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Science of Collecting Fees
Ed Poll – LawBiz
Joshua Lenon – Clio
Agenda
•  Billing Needs (5 minutes)
•  Science of Collecting Fees (40 minutes)
– Reasonable, ethical fees
– Documenting billing and oversight
– Billing best practices
•  Tools to Aid with Fees (5 minutes)
•  Questions (10 minutes)
Instructors
Joshua Lenon
•  Lawyer, admitted in
New York
•  Lawyer-in-Residence
for Clio
Ed Poll
•  Founder of LawBiz
•  Author of The Business
of Law
BILLING NEEDS
Solo attorneys spend 40% of
time on non-billable tasks.
Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
Firms 11-20 spend 8% of time
on unbillable tasks.
Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
Unbillable Tasks
•  Client development
•  Licensing and subject matter
maintenance
•  Team development
•  Business maintenance
•  Billing
$21-30k lost per person per
year spent doing time/billing.
Billable Hours by Bruce MacEwen & Janet Stanton of Adam Smith, Esq.
Productive firms develop
procedures to fast track non-
billable work.
SCIENCE OF COLLECTING FEES
Collecting Your Fee:
Getting Paid from
Intake to Invoice
© 2014
Law is Both a Business
and a Profession
“Law is not a
profession at all,
but rather a business
service station and
repair shop.”
–  Adlai E. Stevenson,
Senator
12
Law is Both Profession & Business
“Law is subject to the same laws of
economics as any other business.
Having a great product is not enough.”
Tower Snow, Chairman (2001)
Brobeck, Phleger & Harrison
San Francisco corporate law firm
13
14
Getting
the work
Doing
the work
Collecting
your billings
Overview
15Copyright ©Karr Associates Inc., 2011
Collecting your fee – from the start
Dealing with slow payers
When non-payment becomes serious•  Withdrawal
•  Alternatives to secure payment
•  Suit or arbitration
Collection Begins at
Intake
•  Understand what client wants
– Seek that result for that client
– Client expectations
•  Want vs. Need
– Want this client/matter
•  “Competent” to handle the matter
Written Fee Agreements
•  Explain fee arrangement
•  Written engagement letter
– Transaction vs. Contingent
•  Consequences
– Two way street
•  Credit check
Fees
•  “Reasonable” under Rule 1.5
– Excessive (ABA)
– Unconscionable (CA)
•  Types of fees
– Time-based (usually hourly) fees
– Fixed
– Contingent
– Value
– Mixture of above
Retainers
•  True retainers
•  Advance deposits
– Evergreen
– Withdrawal
•  After billing statement
•  With notice per engagement agreement
Budgets
•  Estimate future costs and
expenses
•  Make client part of the team
•  Manage client expectations
•  Memorialize course of action client
approves
Billing Statements
Include:
•  Matter
•  Person who performed work
•  Time spent (if relevant)
•  Amount charged
•  When payment is expected
•  What will happen if payment is not
timely received
•  Can the client understand the bill?1
•  Value provided?2
•  Does the bill make the services
sound meaningful and reasonably
priced?
3
•  (If billing cycles are relevant) Has
the firm sent the bill when client is
likely able to pay?
4
Bills Influence Collections
Who Handles Collections?
•  Lawyer involvement
•  Staff involvement
– Obligation to supervise
•  Need for joint plan and
staying informed
Bills Not Paid Timely
Follow up – “Dial & Smile”
– Did client receive the bill?
– Did client understand what was done
and what was billed?
– Does client have any questions or
problems with the bill or the
services?
– When will the client pay?
Interest on Delinquent
Accounts
Generally permitted but
•  Must disclose possibility of interest
fees at outset of representation
•  Some jurisdictions require written
client consent to arrangement
Stopping Work
•  See engagement/fee agreement
•  Impact on client and matter
•  Impact on lawyer-client
relationship
Withdrawal When Non-Payment
27
Permitted
under Rule
1.16
Will not
cause
materially
adverse
effect on
interest of
clients
Time
sensitivity
Alternatives to Non-
Payment
•  Payment plans
•  Revisit when client’s finances
improve
Avoid an arrangement that the client
will almost certainly fail to satisfy
Lien on Client Files and
Property
Check your jurisdiction
•  Can’t withhold client’s file for
nonpayment
•  Can withhold much or part of a file to
obtain payment
•  Can withhold only work product
•  Can withhold only opinion work product
•  May withhold file even if client
prejudiced
Reporting Client to
Credit Agency
•  NYSBA Opinion 684 (1996) states
that reporting is not permitted
because the disclosure is not
reasonably necessary to collect
the fee
Promissory Note to
Secure Payment
Comply with Rule 1.8(a)
•  Fair and reasonable
•  Terms fully disclosed to client in
(understandable) writing
•  Advised in writing to seek independent
counsel
•  Signed agreement documenting
informed consent
Filing Lawsuit
•  Check jurisdiction regulations
•  Review E & O insurance policy
– Carrier may want/require notice
•  Use outside counsel
– Objectivity
– Better protection for confidences
Risk of Cross-
Complaints for Legal
Malpractice
•  Only 10-15% of suits for fees
result in cross-complaint
•  First loss is best loss
•  Need to make sure case is one
worth sending to suit
•  Peer review of file before suit is
filed
Process Summary
•  First meeting
•  Engagement letter
•  Budget
•  Internal collection procedure
•  Peer review of file
•  Arbitration if required
•  Write-off
•  Lawsuit
Resources
•  Collecting Your Fee: Getting Paid
from Intake to Invoice (ABA)
•  Attorney & Law Firm Guide to The
Business of Law® (ABA, March
2014)
•  www.lawbiz.com
•  www.lawbizblog.com
•  www.lawbiztips.com
•  www.lawbizregistry.com
Free Weekly Newsletter:
www.lawbiztips.com
LawBiz Management Co.
(800) 837-5880
TOOLS TO AID WITH FEES
Practice Management
Practice Management
Practice Management
ZenCash & InvoiceSherpa
Thank You
Joshua Lenon
joshua@goclio.com
@JoshuaLenon
Linkedin.com/in/joshualenon

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Science of Collecting Fees

  • 1. Science of Collecting Fees Ed Poll – LawBiz Joshua Lenon – Clio
  • 2. Agenda •  Billing Needs (5 minutes) •  Science of Collecting Fees (40 minutes) – Reasonable, ethical fees – Documenting billing and oversight – Billing best practices •  Tools to Aid with Fees (5 minutes) •  Questions (10 minutes)
  • 3. Instructors Joshua Lenon •  Lawyer, admitted in New York •  Lawyer-in-Residence for Clio Ed Poll •  Founder of LawBiz •  Author of The Business of Law
  • 5. Solo attorneys spend 40% of time on non-billable tasks. Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
  • 6. Firms 11-20 spend 8% of time on unbillable tasks. Tips to Improve Law Firm Billing Productivity – NALS 09/16/2013
  • 7. Unbillable Tasks •  Client development •  Licensing and subject matter maintenance •  Team development •  Business maintenance •  Billing
  • 8. $21-30k lost per person per year spent doing time/billing. Billable Hours by Bruce MacEwen & Janet Stanton of Adam Smith, Esq.
  • 9. Productive firms develop procedures to fast track non- billable work.
  • 11. Collecting Your Fee: Getting Paid from Intake to Invoice © 2014
  • 12. Law is Both a Business and a Profession “Law is not a profession at all, but rather a business service station and repair shop.” –  Adlai E. Stevenson, Senator 12
  • 13. Law is Both Profession & Business “Law is subject to the same laws of economics as any other business. Having a great product is not enough.” Tower Snow, Chairman (2001) Brobeck, Phleger & Harrison San Francisco corporate law firm 13
  • 15. Overview 15Copyright ©Karr Associates Inc., 2011 Collecting your fee – from the start Dealing with slow payers When non-payment becomes serious•  Withdrawal •  Alternatives to secure payment •  Suit or arbitration
  • 16. Collection Begins at Intake •  Understand what client wants – Seek that result for that client – Client expectations •  Want vs. Need – Want this client/matter •  “Competent” to handle the matter
  • 17. Written Fee Agreements •  Explain fee arrangement •  Written engagement letter – Transaction vs. Contingent •  Consequences – Two way street •  Credit check
  • 18. Fees •  “Reasonable” under Rule 1.5 – Excessive (ABA) – Unconscionable (CA) •  Types of fees – Time-based (usually hourly) fees – Fixed – Contingent – Value – Mixture of above
  • 19. Retainers •  True retainers •  Advance deposits – Evergreen – Withdrawal •  After billing statement •  With notice per engagement agreement
  • 20. Budgets •  Estimate future costs and expenses •  Make client part of the team •  Manage client expectations •  Memorialize course of action client approves
  • 21. Billing Statements Include: •  Matter •  Person who performed work •  Time spent (if relevant) •  Amount charged •  When payment is expected •  What will happen if payment is not timely received
  • 22. •  Can the client understand the bill?1 •  Value provided?2 •  Does the bill make the services sound meaningful and reasonably priced? 3 •  (If billing cycles are relevant) Has the firm sent the bill when client is likely able to pay? 4 Bills Influence Collections
  • 23. Who Handles Collections? •  Lawyer involvement •  Staff involvement – Obligation to supervise •  Need for joint plan and staying informed
  • 24. Bills Not Paid Timely Follow up – “Dial & Smile” – Did client receive the bill? – Did client understand what was done and what was billed? – Does client have any questions or problems with the bill or the services? – When will the client pay?
  • 25. Interest on Delinquent Accounts Generally permitted but •  Must disclose possibility of interest fees at outset of representation •  Some jurisdictions require written client consent to arrangement
  • 26. Stopping Work •  See engagement/fee agreement •  Impact on client and matter •  Impact on lawyer-client relationship
  • 27. Withdrawal When Non-Payment 27 Permitted under Rule 1.16 Will not cause materially adverse effect on interest of clients Time sensitivity
  • 28. Alternatives to Non- Payment •  Payment plans •  Revisit when client’s finances improve Avoid an arrangement that the client will almost certainly fail to satisfy
  • 29. Lien on Client Files and Property Check your jurisdiction •  Can’t withhold client’s file for nonpayment •  Can withhold much or part of a file to obtain payment •  Can withhold only work product •  Can withhold only opinion work product •  May withhold file even if client prejudiced
  • 30. Reporting Client to Credit Agency •  NYSBA Opinion 684 (1996) states that reporting is not permitted because the disclosure is not reasonably necessary to collect the fee
  • 31. Promissory Note to Secure Payment Comply with Rule 1.8(a) •  Fair and reasonable •  Terms fully disclosed to client in (understandable) writing •  Advised in writing to seek independent counsel •  Signed agreement documenting informed consent
  • 32. Filing Lawsuit •  Check jurisdiction regulations •  Review E & O insurance policy – Carrier may want/require notice •  Use outside counsel – Objectivity – Better protection for confidences
  • 33. Risk of Cross- Complaints for Legal Malpractice •  Only 10-15% of suits for fees result in cross-complaint •  First loss is best loss •  Need to make sure case is one worth sending to suit •  Peer review of file before suit is filed
  • 34. Process Summary •  First meeting •  Engagement letter •  Budget •  Internal collection procedure •  Peer review of file •  Arbitration if required •  Write-off •  Lawsuit
  • 35. Resources •  Collecting Your Fee: Getting Paid from Intake to Invoice (ABA) •  Attorney & Law Firm Guide to The Business of Law® (ABA, March 2014) •  www.lawbiz.com •  www.lawbizblog.com •  www.lawbiztips.com •  www.lawbizregistry.com
  • 36. Free Weekly Newsletter: www.lawbiztips.com LawBiz Management Co. (800) 837-5880
  • 37. TOOLS TO AID WITH FEES