As lawyers we are in the business of providing professional services to our clients, with variances in hourly and daily rates (daily rates; if a barrister). There are some schools of thought that law is a profession and as a result it may be considered ‘tacky‘ to chase accounts or speak about money with clients (if you are a solicitor this will mean actual clients or if a barrister solicitors as clients)? Others think law is a business and like any other business, lawyers have to be mindful and understand the basics of ‘how to run and manage‘ a business. I would like to know how many employed lawyers, equity partners or owners of law firms, think law is a profession when they don’t make monthly/yearly budgets? :-)
However, business management doesn’t form part of an undergraduate legal degree, which often means lawyers have technical legal knowledge but may not possess the necessary business acumen to manage and run their files, accounts and businesses, to ensure ‘bad debt’ is kept to a minimum.
In my most recent role, prior to entering law, I was managing a Gynaecological/Obstetricians specialist medical practice. I definitely learned, first hand, about how to manage small businesses (and the principles can apply to large business as well) when it comes to managing patients/clients and their expectations around the subject of ‘cost‘ or ‘money‘ for services rendered, so everyone is satisfied with the service and the costs/payments/expectations etc. – the whole package.
Upfront and Honest
From my experience, getting paid on time depends on whether you are assertive, unashamed, upfront, transparent and honest when it comes to talking about money and costs to your clients/barristers. Alternatively, if you are afraid to talk about money/costs with your clients (and barristers) and hope ‘it all works out in the end‘ you will find, most times it doesn’t, as expectations will not be met and dissatisfaction will follow.
I know from my experiences, a ‘money talk‘ firstly needs to be addressed in a professional, upfront manner at the outset of any engagement with a client or a barrister (with cost disclosures, estimates, payment terms, expectations on payment clearly stated and money in trust for fees (solicitor and barrister) prior to services being rendered. If this does not occur, it has the potential to ‘end in tears‘ when invoices are not paid in line with their disclosed terms (both solicitor and barristers).
If clients aren’t informed and kept informed through the course of their matter, about costs/payment expectations, this leaves solicitors open to disassatified clients (& barristers) when clients haven’t been asked to fulfil their payment obligations (if tardy) and debts continue to remain unpaid. Speaking to clients about costs, managing costs and client payments, needs to be addressed throughout the course of engagement (& barrister), which in my view, would include ensuring money is in trust to cover all legal reps fees, prior to services being rendered.
People (in general) expect to pay for services (and goods), they are used to paying for their groceries, tradespersons, airlines, accountants, doctors, hairdressers etc etc. In saying that, it is probably true, clients may be more reticent to pay for the ‘knowledge and skill‘ of a lawyer. This is even more reason why clients need to be informed of what is expected of them re: costs/payment at the outset of any matter, and ensuring their compliance with the agreed terms for payment, throughout the course of the matter, to finalisation.
When Is It Best To Require Payment?
From my experience, in medicine and law, its always easier for patients/clients to pay for services, prior to the service being rendered (surgery, court events, lawyers work etc) , rather than after the event. Lawyers have ‘bargaining power’ with clients before a service has been rendered, that ‘bargaining power‘ diminishes dramatically after a service has been rendered, when there is not enough money in trust to settle invoices. When payments aren’t made by clients (and solicitors to barristers), then the ‘debt dance‘ begins, which takes extra time, resources and possible souring of relationships, in order to try to recover payments from clients to try and pay solicitor and barrister fees.
If people balk about costs/payments prior to the services being rendered, they will balk (and usually not pay) after the services have been rendered, when it will become a huge issue for all concerned.
9 Tips To Get Paid
Barristers: these tips can also apply to your business;
- Speak confidently and authoritatively about costs/fees/payment expectations at the first contact and continue to have these conversations throughout the course of the matter. Clients will be happy to know what is expected of them, particularly in relation to:
- how much its going to cost (be generous in your estimates, don’t under estimate and then continually revise, that will indicate ‘shady‘ practice) I always overestimate (as I believe people don’t like underestimated amounts that have ‘creep‘) 99% of the time I come in under the estimate. I notify the solicitor, as soon as I know the invoice will be higher than the estimate and provide an updated cost disclosure document, for agreement.
- let clients know when they need to pay by (even provide dates i.e. every month, every quarter etc).
- If you are ashamed to talk about money they will be reticent to pay your invoices. If they don’t think its important to you, why should it be important to them?
- Its also important to remember that barrister/solicitor relationships may be strained when payment is not made pursuant to the agreed cost disclosure terms, due to a lawyer not addressing and managing client costs/payments. Its good business acumen to have money in trust to cover both the solicitor and barristers fees, prior to services being rendered.
- Invoice your clients quickly and accurately. Why not think about having a monthly billing system? That will ensure the clients account is kept manageable and if payments are not being paid as expected, it can be nipped in the bud, prior to a large bill being ‘racked up‘ with no payment and possibly little or no means of recovery.
- Constant communication trains clients to pay bills promptly and leads to an efficient, professional relationship between you and them. Its a ‘training exercise’ when it comes to client payments.
- Keep payment terms short, why wait for 30 days? If you’re serious about your work, and you try your best to supply your services to your clients’ deadlines, there’s no reason why they shouldn’t try their best to pay you just as quickly. Thats a two way business relationship (both client and barrister), isn’t it?
- Option 1: Let the client know immediately if their account is overdue. Send a statement or reminder after a few days. Don’t let it drift and/or
- Option 2: Don’t be afraid to call the ‘debtor’. Usually, a polite telephone call to ask about a late payment will get the ball rolling, or at least tell you when you can expect a payment. If any problems exist that need to be resolved before payment can be made, your phone call will let you know what they are so you can start clearing them up.
- The phone call: the first 15 to 20 seconds of the call are critical. Make sure to project good body language over the phone. Be professional and firm, not wimpy or awkward. Use a pleasant voice that conveys authority, and respect the other person’s dignity.
- What if payment still is not made after an initial phone call? Don’t let things slide. Statistics show that the longer a debt goes unpaid, the more difficult it will be to collect and the greater chance that it will remain unpaid forever. Most experts recommend making additional phone calls rather than sending a series of past-due notices or collection letters.
- Put your payment terms on your business, firm or chambers website (review Louise’s). Transparency is always going to help you get paid, as it won’t be a surprise as expectations are clearly specified.
Talking about fees and payments with any clients is part of business management and this skill is better mastered sooner rather than later. Its not enough to be legally knowledgeable, business management skills are also important in the practice of law.
If you speak to clients (and barristers) candidly about fees/payments you will soon have a reputation of being a ‘straight shooter, upfront, transparent and honest‘ , which is what everyone likes to deal with and it allows people to trust. This honest, trusting environment is where relationships can grow and prosper. In addition, clients will be happy and they will trust you, referrals will likely follow. If clients don’t want to pay fees early or on time, they definitely won’t want to pay them later, after the event. Are these the kind of clients you want?
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