How many times have you heard, “If you want to avoid collection problems, get your fee up front?”  Good advice, but how exactly do you make it happen?  Here are four sure-fire options:

• Use “evergreen” retainers.  In this type of arrangement, the client agrees to maintain a specified retainer balance at all times.  Your bill should reflect the beginning retainer balance, fees and costs incurred during the month, total funds disbursed from the client’s retainer, any balance remaining, and the amount needed to replenish the retainer.  Keep a careful eye on the client’s balance at all times.  If the client fails to replenish the retainer as required, be prepared to enforce the terms of your agreement (including withdrawal).
• Offer incentives, such as a discounted hourly rate or flat fee, if the client establishes a retainer or pays your fee up front.   If you intend to charge a “fixed fee earned upon receipt” read and understand Oregon Rules of Professional Conduct 1.5 and 1.15-1  and OSB Formal Opinion 2005-151.  These arrangements must be in writing and must contain specified disclosures. 
• Collect “last month’s rent.” Require that the client pay a security deposit to be held in the lawyer trust account. Invoice the client as usual. At the end of the matter, use the security deposit to pay the client’s final bill. Alternatively, the funds may also be used if the client fails to pay a monthly invoice. As always, put your fee agreement in writing. Keep in mind that if the client’s funds can earn net interest, you are required to establish a separate interest-bearing account for the client or obtain a waiver of the client’s right to interest. See OSB Formal Opinion 2005-117 for additional details.
• Accept credit cards. Avoid bookkeeping hassles by using a private credit card processor who will take merchant fees only from your business account, not your lawyer trust account. Be sure to read and comply with OSB Formal Opinion 2005-172.  Credit cards are a great way to collect retainers when clients can’t otherwise come up with the funds.

Copyright 2011 Beverly Michaelis