment in the future, which may help balance out the slow payments by some of your current clients.

Line up liens

In many states, a lawyer can assert an attorney’s lien against a client’s property that was the subject of the lawyer’s representation, which can be an effective way to ensure collection of a lawyer’s fee. But a lawyer can lose his or her right to the lien by not following the technical requirements regarding notice and filing.

In Minnesota, for example, an notice of intent to claim an attorney’s lien on a client’s real property must be filed within 120 days of the last work the lawyer performed on behalf of the client. If the notice is not filed on time, the right to claim a lien is lost.

Avoid Animosity

When dealing with clients who aren’t paying, remember that a fee dispute with a client that escalates may leave you with a conflict of interest. Lawyers cannot sue a current client over fees. Stress over a client’s nonpayment has led more than one lawyer to do or say things that violate the Rules of Professional Conduct.

If you believe that an existing client owns property that could be used as security for your fee, treat any request for a security agreement as a business transaction and follow the ethical rules (ABA model rule 1.8(a)), especially giving the client an opportunity to consult independent counsel about the transaction.  The same goes for converting an hourly fee agreement into a contingent fee arrangement or asking a client to sign a confession of judgement.

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Collecting fees in difficult economic times is a post from the law firm marketing blog,

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