Retainers serve an essential purpose in the complex legal field by ensuring payment and a steady cash flow. To be effective, retainers need to be monitored to ensure they have the funds necessary to cover billing. Done properly, retainers can improve cash flow and the collections process, enhance the overall client experience, and streamline accounting.
Key to successful retainer management
Proper retainer management is critical to avoid the associated compliance issues and complications that come along with mishandling. But aside from not wanting to deal with the bar or law society and possible ethics complaints and violations, a firm also needs to make sure its operations are supporting a healthy cash flow.
The key to making sure you get paid – and paid on time: evergreen retainers.
Evergreen retainers are very similar to regular retainers, but the main difference lies in making sure the balance never falls below a predetermined minimum amount. Rather than waiting until the account is depleted to notify the client or billing even when there’s no longer funds to cover the invoices, evergreen retainers require a proactive approach. Through monitoring of account balances and client notifications, it’s possible to make sure no additional work is being done beyond what’s covered on retainer.
Use evergreen retainers effectively
To make sure your firm is using evergreen retainers to their maximum potential, you’ll want to determine a way to monitor them and be upfront with clients in how they’ll be used.
Create a process or automate
Automation can be extremely helpful in managing evergreen retainers effectively. Manually reviewing accounts for balance limits can be time-consuming and tedious, as can following up with clients to secure additional deposits to the retainer. Certain practice management solutions such as CosmoLex allow balance thresholds to be set for accounts, automatically triggering a notification to be sent to clients to alert them of the low balance and sending follow-up emails until resolved.
Address it in your fee agreement
Spell out how an evergreen retainer works, what the minimum balance is, and the consequences of failing to replenish the account. Making the payments required of your client predictable and transparent creates a more positive customer experience. Having the minimum amount required in trust in writing also helps protect you if a client doesn’t top off their account in a timely manner.
With these two pieces in place, you’ll be able to ensure your invoices are going to be paid in full and on time. Gone are the headaches of trying to track down customers who owe you money after their retainers ran out. Instead, you’ll be able to focus on legal work without worrying about whether or not you’ll be paid for it, all thanks to evergreen retainers.