Bankrolling Cases Can Bust You

In hard economic times, it serves a lawyer well to monitor your receivables. When clients don't pay their bills on time, you are essentially loaning them money. And that's no good for you.

Same for costs advanced that don't get paid back to you on time. Whether it's fees or costs advanced, it's still money out of your pocket at a time when the Law Firm can least afford it.

Problems with clients who don't pay their bills on time can be avoided.

Start with a clear attorney-fee agreement or engagement letter. Make sure the client understands what will happen when the fee bill is not paid, right from the start. Then don't let the billing pile up unpaid. Take prompt steps to collect what is owed for your fees. Don't just send the bill out and hope. Hope is nice, but it won't pay your salary.

One way to speed up the process is to e-bill your clients via email and offer credit card payment arrangements. Most firms give 15 to 30 days to pay a bill and adding a week for the mailman delivery only weakens your Law Firm's cash flow. Get the bill delivered faster and you'll get it paid faster.

But if the bill is not paid on time, follow up during the next 30 days when overdue with email or mailed reminders or perhaps even a phone call. If there is no payment within 60 days of sending it out, consider notifying the client that you will withdraw from representation if the bill is not paid within 7 or 10 days. And if it is not paid, withdraw.

If you don't insist on prompt bill payment, you become just another bill that's easy to ignore.

A close working relationship with the client is key to prompt bill payment too. Clients need to be told that the attorney-client relationship requires client assistance too and that includes prompt payment of the fee bill. Otherwise, the Law Firm is making a loan to the client (quite literally) by allowing the fee bill to go unpaid.

Yes, lawyering is a profession. But don't forget that a Law Firm is a business too and if you don't treat it like one, no one else will.

Ron Burdge

Helping Attorneys Mind Their Business Since 1978.