For your practice to be viable, you need to take steps to ensure that you get paid for the services you provide, unless you make a conscious choice to work pro bono. You should not panic and accept every inquiry for representation that you receive.
Think carefully before acting for anyone who won’t sign a retainer agreement or pay the requested retainer. If they can’t or won’t pay a retainer at the outset, what confidence can you have that they will pay for your services as your bills are rendered?
If you agree to represent a client, put that agreement in writing at the outset. This is often referred to as a retainer agreement or engagement letter, and it is a valuable risk management, financial management and communication tool. An agreement that is clear on the services to be provided and your policies and procedures for communication and billing helps reduce misunderstandings about your role and your client’s responsibilities in the matter.
Sign a new retainer agreement for each new matter you accept, even with the same clients. Clearly spell out in each agreement what you have been retained to do and what you have not been retained to do.
Discuss fees during your initial interview. Your retainer agreement should clearly set out how and when you bill, payment methods, payment schedules, interest rate charges, disbursements and HST, as well as the consequences to the client for non-payment of accounts when rendered.
Be clear that you expect to be paid for your services on a timely basis. Discuss with your client the best time of the month to be billed and the interest rate you charge on overdue accounts. This assists the client in budgeting and reinforces the message that payment of your account should be a priority. If you do not currently accept payment by credit card, consider doing so. The merchant fees you pay will more than likely be offset by reduced accounts receivable.
Make sure that your requested retainer is sufficient to cover your initial work and that your agreement requires that the retainer be replenished once the initial retainer has been reduced to a specified amount. Set out the consequences if the “top up” is not received. Be clear that you will not be considered retained for a matter until the signed retainer agreement and the requested retainer are received by your office.
Once you begin your work, keep detailed and contemporaneous time records so that you can issue an accurate and detailed statement of account on a timely basis, and while a client is still appreciative of the work you have done. Time and billing software is invaluable in helping you get timely and accurate bills to your client.
Keep a close eye on your accounts receivable and Work In Progress. Don’t let either build up to unreasonable amounts. The longer you delay in preparing and sending a bill, the longer it will be before you are paid. Billing regularly and at the agreed time conveys the message that you value the work you do, and it should improve your cash flow.
Be aware of where your business is coming from, which areas of practice are most profitable, who your best clients are and where you should focus your efforts. Legal software, properly used, can help you glean all this information from your files.
Matter Screening
When screening matters, resist the temptation to dabble in unfamiliar practice areas. It is very risky to do and the likelihood that you will make a mistake is high. If you are thinking of branching out to a new practice area, consider partnering with experienced co-counsel until you are familiar enough with the area to be able to practice competently and efficiently.
Don’t Panic
If, in the current economy, you find business slowing down, don’t panic and take every request for representation that you receive. Have a plan and stick to it. If you find that you have extra time, see this as an opportunity to introduce new efficiencies to your practice. Update your precedents. Learn more about technology. Use any extra time you might have to connect with your clients. Remember: most new business comes from existing clients and referrals from them.
Deborah E. Gillis Q.C. is a lawyer and consultant in Bedford, N.S., providing professional advice to lawyers on Risk Management and Practice Management matters and on Succession Planning. She can be reached at dgillis@dgillislegalservices.ca