The Mentorist

From the Client’s Chair: Why Your Firm’s Legal Bills Don’t Get Paid

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As a general counsel, I’ve paid a lot of legal bills over the years.

Most of the time, I was happy to pay them after only a quick review.  But then there were the bills that languished, waiting until I had the time — or had calmed down enough — to get in touch with their sender.

To assure that your firm’s bills don’t “stall out” once they land in your client’s inbox, follow these guidelines:

  1. Lay the groundwork

    Unless you’re positive that your client understands what the legal work she’s requesting is likely to cost, raise the topic with her.  Describe the approach you plan to take, what resources you plan to use and what you think the “ballpark” cost will be.

    Having this sort of conversation will make certain you and your client agree on the project’s scope and will avoid “sticker shock” when the bill arrives.

    And if, while doing the work, you encounter new circumstances that will result in additional costs, discuss this with your client at the earliest possible moment.

  2. Less is less

    Don’t send out a bill one or two lines long, containing a vague description of what the charges are for.  Name names, nail down times.  Otherwise, you’re likely to get a call from your client, asking for a “do-over” with more detail.

  3. If I haven’t heard of them, I won’t pay for them

    Getting a bill that describes work done by name-after-name your client has never heard of ranks high on the annoyance scale.  If you haven’t introduced the people who are doing work on your client’s matters to your client, at least explain who these people are in a note that accompanies your bill.

  4. Get your stories straight

    Some partners treat billing so casually they don’t even check to assure that meeting times match up.  Their bill may describe a particular meeting that Lawyer “A” had with Lawyer “B” to discuss the client’s matter.  However, Lawyer “A” billed 45 minutes for that meeting and Lawyer “B” billed an hour and 15 minutes.

    Discrepancies like this make the accuracy of your entire bill suspect.

  5. You charged me for that? Really?

    I once received a legal bill that charged for time a partner spent taking a colleague and me out for a celebratory closing dinner.  The dinner was the partner’s idea and — to add insult — included a bottle of vintage Dom Perignon (charged to my company, of course).

    Grace and magnanimity go a long way toward building client relationships. Don’t think short-term.

  6. Giving yourself a bonus is bad business

    The shareholders’ lawsuit was over, and we had settled for an amount less than the cost of a full court battle, but still hefty.  In other words, a good –- not great — outcome.

    Apparently, the partner handling our matter had lower standards:  When his firm’s bill arrived, it included a line item stating “15% success fee” – the amount he had decided to grant himself as a “good work” bonus.

    His chutzpah still amazes me.  We’d never discussed the possibility of a success fee — nor had he called me in advance of sending the bill to tell me he’d awarded himself one.

    A bonus award is for your client to grant –- and then only when and if the client feels one is due.

  7. The only thing worse than bad news is being surprised with bad news

    Even if you’ve discussed the project’s anticipated costs with your client upfront, there are times when legal fees run over budget.

    Take a good look at the reasons for this.  If your firm’s actions were the cause — and were unnecessary — consider absorbing the overrun costs for the sake of preserving the long-term relationship with your client.

    If the cost overrun was unavoidable — or led to a better outcome — talk to your client before sending the bill. Explain how the overrun happened and why it was necessary, then apologize for not keeping the client informed along the way.

    Assuming responsibility for the extra charges goes a long way toward getting paid for them.

  8. Add a personal touch

    Include a note with your bill, telling your client how much you valued the opportunity to work together.  This puts a human face (yours) to the bill and serves as a subtle reminder to the client that your own livelihood depends upon collecting.  Bills sent cold by your firm’s accounting department are impersonal and easier to ignore.

  9. Bill early and often

    Most clients are under their own budget pressures.  Sending your firm’s bill every month will help them accurately track expenses against their budgets.  By contrast, waiting to bill only after several months of work can take your client by surprise — and wreak havoc with her budget.  No GC likes having to beg the CFO for budget forgiveness.  Help your client look good by billing on a regular cycle.

  10. Seize the day

    law firm billingA managing partner I once worked with was a master at collecting on his bills.  His secret?  Ask for money at the point the client is the happiest.  In this partner’s case (he was a transactional lawyer) that point was the closing of “the deal.”  In fact, the deal’s printed closing agenda always included a specific line item reading “Payment of Counsel Fees.”

    Having been on both sides of the lawyer fence — firm partner and general counsel — I now appreciate this partner’s collection strategy all the more.  A deal closing is typically a happy occasion full of future possibilities.  It’s somewhat like a wedding ceremony.

    So –- before any of the inevitable disappointments of post-deal “living together” arise –- collect your firm’s fee.

Author: Jane E. Owens

Jane E. Owens, The Mentorist’s chief blogger, has spent her career immersed in the business and culture of corporations and law firms. A former general counsel and corporate lawyer, Jane is fascinated by those who thrive (as well as those who don't) in the professional world – and, through her mentoring practice, hopes to increase the ranks of the former. To learn more about Jane or suggest topics you'd like The Mentorist to discuss, go to: www.mentorist.co

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