Collecting Fees

With law firm revenues taking a hit from COVID-19, effective billing and collection procedures have never been more important. Follow the best practices outlined below to minimize hiccups.

Bill smarter

  • Review pre-bills carefully. Misspelled names and billing errors are irksome to clients.
  • Correct any mistakes that slip by quickly and accurately – the first time.
  • Issue statements before clients receive their paychecks – before the 15th and again at month end. If you serve corporate clients, send bills in a manner and format that works for the accounts payable department. When cash flow is challenging – for you or your client – weekly billing may be an option.
  • Always include a due date on statements. Most clients prioritize payment based on due date.
  • Offer incentives. In lieu of late fees or interest, offer clients a discount if payment is received within 10 days of the billing date.
  • Give clients the 411. Your bill should tell a story – the who, what, and why of the work performed.
  • Stick to your agreed upon billing interval. Monthly, quarterly, weekly – whatever it may be. Inconsistent billings disrupt firm cash flow, infuriate clients, and make collection more difficult.
  • Be flexible in how you accept payment – Venmo, Zelle, PayPal, ApplePay, credit card. Absorbing processing fees may not be fun but it’s better than not getting paid.

Head off problems

  1. Always take the time to discuss fees, costs, and billing procedures. Most nonpaying clients who file retaliation suits or malpractice counterclaims do so because they never understood what the lawyer’s services would cost.
  2. Never leave home without a written fee agreement. Be specific and complete. Your agreement should: (a) specify the scope and timing of services; (b) describe what the client is expected to pay for and when; (c) explain billing practices; (d) identify what will occur if payment is not timely made. Losing a potential client who refuses to negotiate and agree to a comprehensive fee and engagement agreement is a small price to pay compared to defending yourself in a malpractice claim or disciplinary proceeding.
  3. Consider alternative fee arrangements – flat fees, fixed fees, unbundled fees, evergreen retainers, or “last month’s rent.” Clients cooperate more fully when they are financially invested in their case. If the client is unwilling to commit financially, the matter quickly becomes your problem rather than the client’s.
  4. Don’t allow outstanding fees to accumulate during the course of representation. As soon as a payment is missed, call the client. Get to the root of the nonpayment. Is the client dissatisfied? If a client becomes seriously delinquent, terminate the attorney-client relationship and withdraw from representation if possible.
  5. Offer to resolve disputes through the Oregon State Bar’s Fee Dispute Resolution Program.

Before you sue

Ask yourself these questions:

  • Will a judgment be collectible if obtained?
  • Do you stand to gain or lose a substantial amount of money?
  • Are there any grounds upon which the client can credibly dispute the debt or any part of it?
  • Have you really listened to your client’s side of the dispute?
  • Was a good result obtained in the underlying case?
  • Has an uninvolved, experienced lawyer reviewed the file for possible malpractice?
  • Will a law suit result in bad publicity reflecting negatively on you or your law firm?
  • Have you offered to arbitrate, compromise or meet the client part way on the amount due?

Remember

Most collection problems can be averted at the outset of representation. A frank discussion of fees, finances, and billing procedures will greatly reduce the possibility of disputes.

All Rights Reserved 2020 Beverly Michaelis

Strengthening Client Relationships During COVID-19

Client needs are evolving. Has your service model kept pace?
Learn how to innovate and adapt to build better, sustainable relationships.

This program will focus on:

Identifying changing client needs
Becoming more client-centric
Advancing client service through technology
Adapting your communication style
Maximizing social media and website content to reassure clients
Developing flexible fee arrangements and billing practices
Improving client retention and renewing relationships

Date/Time/Location

Wednesday, December 2, 2020 from 10:00 a.m. to 11:00 a.m. Pacific Time.  This is a live, online webinar. 

Register Now!

Registration is open for Strengthening Client Relationships During COVID-19.

Who Should Attend?

Lawyers, legal staff, conflict managers, or office administrators – anyone interested in improving client relationships during challenging times.

Group Discounts

Discounts available to firms who wish to register 5 or more attendees. Contact organizer to arrange a discount code before registering: beverly@oregonlawpracticemanagement.org.

Does the Program Include Written Materials?

Yes. Written materials will be distributed electronically to attendees.

Questions, Live Polling, and MCLE

Questions are welcome during the live event.  Attendees are also encouraged to participate in live, anonymous polling. OSB MCLE credit pending.

All Rights Reserved 2020 Beverly Michaelis

COVID and Law Firms

Consider these headlines from the ABA Journal:

May 2020 – Law firm revenue takes nosedive during COVID-19, new survey data shows

  • Roughly 81% of law firms have seen their revenues drop during the COVID-19 pandemic
  • 27% of firms experiencing loss of revenues saw business decline by more than half
  • Nearly 20% of firms have been forced to shrink their staffs
  • More than 60% said they believe it will take from four months to a year for their firms to revert back to their financial positions before COVID-19

June 2020 – Top law firms fared surprisingly well during COVID-19 pandemic, survey says

  • Demand for the first five months of the year was down only 1.4%
  • Cash collections were up more than 3% through May
  • Expenses were essentially flat as law firms reduced discretionary spending
  • 54% of the law firms reported increases in client requests for discounts in May, compared to the previous month
  • 52% reported more requests for extensions the same month
  • Lawyer layoffs have been modest
  • Layoffs of nonlegal staff members have been concentrated in jobs that don’t lend themselves to remote work
  • Transactional practices, such as corporate and real estate, were most affected by the slowdown
  • Practices have been active in bankruptcy, banking, labor, and employment
  • Liquidity is good, with almost 90% of law firms having the ability to cover at least three months of monthly expenses, excluding partner draws
  • More than 50% of the surveyed law firms cut or delayed partner contributions, which gave them more cash on hand

So… which is it?

Good question! There’s a difference between a nosedive and faring surprisingly well, although the devil is in the details.

The top law firm data is based on a survey of 52 of the nation’s top 100 grossing law firms and 20 midsized and regional law firms. Such a list would include very few, if any, offices with a presence in Oregon.

Additionally, the data was gathered four to five months ago. Measured in COVID time, which eerily resembles dog years, the survey feels outdated. Notice too that the firms judged to be “doing well” nonetheless laid off staff and reduced spending. Half received requests from clients asking for discounts and extensions, which were no doubt granted.

Either way we know our truth. Oregon is a state largely comprised of small firms and solo practitioners – lawyers who make a living but aren’t among the nation’s top money-wise.

So as we work to restore our livelihoods and practices, what should we keep in mind?

Five thoughts to keep in your head

  • We can and will bounce back.
  • Continue following COVID guidelines and don’t let your guard down. Staying healthy ensures that your practice remains open.
  • Deal in facts. Know the economic indicators for your firm.
  • If you have been neglecting marketing, you absolutely, positively must get going.
  • Make a plan and take action. Now might be the time to consider other practice areas.

What to do next

Work on your mental mindset

You are more resilient than you think.

Consider the tough times you’ve lived through. Losing someone you loved, struggling over student loan debt, or ending a relationship. It felt bad at the time, and I am not minimizing how bad. However, you did survive. You are here. You moved forward.

Furthermore, I am willing to wager that you had help. Someone supported you. Said something or did something that made you feel better. Reach out to those people today. Reach out to the attorney counselors at the OAAP for free, confidential assistance.

Your physical health

If you don’t take care of yourself, you won’t be able to help others.

You know what to do to stay physically healthy, so you won’t see it repeated here. Mental health is another matter. If you are struggling, pick up the phone and call the OAAP. They can help.

Just the facts mam

What are your outstanding accounts receivable? How many clients are 60 or more days overdue? When did you last compare your actual income and expenses against budgeted projections? Do you have a budget?

Financial management may not be fun, but we have to deal in reality. You can’t guess who owes you what or how much, you’ve got to know. Start now.

Begin by adjusting or creating a budget for the remainder of 2020. Yes, I know we only have four months remaining in the current year, so this is a task you could easily procrastinate about. Don’t do it. Face the numbers now while time remains to make a plan and take action.

On the expense side, ask for no-penalty extensions, negotiate new rates, request discounts, and get tough on discretionary spending. You may need to collect retainers for litigation expenses you previously fronted.

On the income side, get on top of overdue accounts. I’ve said it before: the most effective thing you can do is pick up the phone and talk to your clients. Screw up your courage and do it. Accepting monthly payments or a discounted amount due is better than no money at all. Offer contactless payment through your website or Square account, accept Zelle or Venmo. Be flexible. Find out what works best for clients.

Marketing

I devoted the month of July to marketing tactics centered around the new normal of COVID-19. If you didn’t catch those posts, or need a refresher, access my blog archives from July. From the home page, locate the sidebar on the right portion of your screen. The archives are midway down the page.

Make a plan

You are in control. Make a written list of what you will do differently, starting today and in the future. Be specific and lay out next steps. For example:

  • Read up on COVID and marketing. Identify 5 or more ideas you want to pursue. Set timelines for each and execute your plan.
  • Prepare a budget-to-actual comparison. Identify what you need to adjust, and act accordingly.
  • Review accounts receivable. Decide on a strategy for each overdue client and begin making calls.

Commit by scheduling out each planned activity. Allow adequate time to get tasks done and don’t overcrowd your calendar.

Scheduling isn’t busy work. It protects your intentions to follow through on your plan and increases the likelihood you won’t brush tasks off.

If you really want to ensure success, find an accountability buddy. Another lawyer is nice, but not necessary. Anyone who is willing to partner with you in goal setting will work. The purpose is not to critique, but to incentivize you to follow through because you’re answering to someone other than yourself.

Once you have a buddy, schedule weekly phone appointments. You won’t be sharing confidential client information. This is a “how did you do this week?” type of conversation and it doesn’t have to be a major time suck. If you want the exchange to go a bit deeper, obviously it can. You can ask for feedback and offer suggestions. It’s up to you.

All Rights Reserved 2020 Beverly Michaelis

How COVID-19 Will Change Solo and Mid-Size Law Firms

Quote

A recent report by Clio assessing the impacts of the coronavirus on the legal industry and consumers found that the virus has created a 40 percent drop in the number of new legal matters opened per week. Almost half of the polled consumers said that if they had a legal issue, they would delay seeking legal help until after the virus subsided. Further, 22 percent of consumers indicated they were under the impression that attorneys stopped working altogether because of COVID-19.

From our friends at NW Sidebar.

This post focuses on how COVID-19 is likely to affect small to mid-size law firms. I encourage you to read the full post. Here are some key points of interest:

Life is different and also the same. Clients expect you to cater to their needs. Put yourself in their shoes and you will do well.

All Rights Reserved 2020 Beverly Michaelis

 

ABA TECHSHOW 2020

It’s officially a wrap. Did you miss ABA TECHSHOW 2020? Get all the apps, gadgets, tech, and tips fit to print right here on Wakelet! Topics include:

  • Artificial intelligence
  • Best practices
  • Client screening
  • Cloud computing
  • Ethics
  • Gmail, iPhone, Outlook, and PowerPoint tips
  • Marketing
  • Security
  • Windows 10

While you’re at it, be sure to check out the TECHSHOW blog.

All Rights Reserved 2020 Beverly Michaelis