More About Money: “Don’t Just Ignore the Bills!”

I hear solos talking about the client who isn’t paying. Now usually this is a client who fell further and further behind on paying legal bills. Sometimes there was an initial retainer but that is usually long exhausted. The client is now ignoring your bills!

Assuming you feel you cannot “fire this client” for not paying you, I want to you if you have talked to your client about his or her client matter. Did you discuss a realistic appraisal of how long their case would be and how much it might cost based upon what your estimated fees and costs would be?

Communication about the likely expense of legal services is essential before setting forth on a client matter. But you may be saying, “it’s a little late now!” Not so. Sit down and review this client’s bills sent and not paid. How much is owing for how long? How much more fees and costs are likely to be be incurred? Does the client wish to pursue? Can you put your client onto a regular payment plan— such as $50 on the first and $50 on the fifteenth of the month. That is only $100 per month spread over the client’s two paychecks. Can you partially forgive the debt if the client can pay 50%-75% of what is owed to bring it current? Is this a client you are willing and able to help on a pro bono or partial pro bono basis? Can the client borrow money from a relative?

You may decide to do something yourself instead of ignoring your bills. Consider whether you can go forward in this representation. On the PLF website (www.osbplf.org) you’ll find an article, “How to Fire a Client.” See the practice aids and forms category on Disengagement Letters for the article and some sample disengagement letters. You will also see a sample agreement for charging a credit card which can be used for setting up a recurring charge to the client’s credit card in the category on fee agreements and engagement letters, “Fee Agreements: Authorization to Charge Credit Card.”

It is always wise to pick up the phone to check in with you client. If you feel uncomfortable, write out this telephone script and use some variation of it to get this situation resolved. At 45 days past the statement date, call your client and say, “Hello [CLIENT]. I just wanted to know if you got my monthly statement for [MONTH]? Is there some problem with the bill that is preventing you from paying it?” Then discuss your withdrawal, or offer a monthly payment plan or negotiate a settlement of whatever amount is past due. Remember the Oregon State Bar offers arbitration services for fee disputes. The important thing is not to ignore this situation.

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Billing Pointers That Can Improve Your Cash Flow

Lawyers enjoy practicing law. They rarely enjoying billing. Busy solos especially can find themselves struggling to get their bills out consistently month after month. One lawyer I met with recently discussed that there were a number of clients who weren’t paying their bill, month after month.

Here are some of the tips the lawyer implemented that improved cash flow.

1. Put a date on your billing statement and indicate when payment is due.

If you don’t have a due date on your bill, your client will be motivated to put your bill at the bottom of the stack of bills to be paid. Then next month, the client, repeats organizing bills to be paid by their due date. Again, your bill is moved to the bottom of the stack.

2. If your billing statement is due in 30 days of the billing statement date, consider offering a discount to your client if the bill is paid within 5 days.

People are motived by discounts! Put this to work for you. Be clever and memorable: “10 by the 10th!” Take a 10% discount if amount due is paid by the 10th.

   Age your receivables.

Do you know how old some of your accounts have been on your book? Age your receivables into these age categories:

0 – 30 days (Current)

31-45 days (Late. Call client to see if bill received and why not paid. Payment plan.)

46 days to 60 days (Collect. Contact client about terminating engagement.)

61 days to 90 days (Suspend work. Collection Agency)

91 days to 120 days (Negotiate Settlement such as 50 cents on the dollar.)

over 120 days (Write-off Debt)

Remember to apply client payments first to costs then to legal services, applying to oldest balance first. If you intend to turn your delinquent client accounts over to a collection agency, be sure to indicate this in your fee agreement signed by your client otherwise you are breaching the duty of confidentiality by disclosing this information to a third party. You should let your client know that you will terminate representation if they fall behind on paying their balance as agreed. If you come up to this point, send the client a letter with a copy of a Motion to Withdraw and indicate that you will file it payment of $xxx is not received by a set time on a set date. “Your account is 60 days past due. If 80% of the balance due is not paid by 4:00 p.m. on Aug. 29, 2014, the Motion to Withdraw will be filed with the court.”

4. Consider tracking the client balance  on the billing statement so that client realizes exactly how long you have not been paid.

Some clients are consumed with worrying about their legal problem and lose track of how far behind they have gotten with paying you. Imagine asking your clients if they would show up to work if they weren’t paid?

5. Consider dividing your client list in half and billing one half at mid-month and the other half at month-end.

Many if not all of your clients are paid on a bi-weekly basis. They likely pay their mortgage and rent payment at the first of the month. Some clients may even prefer to be billed bi-weekly. This can be especially helpful for family law clients who are struggling.

6. The easiest way to ensure cash flow is to get cash up front!

Ask for enough of a client retainer to cover the first part of the representation, but more than two months. To avoid running out of the retainer, use provision to have a set balance held in the retainer. This is called an Evergreen Retainer.

My favorite success story reported that by negotiating old client debt, money came into the firm sufficient to cover one month’s expenses! I hope that more of you will find your cash flow improving!

 

 

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A Warning About Browser Hijackers

This past week, I purchased software for my  laptop.  I elected to download the software instead of waiting for the program CD to be sent. But that wasn’t the problem. The problem was electing the option: Install Normal instead of Custom Install. Normally, you wouldn’t need to do a custom install. I never did and you, too, likely may not have customarily used Custom Install.

This is what happened and why I recommend you do Custom Install in the future.

My program installed nicely. WinZip Pro. It is a ‘reputable’ file compression program recommended by CNET. Should be fine, right? Well, the company decided to add some other things in the Normal Install.  I got a browser highjacker: My SearchDial Toolbar and start.mysearchdial.com.

“Hey! Where’s my homepage???”

I kept getting start.mysearchdial.com instead of the homepages I had set. I put start.mysearchdial.com into Google, and found out what it was and how to remove it. Thank you  blogger, Stelian Pilici for your June 1, 2013 blog post Remove Start.MySearchDial.com hijack (Removal Guide) on the blog Malware Tips Your Security Advisor. Mr. Pilici says:  “Start.MySearchDial.com is a browser hijacker, which is promoted via other downloads, and once installed it will add MySearchDial Toolbar, and change your browser homepage and search engine to Start.MySearchDial.com”

His instructions are straightforward and I quickly had it removed from both Internet Explorer and Chrome – it was attached into both browsers. The instructions are hyperlinked above for you.  Hopefully, companies like WinZip won’t continue this practice. And hopefully, CNET will post warnings about what is contained in the formerly innocuous, Normal Install. Do your friends, families, and colleagues a favor – pass the word.

 

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