If you’ve been a lawyer for any length of time, you’ve likely had a client or two (or more) that have questioned or refused to pay your invoice. Sometimes it feels like it’s just the cost of doing business as a lawyer, BUT it doesn’t have to be. There are several steps you can take to increase your chances of getting paid:
1) Get (and top up) a Retainer & Have a Clear Engagement Letter
The most obvious step is to obtain an up-front retainer fee for your trust account and keep it topped up. If they can’t pay a retainer fee now, it is unlikely they can pay your bill down the road. If you work with flat fees, get full payment up front if you can. Also, have a clear engagement letter setting out your fees and the client’s agreement to pay them.
2) Don’t Ignore Red Flags
Sometimes you get signs that a new client may not be the type to pay. For example, they question your hourly rate from the start and try to negotiate your rate down; they tell you not to spend a lot of time on something; they phone you and keep you on the phone for an hour but then ask you not to charge for the call; they left their previous lawyer because “She was charging way too much for what she was doing”, etc. Don’t ignore your Spidey-senses. While some of these clients might be struggling financial and are simply cost conscious (and you may be willing to give discounts or offer payment plans), others, are the type who enjoy trying to get things for free in life and don’t respect your knowledge and the value of your education and experience. Listen to your gut.
3) Manage Expectations
Managing your clients’ expectations is one of the most important things you can do to ensure you get paid. When you are preparing to send out an invoice, ask yourself, “Is my client expecting this? Or, will they be surprised?” Hint: They should never be surprised!
While ideally all lawyers would charge flat fees and there would be no surprises, not all practices can work that way. Clients tend to get caught up on lawyers’ hourly rates, but they should really be focused on the overall costs. While it can be hard to accurately estimate your legal fees if you charge an hourly rate, you should be giving a ballpark figure for each step of the file. My philosophy is to err on the side of estimating high.
Also, sometimes clients have the means to pay, but they are hesitant or are avoiding payment because they are not happy about the work completed, or the lack of progress on a file, or because you did not return a phone call. If a client is late in paying perhaps pick up the phone and see if everything is okay or if there was simply a miscommunication. And make sure you are sending regular status reports, so the client knows about the progress you are making.
4) Make Your Invoices Easy to Understand & Easy to Pay
Your invoice is your way of communicating your value to your client. Do not just write “For Legal Services Rendered” and then $25,000.00. What did you do to assist this person and help them with their problem? How has their life improved because of what you did? Or, what have you helped them avoid?
Your docket entries should be clear about the value you are bringing to the table. Did you stay up all night preparing an oral argument that won them their case? Did the other side send over a 20-page email with several attachments you had to review? Make that clear, and don’t just write “Read email” or the client may be wondering why you charged for 45 mins to read one email.
Make your invoice easy to pay as well. Put clear instructions on how to pay on the invoice, plus offer convenient payment options such as e-transfer or by credit card.
5) Bill Regularly & Consistently (& after a Win)
Sometimes clients would love to pay you, but they can’t, because you haven’t sent your invoice. Psychologically it is easier to pay small monthly bills rather than one large bill for many months of work (and you will get paid faster). Won a big motion for the client? Send your bill while they are still happy with your performance.
Overall, the key to getting paid, and getting paid promptly, is to take your lawyer hat off and put yourself into your client’s shoes. Pretend you’ve never worked with a lawyer before. What would you want to know about your lawyer’s bills and fees? What would make you annoyed? What would you want your invoices to look like? What questions would you have?
What tips do you have to get paid? Let us know!