Looking at Fees and Billing with a Fresh Eye

What if collection problems prevail across your entire clientele – not just a few accounts?  It may be time to turn a critical eye toward your current fee structure and billing practices:legal_document_istock_0

Switch to AFAs – Alternative Fee Arrangements

Combining flat and hourly or hourly and contingent fees may solve at least some of your cashflow problems. In litigation it’s easy to dismiss flat fees as unworkable: “I just can’t do it because the nature of the case is too unpredictable.”

Is this really true or is it an excuse not to change?

Let’s take dissolution.  I would expect nine out of ten lawyers to reject flat fees outright, but wait a minute.  Fees aren’t “all or nothing.”  More accurately, they’re anything you want them to be (almost). Therefore, it is perfectly doable in dissolution to flat fee at least the first stage of the case:  initial client interview, client follow-up, preparing and serving the petition, initial mandatory discovery.  Go hourly thereafter, but look for other opportunities (stages/discrete tasks) where you can propose flat fees.  In short, be more flexible.  Done right, an AFA could mean collecting a flat fee up front for the initial stage of the case with a requirement for an evergreen retainer once hourly billing kicks in.

Do a Better Job of Educating Clients

As I’ve noted before, many a collection problem can be traced back to the initial client interview when the lawyer failed to adequately discuss billing practices. If you don’t have an honest, open discussion about fees, costs, and billing practices, reform now!

  • Reinforce what you tell the client by using billing brochures enclosed with your fee agreement.
  • Or if you don’t like the brochure idea, attach a one page bullet list of your billing procedures.
  • Prefer to be paperless?  Send clients to a private web page that serves the same purpose. Consider requiring clients to read and accept your web-based billing procedures before eSigning your fee agreement.

Why am I suggesting brochures, lists, and web pages?  The brutal truth is that even the shortest fee agreement is probably too long for the average client to digest.  But we can make billing more understandable!

When you separate and reformat billing details using brochures or bulleted lists you improve readability.  [Much like what I did in the preceding paragraphs.]  Improving readability increases comprehension and understanding.  If you go the Web page route, use the same or similar formatting techniques.

Change How You’re Paid

It’s hard to imagine a law firm that doesn’t accept credit cards, but I know you’re out there.  If you’re part of this group, and you’re also experiencing collection problems, start taking credit cards.  Yes, there are a few things you need to know – for example – how to pick a merchant to process payments and what to do about merchant fees (aka credit card surcharges or transaction fees).  But I’ve got your back.  Read the hyperlinked posts included above and you’ll get the answers you need.

Not convinced? Statistics reveal that 43% of consumers prefer to pay by debit card, 35% with a credit card.  Granted, legal fees are not a typical consumer purchase, but still: why would you disregard what many consider a preferable payment method?

Credit cards can be an ideal solution for collecting flat fees earned upon receipt or the cost of an initial consultation.  Many a family law lawyer has shared that clients would not be able to afford their services without the ability to put their bill on a credit card…

Be More Like Bugs Bunny

Yes, this is the carrot/stick metaphor.  It’s this simple: discounts are a client motivator.  If you want to collect a retainer, up-front fee, or take care of an outstanding balance give the client a financial incentive to pay you.

Here are some examples:

  • Your rate is $250 per hour if the client is invoiced, but if the client establishes a retainer, your rate is reduced to $200 per hour.  [Establishing a retainer triggers the lower hourly rate.]
  • You offer preparation of a complete estate plan at $2,500, due and payable upon completion.  If the client is willing to pay up front before work begins, your flat fee is reduced to $2,000.  [The earned upon receipt fee triggers a $500 savings to the client in return for being paid now.  Remember to comply with earned upon receipt payment rules and get your fee agreement in writing.]
  • You offer 10% off your bill if the client remits payment within 10 days (instead of the usual 30 or more).  [Your early payment discount saves the client money and allows you to collect the outstanding receivable in one-third the usual time.]

There is no magic wand in collections, but a willingness to start over and shake things up can make a difference.

All Rights Reserved – Beverly Michaelis – 2017.

Client and Case Screening: Lessons Learned

One of the most important skills lawyers must hone is the ability to size up clients and cases.  If you’ve allowed disagreeable clients or “dog” files to creep into your practice, you know exactly what I mean.

Evaluate potential new clients based on the seven keys to successful client screening:

Goals

Are the client’s goals reasonable under the circumstances?  Does a proper legal remedy exist?  If you inform the client that the result she is seeking isn’t possible, how does the client respond to this news?

Motives

What drives the client?  Does he have a “scorched earth,” take no prisoners, sue at all costs mentality?  A desire to “get back” at the other party?  This person may be difficult to manage, if not to please, and unwilling to compromise.

Past Legal History

What is the client’s history with the law, particularly the court system?  Has the client ever filed a lawsuit?  Been sued?  Had a criminal case?  A simple search using the “party name” field in OJCIN will yield results, but these are good questions to ask the client directly.  For one, it may be crucial to know if your client has been involved in a similar or related matter in the past.  Prior testimony could be relevant (or discovered). For screening purposes, the goal is to rule out red flags.  If you discover the client has a record of bringing six unsuccessful civil suits in the last ten years, this may give you pause.

Willingness and Ability to Pay

The client who lacks the funds to pay you up front is very unlikely to come up with the money later.  The client who complains about your fee and pays grudgingly is a fee dispute waiting to happen.  ‘Nuff said.

Lawyer Shopping

This is the most critical screening element in my opinion.  How many lawyers has the client spoken to and why?  Do you get the sense the client is trying to conflict out the other party?  (See Motives, above.)  Has more than one lawyer declined to represent the client?  Did the client fire her former lawyer?  Is the client currently represented, but unhappy?

Getting a second opinion is not necessarily a bad thing.  However, if there is a long line of lawyers behind you move on to the next prospect.

Nonverbal Cues

Sometimes clients tell us what we want to hear.  All the words are right, but the client’s tone is off or he refuses to make eye contact.  When nonverbal cues don’t align with the client’s verbal message, something is wrong.  Either probe the inconsistency or decline representation.

Attitude

The ideal client should have a neutral or positive attitude toward the law and the profession.  A client who has a chip on her shoulder will be difficult to turn around.  Your job is to learn more and weigh for yourself whether this person is someone you want to represent.  You may discover the client’s feelings are justifiable. Or it could be the client is playing the “blame game.”  If so, this is one queue you don’t want to be in.

More to Learn

Learning the seven keys to successful client screening is only part of the battle.  If you want to hone your client and case screening skills, but missed the Client and Case Screening CLE last Wednesday, contact me for information on how to download the written materials.  In addition to the 7 Keys to Successful Client Screening, this CLE also addressed:

  • Integrating screening into client intake
  • Probing clients with 5 must-ask questions
  • Learning how to adjust when you take a case beyond your areas of expertise
  • Debunking the top 10 excuses for taking a bad case
  • Building discipline into the case selection process
  • Declining the poorly-matched client
  • Preparing effective nonengagement and disengagement letters
  • Embracing the lawyer’s Bill of Rights

I anticipate offering this program again in 2017.

All Rights Reserved [2016] Beverly Michaelis

I Wish I Never Represented that Client!

If this is you, consider attending “Client and Case Screening,” a live online CLE event scheduled for August 31, 2016 from 10:00 a.m. to 11:00 a.m.

Learn how to screen clients and cases effectively and efficiently by:

  • Honing your client assessment skills
  • Using a 7 step client screening checklist
  • Integrating screening into client intake
  • Probing clients with 5 must-ask questions
  • Learning how to make adjustments when you take a case beyond your areas of expertise
  • Debunking the top 10 excuses for taking a bad case
  • Building discipline into the case selection process
  • Declining the poorly-matched client
  • Preparing effective nonengagement and disengagement letters
  • Embracing the lawyer’s Bill of Rights

1.0 Practical Skills MCLE credits.

 

Eventbrite - Client and Case Screening for Lawyers

Represent Only Clients You Like

Registration is now open for “Client and Case Screening,” a live online CLE event scheduled for August 31, 2016 from 10:00 a.m. to 11:00 a.m.

Learn how to screen clients and cases effectively and efficiently by:

  • Honing your client assessment skills
  • Using a 7 step client screening checklist
  • Integrating screening into client intake
  • Probing clients with 5 must-ask questions
  • Learning how to make adjustments when you take a case beyond your areas of expertise
  • Debunking the top 10 excuses for taking a bad case
  • Building discipline into the case selection process
  • Declining the poorly matched client
  • Preparing effective nonengagement and disengagement letters
  • Embracing the lawyer’s Bill of Rights

1.0 Practical Skills MCLE credits Oregon.

 

Eventbrite - Client and Case Screening for Lawyers

Client and Case Screening – Live CLE Event

Registration is now open for “Client and Case Screening,” a live online CLE event scheduled for August 31, 2016 from 10:00 a.m. to 11:00 a.m.

Learn how to screen clients and cases effectively and efficiently by:

  • Honing your client assessment skills
  • Using a 7 step client screening checklist
  • Integrating screening into client intake
  • Probing clients with 5 must-ask questions
  • Learning how to make adjustments when you take a case beyond your areas of expertise
  • Debunking the top 10 excuses for taking a bad case
  • Building discipline into the case selection process
  • Declining the poorly-matched client
  • Preparing effective nonengagement and disengagement letters
  • Embracing the lawyer’s Bill of Rights

1.0 Practical Skills MCLE credits pending in Oregon.

 

Eventbrite - Client and Case Screening for Lawyers