What to do about Clients Who Cannot Afford to Pay Their Attorney Bills
Many solo practitioners have worked for larger firms and do not appreciate what it takes to get paid. Cash flow keeps any enterprise operational. A law practice is no exception. Even non-profits need cash flow to keep going.
There are three basic reasons an attorney might be having problems getting paid.
1. Some clients cannot pay for the attorney’s legal services.
2. The attorney does not bill regularly enough to produce regular cash flow.
3. The attorneys billing style annoys his/her clients.
The subject of today’s blog addresses the first problem:
What to do about Clients Who Cannot Afford to Pay Their Attorney Bills
Talking about payment:
The best way to determine if a client can pay an attorneys anticipated legal fees as they come due, is for the attorney or a law office staff person to discuss the anticipated charges with the client. Even if the client can pay for the attorney’s services at the time of the agreement, financial circumstances often change. We recommend that our attorney customers encourage their clients to communicate any problem that may make it difficult for the client to pay. Payment terms should be able to change to meet the needs of any new client financial realities. Open communications around payment issues is always a cash flow plus.
Payment Agreement:
A payment agreement separate from the attorney’s legal representational agreement is key to making sure the client knows how much and when he/she will be expected to pay. It is also helpful in finding out if the client can pay. It certainly does not assure payment, but it does help to communicate about what the client can expect to pay and when. Many clients are quite nervous the first time they visit with an attorney and their nervousness might distract them from completely understanding what they are signing. It is best that the staff person or attorney go over the Payment Agreement verbally (out loud).
Payment Plans:
A client does not have to be behind in his/her payments to be put on a payment plan. Some clients will find it easier to pay a monthly flat amount instead of a varying monthly amount. The attorney knows what is feasible for his/her practice and should offer a payment plan to any client who feels they need it in order to stay current. If the attorney waits until the client is behind with his/her payments, there is a whole range of new problem introduced that come from the client knowing they are behind with their payment schedule and now cannot afford the previously agreed upon payment schedule.
Payment Plan Bills:
To be effective, Payment Plans must be billed. Attorneys should not assume a client will remember to pay month after month. The attorney can easily combine payment plans with the monthly bill for fees and services by adding a minimum amount due. There is a role for automatic monthly credit and debit card charges, but this can be a mine field of security and other issues. We will deal with automatic monthly credit and debit card charges in another posting.
Payment Due Dates:
Whatever else the payment plan bill has, a Payment Due Date is critical. It is very important the client know the day he or she is behind with a monthly payment.
To find out more about how Interbill can help you establish and maintain a good cash flow through client payment plans, please call 800.733.9933 or email info@interbill.com.
