The news is full of reports of law firm layoffs, decreased legal business, and increased client resistance to high billing for legal fees. In these times lawyers can expect more frequent fee disputes. These disputes can lead to malpractice claims motivated in part to avoid paying a legal fee; or counter-claims that are the result of suing a client for fees – the surest way of drawing a malpractice claim.
The first line of defense in getting paid is to know what you are doing in billing clients. What is your attitude about a client’s commitment to pay your fees? What are the common mistakes made by lawyers in billing? What are good billing practices? What follows is a review of these questions.
An Attitude Check
Do you believe:
If you believe the answer is ‘yes’ to these questions, get help fast. Money Magazine once did a survey to determine the priority people gave to paying the bills of the top 25 service providers including doctors, lawyers, plumbers, electricians, etc. Lawyer finished dead last – 25th! If you are looking for friendship and gratitude as a lawyer, the best advice is to get a dog. The point here is not that most clients are deadbeats, but that you must bill in a way that realistically improves the likelihood that you will, in fact, get paid for your services.
Common Billing Mistakes
Amy Stevens (Wall Street Journal), Larry Bodine (Lawyers Weekly USA), and Jay Foonberg (Lawyers Weekly USA) have all written articles listing their 10 favorite “Billing Bloopers.” What follows is a gloss of their ideas:
Good Billing Practices
There are a number of good checklists on smart billing. Almost all of it is based on good client communications. Howard L. Murdock in his article Better Communication Increases the Likelihood That Bills Will Be Paid (The National Law Journal) emphasizes this point by developing 12 ways lawyers can improve their chances of getting paid by proper billing:
Some lawyers are reluctant to press for a retainer. This is a serious mistake. Lawyers should have a strict policy to get retainers routinely -- especially in laborintensive matters requiring an immediate big effort, or when the ability of a client to pay is questionable. Clients who have not paid a retainer or fee do not yet have a financial stake in the matter. It gives them a different attitude about paying your bills. It feels like a free ride. Get a retainer.
The October 2008 issue of the ALI/ABA The Practical Lawyer includes the helpful article “Creating The (Almost) Perfect Retainer Agreement (With Form)” by Lori A. Colbert. In addition to the model form it includes a practice checklist. It is available on the Internet for $19.00. Just Google The Practical Lawyer and go from there.
Finally, another good way to get paid is to accept credit card payments. The KBA Ethics Committee issued a comprehensive opinion on proper procedures for Kentucky lawyers to accept credit card fee payments in Ethics Opinion KBA E-426 (March 23, 2007). If you are not already accepting credit card payments, it is recommended that you read this ethics opinion and begin offering your clients a most convenient way to keep up with paying for your valuable services.