finance
practice management advice
taking the lead
The LonGer
An overdue
reCeivABLe
Goes wiThouT
ATTenTion,
THE MORE
COURAGE THE
CLIENT GAINS
FOR FURTHER
DELAY OF
PAYMENT.
reevaluate the objective of the work, the
status of the matter and on what basis it
makes sense to go forward. The meeting
could end with ( 1) payment of overdue
fees through the use of a credit card or
other financing, ( 2) a restructuring of the
fee agreement or a change in the objective
or plan going forward due to cost considerations, ( 3) the replenishing of the fee
deposit through the use of a credit card, or
( 4) a termination of representation.
problem is the problem. By the time two or three months have
passed, the client has become conditioned to understand that
timely payment does not seem to matter much to the lawyer.
Everyone knows lawyers are rich and don’t need the money,
right? Do you really want to reinforce that impression by not
addressing payment, both promptly and in a serious way?
The strategy is to use the threat of the
meeting with the attorney to provide
incentive for clients to pay before a meeting
becomes necessary. The vast majority of
clients will find a way to make payment
rather than having to attend that meeting
with the lawyer to reevaluate the relationship. If the threat of a meeting doesn’t
work, then the meeting provides a basis to change the arrangement because the client is unable to live up to the terms of the
original fee agreement.
An effective collection policy would include the following:
• Any bill going to the client with an overdue balance should
include a letter noting that the overdue balance is unacceptable and requesting immediate payment.
• The firm should have a procedure for tracking the age of
receivables and notifying the attorney and the appropriate
staff person when the receivable reaches 40 days.
• There should be telephone contact with the client no later
than 45 days following the date of the bill. If agreement cannot
be reached in that first call, or if agreement is reached but
payment is not made, a second call should be made for the
purpose of setting up a meeting with the client to reevaluate
the relationship.
• The arranged meeting between the lawyer and client should be
similar to the intake meeting. The attorney and client should
CONCLUDING THOUGHTS
Getting paid for services performed should be considered a
normal part of doing business. Unfortunately, some small firms
struggle with collection ratios in the 70- to 80-percent range and
seem incapable of correcting the problem. Voluntary pro bono
work is a worthy contribution to the needy. Not getting paid by
clients who had agreed to pay for your services reduces lawyer
compensation, often to an unacceptable level.
These two strategies will reduce and hopefully eliminate
the number of receivables the firm carries, resulting in well-deserved financial reward for the lawyers. Taken together, these
strategies will work, even if your clients are of limited means.
You are simply setting up more client involvement in decisions
affecting the amount of the fees and a plan for credit card financing should the client not be able to afford the monthly payments.
Not only will these strategies improve lawyer compensation, but
they will also eliminate tensions over unpaid fees and result in
better client relations. LP
BY ARTHUR G. GREENE
agg@boyergreene.com
Arthur G. Greene is a principal of Boyer Greene LLC, in Ann Arbor, Mich. Following a career as a
practicing lawyer, during which he served as the managing partner of a firm that grew to 70 lawyers, Greene has turned his focus to a consulting practice that has included profitability studies,
strategic planning, governance, succession planning, compensation plans and other aspects of
maintaining a healthy firm.
