Get What They Owe You Options

[Editor]

From Attorney at Work


Financial success is not measured by the billable hours you work, but by the amount of cash you actually realize from them. Uncollected receivables are tantamount to an interest-free loan to the client that can eat up your cash flow and compensation. Your firm shouldn’t be a bank that carries your client’s expenses. Instead, take a businesslike approach to collections.

Eight Steps to Collect the Money You are Owed

Get it in writing. A signed engagement agreement should state each party’s responsibilities for making the engagement a success. The lawyer agrees to perform to the best of his or her ability and the client agrees to cooperate fully, which includes paying the lawyer’s bill.

Set and enforce a policy. There must be clear consequences for a client’s failure to honor the commitment. Collection policies should specify that you’ll keep track of when clients are behind on their payments, and detail how to contact clients when payments are late.

Make a budget. In addition to an engagement agreement, prepare a budget that addresses events, time and money for the matter at the very beginning. The client must read and accept it, and you have a responsibility to stay in continual touch about expenses versus budget.

Do not discount. Discounts are unnecessary if the client has agreed to pay the full amount in the engagement agreement. Make it clear that your firm is a business with definite collection policies in place, and that those policies will be enforced.

Bill clearly. Since the terms are established and agreed upon, you must bill in a regular and timely way, using statements that fully describe the work done and the goals accomplished by that work. The more information you provide about what you did, the more likely the client will be to pay the bill.

Follow up consistently. When an account is overdue, take a consistent approach to connect with the client. Confirm that the bill is received and the client satisfied (or at least not dissatisfied) with the service (the result is never an issue). Don’t just hope a billing problem will go away.

Walk away. In accord with Rule 1.16, stop work for clients who will not pay. Provide adequate warning, make clear that this last resort is not taken lightly and that the client’s refusal to pay is the cause. Also inform the client that the amount owed remains a debt of the client and payment is expected. Delinquent clients should never hold a firm hostage.

Use a collection service, if needed. Disclose only details that are absolutely necessary to the collection service without jeopardizing client confidentiality. Before you engage in a formal collection process—internally or externally—thoroughly review the client file to be certain that it contains no basis for a malpractice allegation.

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