Tuesday, October 28, 2008

Getting Clients To Pay Their Bills

Most would hope that their law practices are for-profit businesses. The tool by which we get paid is the bill that we send to our clients. Here is how Ed Poll sees it in an article that he has written for the ABA's Law Practice Management Section. Ed observes:
You've sent your bill to the client. It's been several weeks and they haven't paid yet but there's no reason to be concerned. After all, if there were a problem, wouldn't they tell you so by now?

The answer, regrettably and often inevitably, is "no." If you defined your payment terms up front in your letter of engagement with the client, and the client has not lived up to those terms, it's symptomatic of a deeper communications problem. My book, Collecting Your Fee: Getting Paid from Intake to Invoice, notes that there are five reasons why clients fail to pay their bills:

  • They didn't get your bill/statement
  • They didn't understand your billing and/or what you did for them and/or the value to them of what you did for them
  • They didn't ask you to do what you billed them for
  • Their cash flow is temporarily interrupted, despite the best of their intentions to pay you quickly
  • Their business has gone "south" and they can't afford to pay you.

Always Communicate

In times of recession, the last two of these reasons are to some extent beyond a lawyer's control. Even so, if there is a problem with a client's ability to pay, good communication can uncover it by learning about and being more sensitive to the needs and conditions of clients. None of this requires constant calls or elaborate questionnaires. Simply meet clients over coffee and ask, "How are you doing? Did you understand my bill? Is there an issue that concerns you? Is there something I can help you with?" Given this opportunity clients will provide you with honest answers. And if there's a problem, it's better to know sooner and come up with a solution than to keep haggling over an unpaid bill.

The first three reasons for unpaid bills also involve communication issues, but of a different kind. They reflect the fact that, although the main purpose of a bill is to secure the client's payment, there is a secondary purpose that lawyers often miss: to leave the client with a favorable impression of the services he or she received. In other words, the bill is another tool for client communication. An effective bill is one that speaks clearly and directly to clients about how you as a lawyer have improved their lives.
This is a vital article for an issue that is vital to the success of our practices. Click here to take a look at everything Ed has to say.

Please be sure to visit www.hardinglaw.com, the website for the law firm of Harding & Associates, for more information on California family law.

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