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

Turn Over a New Leaf through Better Client Management

The New Year is an opportunity to do things differently.  Why not resolve to improve client management?

Lesson One

The first lesson in managing client expectations is that some folks should never become your clients.  Become a “red flag” spotter.  Screen potential new clients with these questions in mind:

  • Who referred the new client?  The quality of the referral source can speak volumes (best client ever: you’ve got another winner; client from hell: run for the hills).
  • Are you taking the case because the new client is a friend or family member?  If this is the only reason, it isn’t good enough.
  • Are you overlooking a potential conflict?  Be especially wary when representing multiple clients, who are almost never equally situated (though they may argue with you).
  • Is the client lawyer shopping? If you are the third lawyer the client has consulted, one or more of the following is likely to be true: the client has no case or a bad case; the client is perpetually dissatisfied; the client doesn’t have any money; the client is purposely trying to conflict you out of representing the opposing party.
  • Does the client have a bad attitude toward lawyers or other professionals? Proceed cautiously if the client’s feelings seem disproportionate. A client who sees conspiracies around every corner can quickly become a nightmare for you.
  • Is the client pursuing the matter on principle without regard to cost? Unfortunately, proceeding on “principle” is sometimes a masquerade for vindictiveness or revenge. A client who seems to be pressing on this point a bit too much won’t be very amenable to settlement and may not be willing to cooperate on simple tasks like scheduling depositions or cooperating with discovery requests.  This client’s motive is to push the other side’s buttons with the side effect of irritating you.
  • And the list goes on.  Learn all the red flags.

Lesson Two

The second lesson in managing client expectations is to think about your practice from the client’s point of view.  Perfectly good clients with decent cases can turn into clients from hell if they feel their expectations aren’t being met.  Avoid this trap:

  1. Be realistic about potential results.  Depositions, discovery, and your own investigation may reveal that your client’s “perfect case” isn’t so perfect after all. It is better to be a bit conservative than to give clients false hope.
  2. Provide accurate timelines. This is easier for transactional lawyers than litigators. Television and movies make it appear that conflicts can be resolved in one, two or three hours, leading clients to believe their case will be a sprint to the finish. Prepare your clients for a marathon.
  3. Talk about fees and costs up front.  Money will be on the client’s mind, so address it early.  Whatever arrangement you make, be sure the client understands exactly what is required of them.  If you bill hourly and provide the client with an estimate or budget, keep a close eye on the numbers.  If it becomes obvious to you that the work can’t be finished for the specified amount, speak up right away.  Always stick to your billing schedule and get invoices out on a timely basis so clients know where they stand financially.
  4. Establish turnaround times for phone calls and emails.  The best approach is to set aside a specific time of day to return calls and reply to messages.  If your schedule allows, you can do this more than once per day.  For example, upon arriving at the office, around lunch time, and again at the end of the day.  If you are a busy trial lawyer running a solo practice, it may be more reasonable to inform clients that you will respond within 48 business hours to calls or emails.  By letting clients know when to receive a response, you manage their expectation that all communications are “instant.”
  5. Inform clients about extended absences.  If a trial or other commitment is going to keep you out of the office for an extended period, change your outgoing voicemail message and consider sending an email blast so clients are prepared.
  6. Use staff effectively.  Some lawyers postpone hiring an assistant because they believe they can’t afford staff.  In turn, these same lawyers spend valuable billable hours performing clerical tasks.  Before you write off the idea of hiring someone, do the math.  Odds are the billable time you recoup from delegating nonbillable tasks to a full or part-time staffer will more than pay for your employee.  Staff can help you respond to the barrage of emails, phone calls, and client requests while keeping an eye on deadlines and getting work product out the door.  Improving responsiveness and timeliness makes for happier clients.
  7. Keep clients informed by transmitting all incoming and outgoing work product.  Clients want tangible results, but we work in a business where there isn’t much to “show”  that clients can put their hands on.  Documents are an exception.  Keep them flowing.
  8. Review all open files at least once in any 30 day period.  Your best option to is create a recurring task or reminder in your calendar or practice management software for each file.  When a new file is opened, part of your file opening procedure should include setting a revolving reminder or tickler to review the new file.  If you don’t have tickle dates for each of your existing files, generate a client list and begin scheduling recurring 30 day reminders for each file.  Try to spread the file review process over the entire month so you aren’t overwhelmed on any one day. Creating a reminder or tickler system means you are less likely to forget about files.  Use monthly reminders as a starting place for delegation and as a prompt to contact clients with a status report. When you stay on top of your files and provide regular status updates, clients feel like you are engaged, involved, and care about their case.

All Rights Reserved [2016] Beverly Michaelis

 

 

Fresh Strategies and Ideas for Marketing Your Law Firm

Are you looking for fresh strategies and ideas for branding and marketing your practice?  One excellent resource is marketing advisor and social media consultant Nancy Myrland.

I’ve followed Nancy on social media for several years.  I learned quickly that she is a wealth of knowledge, even when limited to 140 characters.

Want to know how to brand your law firm?  Nancy has ideas.  Looking for new strategies in content marketing, here you are.  Is video is the way to go?  Nancy has advice on that topic too.  No surprise, but she also writes about specific social media platforms: Google+, LinkedIn, Twitter, and social media generally.

How can you get access to all this great stuff?  Easy!  Just subscribe to Nancy’s blog or podcast.

Another favorite of mine is Samatha Collier at Social Media for Law Firms. Samantha also has the gift of imparting great advice in 140 characters or less.

Follow Samantha on social media, visit her site, or subscribe to her blog if you want to get started in social media, improve social media engagement, or learn content marketing from one of the best.  Need motivation?  Here are a few topics to pique your interest:

While We’re on the Topic of Marketing

Don’t forget the PLF offers a number of marketing resources on its website. Select Practice Management > Forms > Marketing to access the following:

  • Marketing and Business Development Worksheets [assessing your competition, choosing a niche, crafting an elevator speech, marketing budget, target market contacts]
  • Checklist for Creating a Marketing Plan
  • Sample Marketing Plans
  • Business Development Goal-Setting Checklist
  • White Paper: Marketing and Business Development: Crucial Skills

All Rights Reserved [2015] Beverly Michaelis

Treating Clients Well

In today’s legal economy, developing business and marketing to prospective clients is the centerpiece of nearly every lawyer’s existence. Whether you are a sole practitioner, an associate or a seasoned partner, you will most likely need or be expected to cultivate and grow your own clientele.

Some firms lean heavily on web design and search engine optimization to attract prospects. Others rely on referrals. Both approaches are effective, but incomplete. The next step is to deliver top-notch client service, starting with understanding and meeting client needs. Continue reading