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Stage for Collecting Legal Fees

published February 11, 2013

By CEO and Founder - BCG Attorney Search left
( 3 votes, average: 4.8 out of 5)
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All of the marketing tools we have discussed are designed only to provide the lawyer with the opportunity to close a "sale." Marketing brings inquiries. After that, you have to get the representation, and set the stage for collecting a fee. Different techniques will work in different situations. There is no one rule, nor a single style of selling legal services.

It's easier to get work than it is to get work that pays properly. Don't "practice" on free or underpaid work.


Generally, the first discussion with a prospective client is a fact-gathering session. If that indicates that the matter is worthwhile, then it is time to sell. In an initial interview, the lawyer must:
 
  • Tell the client how the firm works
  • State how the client's matter would normally progress, and what the obstacles are
  • Communicate that the lawyer would like to handle the matter (or, if there's a question or a required approval by the firm that the firm would probably like to handle the matter, but policy requires a review, etc.)
  • Indicate the arrangements for payment

It is also important that, in the first interview, the lawyer explain conflicts of interest and caution the client that if such a conflict should arise the representation may not be possible.

In litigation, it is generally an advantage to sign up the client, but leave the lawyer an out within a certain period. At the initial stage, you have only the client's point of view, and later information can show the story to be quite different, or can turn up facts, laws or precedents which are unfavorable or indicate other reasons which make a good result unlikely. Firms which handle contingent fee cases should establish an intake review committee which alone should have authority to commit the firm to a case. The interviewing lawyer can explain that policy to a prospective client. Having such a policy should not result in loss of good business.

In order to give yourself every advantage in the initial interview, set the stage carefully. Use an informal conference room if one is available. This would be a small conference area in which living-room-type furniture allows the client to sit and to talk to the lawyer as a friend. If the case is important, consider having a legal assistant present to take notes so that the lawyer can concentrate on the conversation and the client will receive the lawyer's full attention.

Don't be afraid to say: "We would like to handle this matter for you." It's flattering to the client. Never end a first interview on an ambiguous note, where the client, and perhaps the lawyer, is uncertain as to the outcome.

Always confirm a representation in writing, preferably on the same day. Document every interview with a prospective client so that there is no question as to your responsibility and the client's responsibility for making payment. If the representation is not accepted or not offered, confirm that in writing also.

Everybody knows how doctors charge. Office practitioners charge by the visit, with certain charges for "extras" like shots or medication. Few laymen know how lawyers charge, but there is an almost universal opinion that they charge a lot. Remember, most laymen have very infrequent contact with lawyers. A particular strategy for explaining fees is applicable in each case, depending on the identity of the client as well as on the nature of the case.

Flat Fee

If the prospective client is an infrequent user of legal services, and the case is not contingent, the most acceptable and easily explained fee arrangement is a flat fee or case retainer. But, of course, that leaves the lawyer open to doing extra work without extra pay. With such cases, explain that the minimum fee you charge is $XX, but that if things get complicated, you will add charges, just like the doctor with shots or medication. Point out to the prospect how the client can help keep the fee down to the minimum. Explain what "costs" are. Confirm the arrangement with a written statement or a pertinent brochure. Do not quote hourly rates unless specifically asked to do so.

If it is a contingent fee matter, explain carefully your policies on division of recovery and about disbursements. If possible, seek a deposit to cover some of the costs. It is also appropriate to offer plaintiffs an alternative type of fee arrangement under which the lawyer is paid on the basis of time.

Some lawyers will argue that taking on a big case for an hourly fee is unfair to the lawyer if a good result is obtained. From a client's point of view, a person who charges $100 or $200 per hour should take on some real responsibility, and should produce a first-rate result. Premiums over such rates are hard to justify and contribute to the impression of the public that lawyers are expensive.

If your prospective client is an experienced user of legal services or a business person, disclose your billing policy fully. Such individuals know the difference in the cost and productivity of a paralegal, an associate, and a senior lawyer, and so you might just as well disclose your hourly rates. Always arrange to bill continuing clients monthly. It is better for the client and for the law firm if you do, so your client knows what legal costs he is incurring and your law firm will have lower receivables and more cash.

If you are not sure of the creditworthiness of a prospective client, always get paid up front. Ask for periodic payments which are placed in a trust account until earned or expended on the client's case, and then get more money before you continue. This is the one sure way of keeping your practice solvent, especially in its early years.

A number of law firms have experimented with bank credit cards like Visa and Mastercard. None of those we know about have been very enthusiastic about the reception of the idea by clients. As law offices open in department stores and shopping centers the use of credit cards to pay for legal services may become more commonplace. If you want to practice "retail" law, handling small matters for infrequent users of legal services, then you may want to be quite open about the use of credit cards and have clients pay their bills with them while they are at the law office.

An effective lawyer manages his or her own time well. He knows on what he is spending his time and whether it is being spent profitably. There are steps which any lawyer can take to improve his own time management. Time management can be learned.

Time Records

Because of the self-esteem which everyone has, most people think they are doing what they know they should be doing. We can recall instances where we have been employed as consultants to discover the causes of sagging incomes. In these firms the lawyers themselves could not understand the reasons, complaining that they were "working 60 to 70 hours a week." In many firms, the consultants' analyses revealed that (1) the lawyers were not really "working" the hours they thought they were, and/or (2) during the time when they were proceeding through the paces of a working day, they were managing their time poorly.

Lawyers who keep time records average more income than lawyers who do not keep time records. The records themselves have some effect on billings, but it is probably more important that persons who keep time records become better time managers and have more knowledge of where their time is going. Many business executives, whose incomes have no relationship to how they spend their working hours, keep time records simply to discipline themselves in the proper use of their time. It is an accepted management exercise to review logged-in time, asking about each entry, "Must this be done at all?" If the answer is "Yes," then, "Must I be the one to do it?" If the answer to the first question is "No," then the activity is discontinued. If the action must be taken but the manager is not necessarily the one who must take the action, he should locate someone with the proper level of responsibility to whom he can delegate the function.

Anyone can undertake this type of analysis of the daily use of time. In certain types of practice, not dependent on time records for billing, it may not be necessary to repeat this exercise in self-analysis every week, but it should be repeated periodically as work pressures mount and the lawyers begin to wonder where their time is going. The proper handling of time priorities can be learned, although it is a learning process that requires self-analysis, education, repetition, and application.

Limiting Interruptions

Some lawyers try to be all things to all people-listening to every bit of office gossip, choosing the color of the carpet, soothing a secretary's hurt feelings, and straightening the magazines in the reception room, while client work remains ignored and the future of the firm remains unplanned.

One may prefer to handle the minor problems rather than tackle the more complex issues, but giving minor issues priority does not create an effective climate for the production of services. One of the key lessons in time management is that the chronological appearance of events should not create the workday schedule. The schedule should be formed because of the priorities and necessities of the work, not because of the order in which stimuli occur.

Operating from crisis to crisis is a sign of sloppy management, as is the allowance of minor interruptions during periods when production of legal or other work should be done. Much more can be accomplished in one half hour of concentrated effort in the preparation of an opinion letter than can be accomplished in a series of five-minute intervals squeezed in from time to time over three or four hours. Not only will more be accomplished, but the work product is likely to be a better one.

Managing the Telephone

Lawyers should set aside certain times during the week when they will not take telephone calls, when they can close the doors of their offices and do productive legal work in concentrated blocks of time. The authors have expressed this opinion to many lawyers, only to be countered with the comment that "if a phone call comes in, I have to be here." This may be true of a few very special telephone calls, but most telephone calls can wait some hours to be returned. Lawyers who have learned to use their time effectively demand periods for concentrated legal effort and have trained others either to take messages for later handling or to handle the problem directly.

In some law practices, it is common for thirty or more telephone calls to be put through to a lawyer each day. An erroneous "need" to be ever-present when the telephone rings is felt by the same lawyers who will not see a visitor who comes to their office unless he has an appointment in advance. The inconsistency of these two positions is obvious. All of us have heard of situations where a person was refused entry by the receptionist, only to go to the lobby of the office building and call the lawyer on the phone and accomplish the business!

Lawyers must establish policies with regard to the telephone. The most fundamental of these is that, if someone has taken the time to visit the lawyer's office to consult with him, the visitor's time should not be interrupted by telephone conversations with other persons who did not make an appointment and who did not make the effort to come in person.
The telephone is probably the biggest threat to efficient time management. With proper delegation and with proper self-organization a lawyer can make the telephone an efficient ally and friend, but it must be treated firmly.

The Early Years as a Sole Practitioner

If you have chosen to go into practice for yourself, be prepared for a few years of lean earnings, empty hours and many frustrations. If you can manage to get through two or three years, have utilized good public and client relations techniques, and produced good quality work for clients, you should be on your way to a fulfilling practice. Understand, however, that only a very few sole practitioners ever become wealthy from the practice of law. Most of them can manage to pay their bills and keep food on the table, but, on the average, sole practitioners are at the bottom of the earnings ladder. Surveys of lawyer earnings almost universally indicate that the larger the organization, the more individual lawyers in those firms earn. For this reason you may wish to keep your eyes and ears open for prospective affiliations, either another lawyer joining you, or your joining another group of your fellow practitioners.

The development of a new practice requires the use of careful financial management. You will be deluged with salesmen trying to convince you to buy books, insurance, equipment and gadgets. Make it a rule not to order anything when the salesman is in your office and always give yourself 48 hours to think a purchase over.

If possible, try to have your office near another firm or lawyer with a library. Established firms will often help new lawyers get started by allowing them to use the library and the copying equipment (for a charge, per page). If you can manage to make such arrangements, don't abuse them. Move quietly in and out of the library without annoying the lawyers who may be there, and be sure to complete the required records on the number of copies you make. If you are near the county or bar association library, you may wish to use that facility until your time is so fully occupied with client matters that you cannot afford to walk there for routine research. Meanwhile, keep your eyes open for current sets of research materials which may be available on a secondhand basis.

One of the things which you will notice, if you open up your own office by yourself, is that you won't have anyone nearby with whom you can discuss legal issues, case strategies, etc. If possible, get to know a more experienced lawyer with whom you can discuss legal matters over lunch. Lawyers generally are very nice people, and many will be agreeable to assisting in this way. As an alternative, you may be able to arrange to get space in the offices of an older lawyer or established firm. In some communities this kind of arrangement is quite common. Generally the young lawyer agrees to handle a certain number of hours of legal work for the older lawyer in exchange for office space and clerical help. In other firms the agreement may provide for a splitting of fees between the older and the younger lawyer and for rent payment to be made from those earnings. Each arrangement must be worked out to meet the needs of both parties.

If you cannot make an arrangement like the foregoing, you will have to hire someone to provide typing and secretarial assistance. While you have the time, you may even do some of your own clerical work, but when you find that your time could be better applied to a public relations effort or legal work, hire someone.

A good secretary can provide you with a great deal of help. He or she may correct mistakes in your grammar and improve your work product. Initially, a part-time secretary will suffice. There are many trained legal secretaries who prefer working a short day so that they can take care of school-age children. They can often turn out more work in four or five hours than a less trained, full-time secretary.

When you get client work, do the most thorough job you can for the client, even if you can't charge for all of your time. By so doing you will be sharpening your skills and creating a satisfied client, one who will be a salesman for you in the future.
From the very first day you open your office, maintain complete financial records. Even if your net profit at the end of the first month is $50, you should know where the money came from, where it went, and why. Set up client funds (trust) bank accounts and maintain the strictest controls to assure that clients' money is separated from your own.

From the first day also, keep time records on your entire day. A review of what you did each day, each week, or each month will tell you how you are spending your time, the commodity you have to sell. Are you spending too much time walking back and forth, to and from the courthouse? Could you consolidate those trips and save an hour a day? Is a two-hour lunch with other lawyers really worth the time? It may have produced a referral or business for you, or it may have been purely social. How much time does it take you to complete a real estate transfer? Can you improve the speed of handling this kind of work through the introduction of improved forms or methods? These are the kinds of questions you will have to keep asking yourself while you establish the work patterns for a lifetime.

As your practice develops, do not slack off in the monitoring of your practice management. Allow yourself some time each week (set a specific time, if necessary) to review the way in which your finances are being handled, where your time is being used, and where your business is going. Remember that practicing law is a business as well as a profession and your future well-being will depend on how you run the business.

The Growth Trend

There is a well-defined trend toward the practice of law by increasingly large groups of lawyers. This mode of practice, distinctly different from the prevailing sole practitioner mode of the pre-World War II era, is affecting both the private law sphere and the corporate and governmental legal organization.

One of the reasons for this trend is that growth, be it from one attorney to two, or twenty to thirty, can give a firm the improved means for maintaining existing clients by providing the ability to furnish a greater range of services, and thereby can assure the firm a continued stable earning capacity.

There are discernible and sound reasons for the development of larger working units within the legal profession.

Quality and Skills

American society is becoming more and more complex and increasingly regulated. New fields of legal endeavor are constantly coming into view over the legislative horizon. In recent years, such areas as environmental law, occupational health and safety, consumer law, and product safety have given rise to new areas of specialization and have provided work for new armies of legal experts. These newer areas take their place alongside more traditional areas of specialization--many of which also continue to grow.

In this increasingly complex society, business clients who traditionally may have dealt with small firms or individual practitioners find that these firms do not have the resources to provide answers to emerging legal and regulatory problems. Consequently, unless small firms grow to meet the client demand, clients tend to gravitate toward what they perceive to be organizations of lawyers offering a wider range of services.

Image

Because they recognize the need for increasingly specialized legal services and for almost instant expertise in newly evolved areas of regulation, members of the business community may be swayed by the image of a law firm as mirrored in its size alone. Except in those instances where a small firm is well known in a particular specialty, such as labor law or taxation, it may generally be regarded in the legal and business communities as an organization of limited resources. The larger congregation of lawyers, on the other hand, regardless of its actual internal organization, may be thought to have a departmentalized structure which can deliver complex and specialized legal services. Thus the outward appearance lent by sheer numbers will often have an effect upon the clients who seek out a legal organization.

Growth of Clients

The most important factor in any law firm's growth is the internal growth of its clients. A law firm reacts to client need. When a local bank is a client, and many major firms rest upon the foundation of a good commercial bank, the law firm must grow to serve the need of its bank client. That need may include the establishment of branch offices in other parts of the state if the client becomes a multi-location entity. This aspect of growth is totally beyond the control of an individual firm. Unless the law firm serves its clients promptly, the clients will eventually seek other counsel.

Momentum

There is a built-in momentum to growth. In a period of economic expansion, coupled with a period in which businesses merge, law firms will expand. This expansion provides forward motion for the established firm which may often carry it beyond its own desires for growth.

Controlling Growth

When a firm desires to retard growth, it has two principal means: (1) its fee policies and (2) its acceptance of new clients.
When a firm desires to reduce its volume of work, it can do so selectively by increasing its fees in specific activities in which it wishes to reduce its load. For example, a firm which does not want to handle divorce work may simply quote a fee substantially above the going rate in the community. This does not mean that when a regular client requires services in this area the firm cannot accommodate his or her particular situation, but by raising rates it will discourage the walk-in divorce matter.

There are, of course, some firms which categorically refuse to accept certain types of legal work. Some firms validly reject any legal activity in which the payment of a fee is contingent upon result, and hence uncertain. This includes subrogation cases and collection work. It is not uncommon for firms to refuse to handle criminal matters even for established clients. Many established firms have learned to refer such matters gracefully to other lawyers who welcome the business.

A firm may validly refuse to undertake assignments for new clients. However, such a process can be over-used in the normal, business-oriented law firm. If a firm totally rejects all new clients it will, as its older clients leave, cease to grow and eventually may be hit by the economic consequences of its decision. On the other hand, there is no obligation for a law firm to accept every assignment offered to it.

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Alternative Summary

Harrison is the founder of BCG Attorney Search and several companies in the legal employment space that collectively gets thousands of attorneys jobs each year. Harrison’s writings about attorney careers and placement attract millions of reads each year. Harrison is widely considered the most successful recruiter in the United States and personally places multiple attorneys most weeks. His articles on legal search and placement are read by attorneys, law students and others millions of times per year.

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