Following up on collections with clients is unpleasant and stressful for all involved. When things come to this point, there are often a series of individual decisions to be made about how to deal with a particular client and situation. But even if you choose to pursue payment, you likely won’t receive all, or even a substantial percentage, of what you’re owed.
Instead, the best way to improve upon this issue is to make changes earlier in your firm’s on-boarding and billing processes.
Take the funnel approach
Talking about money early in the process of taking on a new client can be accomplished with tact and grace—and get you and your client on the same page.
We recommend thinking of conversations about payments with new clients as a funnel. It’s okay to start broad and vague. You can get more specific as you go, but the goal should be to broach the topic before getting to the final paperwork.
For instance, if you offer payment plans, mention that in your marketing materials and in any initial conversations. This helps prep them early to think about payments and options. By the time you are signing a financial agreement, you should know how the client will pay.
Discuss payment options
Different practice areas and cases call for different billing options. During the on-boarding process, discuss how your client will pay.
If the work will be done for a fixed fee, let them know the cost as soon as possible. If they are going to put up a retainer, discuss how much that will be and what the process looks like.
And if the client isn’t paying by retainer of fixed fee, get a card on file and have them sign a simple, clearly-worded financial agreement that authorizes you to charge their card within a set number of days of issuing a bill. For those offering payment plans, determine a set amount per month. Either way, make sure your client retains a physical and electronic copy of this agreement.
Complete financial steps before moving forward
In addition to discussing the matter with clients and including a clear financial agreement as part of your paperwork, you need to follow up on what’s been discussed. Before beginning any work for the client, it’s important to have some level of financial commitment from them.
For those paying retainers, get the agreed-upon sum deposited into a client trust account. For fixed fees, get a significant portion of the total as an advance payment. And if you are going to keep a client’s card on file, be sure you have that information and are storing their sensitive data properly.
Keep your invoicing clear and timely
As much as preparing your client matters, so does follow-through from the law firm. If a client is expecting to have their card charged for legal work and three months go by before they get a bill from the law firm, they’re going to be feeling irritable at best.
The same goes for paying the rest of a fixed fee or depositing more for already completed work because no one notified the client about a depleted retainer. Billing timelines matter to everyone.
To address this, make a firm policy to invoice within thirty days of work and to notify clients when retainer balances are getting low. Likewise, strive for invoices that are concise and straightforward for a layperson to read.
Make good tech work for you
For many law firms, the path to consistent and timely follow-through comes through using good technology.
With features like bulk billing, a modern practice management system can significantly reduce the amount of time needed to generate and send bills. Making billing less of a project makes it easier to stay on top of. A sound practice management system can also send an automated alert when a retainer balance gets low.
Ultimately, the way to get clients to pay starts several steps before the moment of collections crisis, but it can be addressed with consistent policy and foresight. Prep your clients to discuss payments early, create a clear financial agreement, don’t proceed without hard proof of financial commitment, and leverage modern tech for timely billing.