How to Succeed in Practice

Succeeding in practice requires momentum, courage, and hard work.  No one knows
that better than a solo practitioner or small firm lawyer.Motivation1

Whether you’re starting out, retooling, or want to make a change, consider this sage advice from Ann Guinn, one of the presenters at the Oregon State Bar Solo & Small Firm Conference.  She may just motivate you to get moving!

All Rights Reserved 2016 Beverly Michaelis


For related content with a greater focus on the financial side of practice see this post.


Can I Double My Fee if the Client Doesn’t Pay?

Some of you will answer:  Absolutely Not!  Others may think:  Not a bad idea!

We’ve all been there.  Non-paying clients can be incredibly frustrating, especially if you went out of your way to offer a reduced rate or special payment plan.  But before you resort to punitive measures, take a moment to think it through.

First, a literal doubling of your fee may be considered excessive.  Review Oregon Rule of Professional Conduct 1.5.

Second, consider whether the proposed punitive action will make a difference.  Do you truly believe that doubling your fee will motivate the client to pay?

Third, collections can be a landmine of legal traps and pitfalls.

What Should You Do If the Client Doesn’t Pay?

In the case of non-paying clients, it may be appropriate and necessary to withdraw. If so, take care to abide by your ethical responsibilities.  If you represent the client before a tribunal and must file a formal Motion to Withdaw, read and understand Oregon Formal Opinion No. 2011-185 – Withdrawal from Litigation: Client Confidences.  If you have any doubt about what you can or cannot tell the court, seek advice from the Oregon State Bar General Counsel’s office or contact a lawyer colleague who specializes in ethics defense.

You should also consider attending Building and Maintaining a Profitable and Efficient Law Practice on March 16, 2012.  Hear Ann Guinn, a nationally known speaker, author, and consultant discuss:

The Keys to Assessing and Increasing Profitability

  • Personal habits that cause you to underearn
  • Identifying profitable practice areas
  • Analyzing office overhead, liquidity ratios, budget, turnover rate, and realization rate
  • How to establish effective billing practices
  • Reducing accounts receivable
  • Developing case and client selection skills to eliminate payment problems
  • How to manage your time and law office effectively and develop efficient office systems

Also featuring:

Richard Slottee, Professor of Law and Director, Lewis & Clark Legal Clinic, who will talk about the Fair Debt Collection Practices Act and other collection issues.

In addition, the Practice Management Advisors of the Professional Liability Fund will review Fee Agreements: Do’s and Don’ts.

Building and Maintaining a Profitable and Efficient Law Practice will be held at the Oregon State Bar Center.  Attend live or via Webcast.  Cost:  $10.  Register now at the PLF Web site > Upcoming Seminars.

Building and Maintaining a Profitable and Efficient Law Practice

On March 16, 2012 the Professional Liability Fund will host Building and Maintaining a Profitable and Efficient Law Practice featuring Ann Guinn, Richard Slottee, and the PLF Practice Management Advisors.

This CLE will give you important tools to manage the financial side of your law practice, including:

  • Analyzing and understanding your firm’s finances in order to make your practice more profitable;
  • Utilizing appropriate fee agreement and billing practices;
  • Effectively organizing your time and your practice;
  • Developing a business plan; and
  • Collecting attorney fees – the right way.

Location:  Oregon State Bar Center – Columbia Rooms A & B (Tigard, Oregon)

Cost: $10 for live seminar or Webcast

Register for the Live Seminar on the Professional Liability Fund Web site > Upcoming Seminars.

Register for the Webcast here.



Accounts Receivable Do Not Improve Like Fine Wine

Unlike a fine cabernet sauvignon, your accounts receivable are at their best when less than 30 days old – and they definitely do not improve with age. Quite the opposite, in fact. The older you allow your accounts receivable to become, the more they cost you and the less likely your chance of 100% recovery. The trick is to keep from building up past-due accounts in the first place. Stay on top of your accounts receivable and keep that cash flow pouring into your bank account.

I couldn’t have said it any better!

This quote was offered by Ann Guinn in her presentation, Maximizing Firm Profits in a Challenging Economy, at the 2010 ABA Annual Meeting.  Ann is the author of Minding Your Own Business: The Solo and Small Firm Lawyer’s Guide to a Profitable Practice, published by the ABA in May 2010. 

Ann’s presentation was terrific.  Her advice was realistic, no-nonsense, and on-point.  With my own spin, here is some of what she had to say:

  • Collecting accounts receivable begins long before a potential client crosses your doorstep. The first step is to get a clear picture of your firm’s financial health.  For example, do you know the cost and profitability of your practice areas?  Your overhead-to-income percentage?  Your realization rates (percentage of fees actually collected)?  Your effective rate (your true hourly rate considering your realization rate)?  This information is key to assessing profitability.  
  • Do you have a written business plan and budget?  Don’t fall into the trap of thinking you don’t need these tools because you’re not applying for a loan or line of credit.  At all times you should know where you’re going, why, and how much it will cost to get there.
  • Properly screen clients and their cases to ensure payment.  Many a collection problem can be traced back to a client or case the lawyer should never have taken.
  • Communicate billing practices and procedures at the outset of representation.  Clients are more likely to pay and less likely to dispute your bill if they understand what to expect.  How are costs and fees billed?  What is your billing cycle?  When is payment expected?  What will happen if payment is not received?  These and other billing questions can be addressed in a client brochure or handout.  The PLF offers a sample billing brochure for clients on the PLF Web site.  Select Practice Aids and Forms > Client Relations > Billing Info Brochure.
  • Get adequate retainers up front or collect earned upon receipt fees.  Getting money before you begin work on a case is a no-brainer.  However, if you compromise and enter into an agreement allowing the client to make incremental payments, then monitor the arrangement closely.  Hold clients accountable and be prepared to withdraw if they don’t keep up their end of the bargain. 
  • Put it in writing.  Even if you do an excellent job of explaining your billing practices and follow-up your discussion with a brochure, you should still have a written fee agreement. If you are collecting a fee earned upon receipt, you may soon be required to put your agreement in writing.
  • Capture all your billable time contemporaneously. Lawyers who record their time after the fact almost always shortchange themselves by underestimating how much time a task actually took.
  • Resist writing your time off.  Clients should see all the work and effort put in on their case.  If you elect to mark an item “no charge,” that’s your decision, but don’t deprive clients of the complete picture.   
  • Clients love detail!  Studies show the more detailed your billing statement, the less likely the client is to dispute it, and the more likely he or she will pay promptly.  Your bill isn’t just the amount due, it’s an opportunity to demonstrate the value of your services.
  • Instead of tracking what Guinn calls the 4 P’s – Postage, Phones, Photocopies, and Phaxes – considering charging a flat two or three percent of monthly fees to cover these expenses.  Incorporate this approach into your written fee agreement, and your billing just got substantially easier.
  • Bill promptly and on schedule. If accounting isn’t your forte, outsourcing to a competent bookkeeper may be just the ticket.  In any case, get those bills out the door.  Clients can’t pay you if they don’t know what they owe.
  • Have a collections policy in place and follow it.  The first step might be as simple as sending a re-bill noting that payment was not received as expected.  For example, if your clients are expected to pay within 30 days of the billing date and no payment is received by day 31, a re-bill should be issued.  If the re-bill does not result in payment, outline the next step to to be taken and when.
  • Review your aged accounts report weekly.  If you have accounts that are more than a year past due, Guinn recommends writing them off (or making one last effort to collect, then writing them off).  Any account that is more than 90 days past due should be on a payment plan.  According to Guinn, you should have no more than two months’ worth of revenues in outstanding receivables.  For example, if you average $10,000 in revenue each month, your receivables shouldn’t exceed $20,000.
  • Last but not least:  Avoid suing your client for fees.

Minding Your Own Business: The Solo and Small Firm Lawyer’s Guide to a Profitable Practice, can be purchased at a discount through the PLF.  From the PLF home page, select ABA Products under the Loss Prevention heading.

Copyright 2010 Beverly Michaelis