March 29, 2017
Editor’s Note: Jared Correia is a paid guest blogger.
Do you want to make more money in 2017? Then, get comfortable talking about it.
Clients in this small law “new normal” are increasingly pushing back on rates—and the concept of loyalty continues to erode. Good legal service does not necessarily guarantee your clients will return or refer others to you. How do you stack up to your competition, in your clients’ eyes? Have you asked your clients about it?
Solo and small firm lawyers hate talking about money. They typically avoid conversations about money or actions related to collection by various means. Lawyers are quick to discount their rates at the first instance of a client’s balking at paying them. Small firm lawyers would rather reduce fees, to acquire client volume, than raise fees, in order to work with fewer clients, on higher-level projects. Lawyers let accounts receivable build up over time, and are quick to write off collections, even when only minimal attempts to get paid have been tried.
Much of this remains self-sabotage. Many solo and small firm lawyers have been conditioned to believe that the highest use of a law degree is for public service, and subconsciously want to remove money as a barrier for potential clients. Lawyers, like other professionals suffer from ‘imposter syndrome’ — but, if you don’t value your own ability, it’s impossible to translate a realistic and fair price for what you do to your clients. Writing off bills as ‘uncollectable’ before exploring payment options, or considering changes to client selection methods, becomes a self-fulfilling prophecy and a means to avoid hosting those more difficult conversations. Removing the psychological barriers you impose against collecting truer value for your services will make your law firm more profitable, and increase your job satisfaction.
There are some specific tactics that solo and small firm lawyers can try, in order to improve their relationship with money:
Amphibious Operations. In what may be an apocryphal story, Mark Twain is said to have written: ‘Eat a live frog first thing in the morning, and nothing worse will happen to you that day’. Whether or not Twain is the source, it’s good advice. It means that you do the most uncomfortable thing first. In terms of the attorney-client relationship, this means addressing the issue of your fee as soon as practicable. Get the money conversation out of the way, and begin doing what you want to do, which is practicing substantive law. If you require a specific amount for a retainer, and a client is unwilling to pay it, move on. If you address a discount, make sure you’ve planned the terms ahead of time. Similarly, payment plans or flat fee arrangements should not be invented on the spot.
On Schedule. To keep yourself on track, and to avoid ad hoc discounting, build and utilize a fee schedule, listing all of your services and prices, including discounting procedures. This way, you’ll avoid making it up as you go along, and drifting silently into the establishment of a low bono practice. This is an especially useful tactic for solo lawyers, who do not have a partner to keep them in line.
Retaining Wall. Ask for higher retainers. The majority of solo and small firm lawyers don’t ask for enough money in retainer, especially considering that it may be the only money they may see from a client. In addition to guaranteeing at least partial payment, the effective use of retainers can be a screen for determining a potential client’s willingness to pay before you engage them — and find out otherwise, the hard way.
Due Credit. Accept debit and credit card payments. It’s often simpler for consumers to put legal fees on plastic. From a process standpoint, it’s easier than getting a bank check. From a psychological standpoint, your clients are used to paying larger expenditures (like legal fees) on credit cards, and paying them off over time. Plus, you’re bound to get paid faster.
Collectibles. Small firms are quick to pull the trigger on writing off uncollectible invoices; but, many do not adhere to a process for ramping up collections that may yield results. It starts with a fee agreement clause related to the collection process. Then, as soon as an invoice become ‘overdue’ (by the firm’s definition), the collection process kicks in. It may involve regular follow-up letters and phone calls, and may not escalate beyond that for a certain period of time. Lawyers often overlook the fact that collection does not immediately escalate to the nuclear option: a lawsuit. Proactive lawyers, who build out and follow processes, can achieve partial payment or access payment plans before more dramatic action is taken.
Make 2017 the year you revise your relationship with your clients, and make more of it. Take a quick quiz now to see where to stand up against your competition—then take action to be the best firm going forward.