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Five Ways to Avoid Client Disputes

Whether in your personal or professional life, disagreements are never pleasant, and client disputes, in particular, can become a real mess. The nature of client disputes varies, as do their severities and outcomes. Often, client disputes arise over ordinary issues like fees or missed deadlines. Other times, however, they involve much more serious concerns, such as malpractice claims and fraud. In this post, we’ll be discussing five ways to avoid client disputes—both big and small—as well as highlighting technological tools that can help.

#1: Fee Disputes

Client disputes are most often over fees, and the industry’s reputation of poor billing practices doesn’t improve matters. Admittedly, the profession does have a long history of billing missteps like:

  • Lump-sum billing
  • Unclear labeling and descriptions
  • Surprise fees that impair clients’ trust
  • Delayed invoicing

How to avoid client disputes over fees?

The fix is simple: bring your billing practices in line with current client expectations. Specifically:

  • Record and show all charges, including waived and unbilled charges to establish goodwill.
  • Use readable, accurate, and descriptive labels for major line items.
  • Provide a detailed bill review prior to sending to ensure that invoices are checked for errors or questionable items.
  • Bill regularly (i.e. monthly); don’t wait until a matter is completely closed to retroactively bill.
  • Stay on top of collections and send reminders. The longer a client doesn’t pay, the more likely they are to dispute fees.

#2: Communication Breakdowns

You’ve heard it said about romantic relationships, but it applies to clients, too: communication is key.

How to avoid client disputes because of a breakdown in communication?

  • Keep clients in the loop. While it’s easy to fall into the trap of not communicating when there’s little progress to report, long periods of “radio silence” on your end can make clients suspicious and/or uncertain about the service they are receiving (and paying for).
  • Establish a primary method of communication for each client (e.g. via phone, email, text, client portal, etc.). Not only is it important to know a client’s preference, but consistency also promotes quicker responses.
  • Organize all communications by matter, including emails, one-to-one messaging, and written letters/notifications to maintain an immediately accessible paper trail.

#3: Missed Deadlines

Deadlines have real consequences, and sometimes, they are so severe that they simply cannot be missed. This area gets complicated, as delays may be caused not only by the client or attorney, but also by things beyond our control, such as government agencies, banks, insurance companies, etc.

How to avoid client disputes over missed deadlines?

  • Use a unified calendar system across matters and parties; with a team calendar, each member is aware of how his or her individual tasks affect the project overall.
  • Integrate event and task tracking, which often go hand-in-hand, to provide a full picture of deadlines and due dates.
  • To keep the entire firm accountable, establish global deadline monitoring.
  • Ensure effective delegation to prevent a single person from becoming overwhelmed.
  • Utilize mobile tools to improve efficiency and accessibility.

#4: Lack of Billing Audit Trail

While it’s easy to forget original sources of billing, if you’re unable to substantiate why you billed in the first place, or if it takes too long, you place your firm at a disadvantage.

How to avoid client disputes over a lack of billing audit trail?

  • Integrate all activities with your billing system.
  • Be able to maintain original source of billing.
  • Don’t forget billable events, tasks, emails, etc.

#5: Mishandled Financials

For far too long, the areas of practice management, billing, and accounting have been kept separate. Even the introduction of computers didn’t improve the situation much, as distinct functions were still needed for each function. However, these three areas must be tightly connected and reconciled with each other so that your firm can uphold its fiduciary responsibilities; otherwise, you may risk your license to practice law.

How to avoid client disputes over finances?

  • Trust books must be kept current and compliant in accordance with state and federal guidelines.
  • All client funds must be accounted for, and clients should receive regular and accurate reports that display retainer balances on invoices.
  • Practice evergreen retainers to ensure funds are always available, and plan ahead to avoid needing to seek replenishment after an account depletes.
  • Direct client costs should be clearly linked to their respective transactions; even if you’re dealing with a fixed fee, expenses must be itemized and labeled properly.
  • Make use of batch credit card payment to avoid confusion, and ensure that internally, you are batching credit card deposits.

While handling disagreements is simply part of the job of being an attorney, there are steps you can take to prevent client disputes, specifically, from damaging your firm or ability to practice law. The best way to handle client disputes is to keep them from happening, and with the right solutions and expertise in place, you can protect your firm from potential conflicts. To learn more about this topic, watch our full webinar Five Ways to Avoid Client Disputes.

Erica Birstler

Erica Birstler is the Director of Strategic Communications at CosmoLex -- developers of a fully-integrated, cloud-based legal practice management, billing & trust accounting system specifically designed for solo and small law firms. Erica's degree is in Business Administration and she has over 6 years of experience in the legal software industry, catering to the specialized technology needs of small to mid-sized law firms. Erica has given numerous presentations across the country on legal technologies such as law practice technology management, cloud computing, and legal billing & trust accounting compliance.