Digital White Papers

ILTA WHITE PAPER: NOVEMBER 2015 WWW.ILTANET.ORG 27 IS YOUR FIRM FAILING AT COLLECTIONS? Just as often, many partners pay attention only up to the point of billing and ignore the need to collect from clients. This failure to collect is a painful and costly lesson that partners and law firms struggle to solve. Here are tips on how to manage clients and collect receivables. MATTER INTAKE IS WHERE IT ALL BEGINS Matter intake policies and guidelines might sound like bureaucratic mumbo jumbo, but they can prevent a lot of headaches and inefficiencies. Too many firms fail to communicate expectations to their partners. As a result, every partner sets their own standards and makes their own mistakes. For example, a firm could have guidelines that mandate the minimum fee expected from every client. Make it explicitly clear that all clients will get billed monthly and all clients are expected to pay their bills within 30 to 45 days. In addition, it helps if you attempt to get a fee deposit equal to X months of fees. Apply that deposit to the final invoice and not the first. It is also beneficial to do an objective assessment to find out if the client has the ability and will to pay their bills. Has this client used and fired another law firm on this matter? Is this client reluctant to pay you a fee deposit? If they can't pay the fee deposit, how will they ensure they will pay you the full fee? If the client had previous matters in your firm, what are the payment patterns, what issues or scenarios have occurred for nonpayment of Sometimes a client might not want to pay a retainer or deposit, or you might not want to ask for one. However, as a practice and a policy, make this a routine part of the client matter engagement process. Many partners feel that asking for a fee deposit is unrealistic, but it is likely their primary competitor routinely asks for, and gets, deposits from 50 percent or more of the same clients. In many jurisdictions, the rules regarding applying fee deposits differ greatly from the application of disbursement deposits, so follow the relevant bar association rules. bills or reasons for write-offs? In the best-run firms, whether large or small, a person other than the primary lawyer, such as a management committee member or a practice group head, typically approves or disapproves all new clients and matters by looking at each individual scenario from the firm's point of view. The problem with many firms is that they implement this procedure in form, not function. If you have such a procedure in your firm, ask your leaders how many matters they reject. If their answer is zero, your firm has a policy in form, not function, and you are likely wasting time without producing results. Great firms routinely reject between five and 20 percent of all new clients. ASK FOR RETAINERS OR DEPOSITS IN ADVANCE Do your engagement letters ask for retainers or a fee deposit? Is it a meaningful amount? Is there a possibility or a clause in the engagement letter for replenishment? Great firms routinely reject between five and 20 percent of all new clients.

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