Tag Archives: Credit Cards

Collecting Fees

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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

Tiplet: Bank Holds on IOLTA Deposits

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Most lawyers are aware that funds held in trust cannot be disbursed until they are fully cleared. Deposits submitted electronically or by wire speed up the process, as does cash. Credit card payments are generally settled and in your account within one to three business days. Checks are usually the slowest to process and are not “cleared” until they are collected and paid by the issuing bank, even if the lawyer’s bank has a policy of making funds available in a shorter period of time. See Sylvia Stevens, Waiting for ‘Go’ Dough: A primer on disbursing client funds, OSB Bulletin 21 (June 2006).

The Professional Liability Fund recommends:

For an ordinary transaction with an established client or known third party, wait three banking days for locally written checks, five banking days for checks written within Oregon, but outside your local area, and ten or more banking days for out-of-state checks. Note, that checks for
$5,000 and over may be held by banks for seven banking days, whether drawn on a local, instate, or out-of-state bank, therefore allow sufficient time for these checks.

To avoid the growing problem of check scams, wait at least ten banking days before disbursing funds in the following circumstances: (1) the transaction is with a new client or a client you are unsure about; (2) the check is very large; (especially compared with the extent of legal services
provided, if the check is a retainer); (3) the check is from an unknown third party; or (4) any aspect of the transaction raises (or should raise) your suspicions. Remember that drafts or other instruments may take longer than ten days to process. To verify that funds have been collected, ask your bank to contact the issuing bank.

Source: “Frequently Asked Trust Account Questions.” From the PLF website, select Practice Management > Forms > Trust Accounting.

How to shorten bank holds

When are holds applied?

Holds may be applied by your local branch at the time of deposit or overnight during processing. Since checks over $5,000 are the most likely to present problems, review your accounts carefully. If in doubt, contact your bank.

 

All Rights Reserved 2019 Beverly Michaelis

 

Looking at Fees and Billing with a Fresh Eye

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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.

Best of Mobile Apps – 2017 ABA TECHSHOW

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This year’s TECHSHOW did not disappoint.  The Best in Mobile Apps for IOS and Android included great suggestions for scanning, scheduling, managing projects, reading PDFs, aggregating email, stopping spam, encrypting data, investigating metadata, using VPNs, sharing files, tracking deliveries, creating personal emojis, messaging, depositing checks, processing credit cards, client billing & more!

For a recap, click here or on the image below.