While there are many lawyers who offer services pro-bono, the law is a business and getting paid a primary objective.
While there are many lawyers who offer services pro-bono, the law is a business and getting paid a primary objective. Many may see the provision of legal services as a noble profession, enabling individuals and other entities access to justice. Continuing that goal generally requires some payment to keep the lights on.
The American Bar Association model rule 1.5 (b), states:
“the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated…”.
The Law Society of Ontario Rule of Professional Conduct 3.6.1 states
“a lawyer shall not charge or accept any amount for a fee or disbursement unless it is fair and reasonable and has been disclosed in a timely fashion”.
Law Societies in Australia, the United Kingdom and Ireland maintain similar provisions: when making arrangements with clients, there is a need for continual transparency and disclosure with regard costs. Lawyers often face a conundrum when representing clients: the fiduciary relationship. They have a duty at law to put their client’s interests ahead of their own. This is unlike and distinct from many other commercial relationships that exist: the car salesman bears no duty to advise a purchaser they are better off with a competing brand better suited to their needs, or in fact by purchasing a bicycle. But the lawyer certainly must advise a litigant their interests are better served by ceasing to litigate if continuing would push them into adverse circumstances.
Can this need for transparency also be used for the good of the lawyer? Yes. The same concern a lawyer exhibits for their client’s circumstance should inform the client’s ongoing actions toward their lawyer – a concern they are funded, regularly, to continue the work. Naturally, this might differ across areas of practice: Personal Injury, Medical Malpractice, Family Law – these are intensely personal disciplines requiring empathy and understanding. While Leasing, Conveyancing and Commercial Insolvency may occasionally present as dispassionately transactional matters, the lawyer who reinforces their determination to provide enthusiastic and diligent service stands the best chance of having that service paid in good time.
It starts with the timesheet
Is time recorded contemporaneously? This is a must – the inefficient lawyer backfills their timesheet at end of day, or worse – any later. Your sheet is also a time management tool – use it wisely to record precisely what you did in a descriptive style that will make sense on a later invoice.
Determine a billing cycle – and stick to it
Habit can be a force for good, be it consumption, exercise or even paying your lawyer. Why wait months to send an invoice? Adopt interval billing and have clients make and get used to making regular payment for services rendered. The client who cannot pay a large invoice may seek a payment arrangement anyway.
Tell a story
A lawyer’s bill needs to tell the client a story. It needs to be a presentation of the work and effort required to finalize the matter, or if interim, get them to this stage. The invoice must continue the same narrative that commenced with the initial engagement – that of concern for their circumstance and clarity of the action taken to resolve it. Accurate, detailed and importantly understandable accounts will ensure payment follows in short order. Do not allow grammatical or excess legalese to creep into your invoices – you agreed to perform a service for your clients, show them you have done it.
Old work in progress isn’t progress
If you send an itemized invoice, do you want your client reviewing and considering time entries that are three months old or one month in arrears? Asking a client to pay for aged itemized time is sending a subliminal message that “I did this work for you three+ months ago, pay me when you can”. Invoicing for current time encourages payment in the current period.
If it is not obvious from the invoice itself, include a status-update letter with every invoice: tell your client what you have done for them and if possible, why. Reinforce the importance of the work you are doing – and why they should pay the attached your invoice without delay. After all – they want you to keep working for them, don’t they?
Sundry miscellaneous incidentals
Is it necessary to charge overhead or even small disbursements? Couriers and postage come at a cost, but small charges can hang the eagle-eyed client up, particularly when they form only a tiny fraction of overall cost. Consider subsuming these into your hourly rate. A careful review of those time records could be in order too – ‘admin’, ‘conference with colleague’ and ‘research’ are examples that should never feature as chargeable time. Zero-rate these and show your client you performed the work …at no charge.
Keep it classy
Make sure your invoice template is consistent with all other correspondence. Any deviation that appears less professional than other documentation sends a message that your invoice isn’t as important. No, it’s not just important – but in fact critical! Letterhead or logo, font and layout similar to other correspondence reinforces that this is official communication from your practice and needs to be viewed as such.
What is your call to action? “We would appreciate payment of our account in due course”. How lovely, don’t mind if I do. It’s a call to action – make it so. “We kindly request settlement of this account by xx/xx/xx. If for any reason you cannot forward payment by that day, please call the undersigned immediately.
Your larger commercial and government clients are bound by more red tape – can you make it easier? Site codes, alternate billing addresses, departmental cross-checking, multiple levels of sign-off. Whatever you can do to modify your templates to suit, do. Ask them what they want out of your billing system and then ask your provider about customization.
Make them a deal
Enact a discount for early payment and enforce a reasonable penalty for late payment. Interest rates may be relatively low, but there are costs involved in credit control and debt collection. Estimate them carefully – and provide those early payers with some benefit. While on that subject, if you are discounting make sure your client knows it. Place that discount front-and-center of your account, reference it in your cover letter, remind your client about it during the next call – and maximize the goodwill benefit that it has bought you.
Provide a statement to every client, no exceptions. What message is sent when a regular statement is not sent? A lawyer who does not remind their client of what is owed is simply saying “it doesn’t matter, pay me when you can”.
…that they cannot refuse
Stay on top of your collections by annotating your receivables ledger and then following-up. Make receivables management a habit – every Tuesday morning perhaps? Certainly not on a Friday, when attention spans wind down.
Grade and rank your clients by their payment tardiness – and consider moving the slow-payers to Alternative Fee Arrangements. AFAs might be a solution if you are faced with a slow-paying client recognized at the outset. If you know you are faced with a difficult collections client, build them a ‘package’ of hours at a given rate and do not review or extend that package until it is paid for. This sets a floor under workable hours rather than simply blowing up the Work In Progress ledger with unrecoverable hours. The client will know you will down tools if they do not fund the work.
What payment methods do you accept? Providing your clients with the maximum payment methods will eliminate excuses. Granted bartering may be one step too far, however you want your clients to have every possible avenue to forward those funds.
In conclusion, the aim is to keep the cash flowing, the doors open and the staff paid so legal minds can concentrate on legal issues. A client’s ability to pay should have been considered at the initial engagement and review as often as necessary. Circumstances do change and must continue to inform a client’s willingness to proceed and a lawyer’s ability to act. Accurate, timely billing in line with client expectations is at the heart of keeping the lights on.