5 Ways to Ensure Clients pay your Bills (without suing them)

Getting your legal bills paid
Hope these aren’t from you

If you can’t get your bills paid, then you and your firm are ultimately going to fail.

Sounds a bit dramatic, doesn’t it?  But tell me this: where does your salary come from?  Where does the profit paid to your partners come from?  Where’s the rent for office space come from?  In short – without paying clients, the firm will die and you will lose your job.

Strangely enough, however, many young lawyers don’t seem to think that these are issues they need to think about.  They think to themselves “oh that’s the partner’s problem – I just do what I’m told”.

It’s not true.

There are many strategies that young lawyers can use to ensure that bills get paid, in full and on time.  Putting these into place in your own practice will also tell your partners that you have an appreciation for the importance of cash flow, that you’re thinking like a business owner rather than an employee, and that you can be trusted to make wise decisions.

Of course, sometimes you’ll be overruled.  There is always “that job” where getting paid is secondary to doing the work.  Maybe it’s a pro bono job, or a job for a relative, or just something where the client has a long and trusted history with the firm so they will give the client the benefit of the doubt.  Don’t sweat those – they happen, and sometimes they go wrong.

There’s also some kinds of work that don’t apply here.  Obviously “no win, no fee” is different, and many property transactions and commercial transactions get paid on settlement or completion of the deal (these can go very very wrong though if the matter doesn’t actually settle).

But so far as it is up to you – use these 5 strategies as a starting point to ensure you get paid.

1. Get Money In Trust

There is no way more certain to ensure you will get paid then getting money into your trust account BEFORE starting work.

But it’s not just having the cash that helps, it’s the psychological benefits as well:

  • Lots of clients want to do things (in particular litigation) “on principle” – right up until it actually costs them significant money.  Getting funds in trust makes it very real, very quickly;
  • You know your client can afford your initial fees, and they get a sense of just how much it’s going to cost (estimates are one thing – but actually handing over the money is another)

How much to get?  Obviously for very large matters, you won’t be asking for $1,000,000 in trust up front – that’s silly.  However, as a general rule, you want about enough in trust to cover your next two likely bills.  That way if things go pear shaped, you’re protected for the first bill that doesn’t get paid, and the work done up to the point you realise that there’s an issue.

2. Give Accurate Estimates – Not Stupid Ones

For reasons that escape me, there are still lawyers out there who are mindlessly optimistic when giving estimates to clients about the cost of things.  As a young lawyer you might have less experience doing up estimate for matters, and this is where a short conversation with your supervisor comes into play.

I appreciate, of course, that perhaps you aren’t the one giving the estimate in the first place.  In that case, your job is to make sure you KNOW what estimate has been provided to the client.  Don’t just plunge in to your instructions without taking 5 minutes to check out what estimate has been, given, and what the current status of the file is.

When giving estimates and ranges to clients, however, remember this simple rule:

  • Whatever you think it will cost – it’s going to cost more;
  • Therefore, your lower estimate should be what you think it will cost, and your upper estimate should allow for the inevitable variables;
  • Clients will always look at the lower estimate rather than the higher in forming their expectations;
  • Remember that your first estimate creates the expectation – every time you increase your estimates, you decrease the trust the client has – so try your best to get it right in the first place;
  • If you know the client well, factor their personality traits in – if they love the sound of their own voice, or enjoy sending you their own research from Google to review, then you need to account for that.

 3. Watch for “Scope Creep”

One of the hardest things as a junior lawyer is that you don’t always know exactly what the scope of works is.  Instead, you get discrete tasks.  However, over time as you have more direct contact with the client, you’ll start to get requests and information from the client directly.

Part of your role as a result is to ensure that you know when the lines are being blurred.  Maybe you’ve only quoted up to a particular point.  Maybe there’s a “hey could you check out this side issue for me” – at this point it’s your job to check what the scope was, and give the client an estimate for the additional task (or have your partner approve it, at least).

You might think it’s a non-issue – but this is possibly the most common cause of client complaint – they (foolishly, of course) assume that the estimate covers everything, even if they end up sending 100 requests nobody even thought of at the start.

For you – just make sure you’re on top of your game if the file is yours to run, and double check the scope of your engagement if you’re not 100% positive.  It’s no good trying to tell the client at the end that the million little requests that had fell outside the scope.  Guess what they’ll say – “Why didn’t you tell me earlier!”

4. Update Estimates in a Timely Fashion

Ever had a renovation done, or heard of somebody who did?  What happens when costs go over – would you rather that the builder tells you as its happening so you can make choices, or just sends you a bill at the end and says “sorry it ended up being more than I thought at the start”.

Simple answer.

5. Send your Bill at the High Points

Many firms have a monthly billing cycle, and that’s fine.  However if you get to a critical point, success, or completion of a significant task in a job, then that’s normally the best time to send the bill, even if it’s not the end of the month.  In essence, you’re capitalising on the goodwill of your success.  The longer you leave it, the more the euphoria fades, and the longer your bill will take to get paid.

Of course – sometimes you lose, fail, or things don’t go according to plan – then you have to issue the bill anyway, but you might consider your timing until you’ve had a proper debrief with the client.

It’s Not Rocket Science

As important as it is, really, the issue of estimates and bills is mostly a representation of the golden rule: do unto others what you would have then do unto you (except getting money in trust!).

Follow that path and you’ll often be right.

Got any more tips to help the bills get paid?  Let me know in the comments!

 

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