At an estate planning conference I attended recently, several law practice colleagues shared their frustration about what they thought was the worst part of their job—collecting payment from clients.
Naturally, after investing time, expertise and effort in crafting wicked good plans for clients, quite a few lawyers had a dilly of a time getting their invoices paid on time. A few even had to hire collections agencies to handle their overdue receivables.
Picture me with my jaw dropped on the floor.
I have only ever had ONE collection problem. In three years of practice, the only client to have ever stiffed me was…wait for it…another attorney. For 2,000 bucks. That’s it. No other client has ever walked off with a plan they haven’t paid for, fully. And, happily.
Why on earth would a boutique lawyer have so few problems with collections when long time practitioners and large firms have so many?
Here’s where I’m about to get controversial.
Collections problems in your law practice begin with your system, not your clients. That may sound repulsive, but it’s the truth.
I’ve avoided collections problems because of the systems I have had in place from the beginning of my practice. (You can learn about the systems I’ve used for engaging law practice clients & collecting fees with ease on this training call.)
Here are some of the systems that will allow you to avoid chasing clients to get paid:
Be a flat fee biller. Period. No excuses. Even litigators and divorce lawyers who have figured out how to be flat fee billers! (Listen in as famed divorce lawyer Lee Rosen discusses HOW he transitioned into flat fee billing successfully on the Business, Love + Money Telesummit.)If you cannot determine a level fee that will pay you reasonably for a service that you can predict, you’re leaving a huge opportunity for other lawyers like me to swoop in and take your market share.“But,” you say,” I can’t predict when my clients reveal some new fact they didn’t tell me about and I have to change their planning midstream. I’ll have to eat that cost!” Wrong.Here’s one way to avoid the dreaded scope creep …
Get a signed engagement agreement from your client. I was shocked at how many lawyers said they didn’t dare ask their clients for a signed engagement agreement—that having them sign something in advance would make them walk out the door and never come back. What?! I always have a signed engagement agreement with my clients and never once had difficulty in getting it signed.An engagement agreement covers your derriere by having your client warrant to you that you know everything you need to know about their estate or their case, their wishes, and their vision.If they change those terms after you begin (and I have yet to have someone do that), then you have recourse to adjust your fees accordingly while maintaining a good relationship with them.It also states when payment is expected—so your client knows to bring their checkbook to which meeting!
Get All the Facts Before You Begin the Work.One of the pieces of the system I use for engaging just about every prospect I meet with requires clients to submit homework before the initial meeting. If a potential client resists the homework, they’re probably avoiding other things too and may not be a good fit for you.When something pops up that wasn’t disclosed in the homework or at the initial meeting (which is all about investigation, qualification and determining whether you really can help), you’d have a good reason to let your client know that their fee agreement has to change too.
Invite your clients to bond with you as co-equals in the relationship. Way too many lawyers come off as being stuffy, superior, and standoffish. This will not help you to get paid for your efforts. People are happier to pay the people and companies they feel have served them well and are in it for the long haul before they’ll pay a one-off transaction.When your clients are bonded to you, they will want to keep you happy. And that means PAID. Look at all of your systems and the practices in your business to weed out anything that stands in the way of that bonding.Are your client attraction efforts warm? Are your phones answered the right way? Do you serve people in a way that lets them feel good about your service? Is your office hospitable? Sad to say, but this is not the case for most lawyers and it can really set you apart significantly.
Require a down payment before you begin work. Many lawyers don’t ask for a down payment. A down payment should be enough to cover your costs if your client walks and makes sure your client will finish the job they’ve begun.If someone plunks down $2000 on a $4000 fee, do you think they’re not going to show up for their next meeting with you? No way. They’ll be there. If you’re worried that asking for a down payment will make your potential client walk, remember that if that’s the case, they might have stiffed you anyway and at least you’re no worse for wear.
Give your client space to reach a clear, full-bodied, “Yes!” decision. So many lawyers are in such a big hurry to get to yes and get paid that the prospect can feel it.If you feel your client may be feeling resistant to engaging or continuing their engagement, meet their feelings head on. Try this: ask, “I sense that you may be feeling uncertain about this investment. Is that right?” Then, let them talk! Don’t take anything personally just listen to their feelings.When resistance comes up, do not, whatever you do, ignore it. Acknowledge the reasonableness of their feelings. Then give them time and enough information to work them out—regardless of whether they’re reluctant because legal work is a large investment, or because they feel resentful over having to see a lawyer at all, or whatever is bothering them. If you yourself have difficulty dealing with feelings, now’s a good time to start learning how!
Don’t pursue clients with cold feet. If someone does get cold feet, they may not be a good match for you at that moment. It’s okay to turn away a client that is not ready to give their full-bodied “Yes!” yet as long as you do it in a way that leaves the door open. I’ve gently turned away clients who came back later when they had more time to consider the purchase decision and the benefits of the investment in working with me. Some of those slower decision makers are my best clients.Always, send a “did not engage” letter to people who leave without saying yes. Many of my colleagues have reported that their “had to think about it” people have come back in and said yes after receiving that letter when they would have just abandoned ship without follow up.
Do not take clients whose case or work you feel less than enthusiastic about. Look for your own full-bodied “Yes!” to your client. When you’re less than thrilled to work with someone or some issue, you’ll give it less than your all. And of course your client knows that! Return calls will be delayed or non-existent, your voice will betray your reluctance. And when it comes time to pay the bill, your client will put you at the bottom of the pile.
Only take clients that really want you to be their lawyer. We are not selling legal documents. We’re selling our brain power and our ability to identify and fix problems. We’re also selling a relationship. People want to have a lawyer to call their own, to call in times of crisis or concern, to check in with when they make a big decision. When you meet with potential clients, sense whether they truly want you to be their lawyer for life. You can tell by their manner, their smile, their warmth, and their sense of relief at signing your engagement agreement.
It’s up to us to set our clients and ourselves up for success. And that includes prompt payment made with gratitude, not resentment. Not only do I get paid on time, I receive thank you notes, candy, flowers, little mementoes that adorn my office, and most importantly, referrals from my clients who feel well served by the way I do business.
You can have this too. It starts with a system, your willingness to follow it and your desire to change the traditional law practice methods that could leave you with difficult to collect fees and a whole lot of stress. We do it differently. And it works.