Guerilla Tactics on Getting Paid

Table of Contents

Introduction

1. Quoting Fees
2. Retainer Agreements
3. Retainers
4. Clients Need to Know
5. Security for Payment
6. Interim Billing
7. Words of Wisdom
8. Administrative Tips
9. When to Say No
10. Hi-Tech
11. Make Payments Easier
12. Soft Sell Collections
13. Hard Sell Collections
14. Creative Collections

Introduction

Lawyers, like most business people, often have difficulties in having their accounts paid. In theory, lawyers should have a big advantage in that the ability to hold funds in trust should ensure a 100% recovery of fees and disbursements. The reality is that we often cannot get sufficient retainers in advance and alternatives must be explored.

I have always had an interest in looking at unique ideas on getting paid. In 1999, Marla Miller (a lawyer from Edmonton) and I collaborated by searching the legal landscape to discover some gems which would be of practical value to lawyers. Since that time, I have found more tactics on getting paid. These are the best of the guerrilla tactics on getting paid.

A. Quoting Fees

1. Quoting Low

Clients often want a quote for fees. Some things are obviously more simple than others to quote. Beware of winning over the client simply because your quote is the lowest. Both you and your client may not be getting the deal you thought. If a prospective client presses you for a quote over the phone, tell them that is not fair to either of you. Tell them that if you quote too low, and the cost turns out to be higher, it may seem to them that you intentionally did this to get them in the door. On the other hand, if you err on the side of caution and quote too high, and they decide not to retain you because of the cost, it is not fair to you. Sell them on how you will do the job, not the cost.

2. Quoting high

When initially quoting fees to clients, it is better to quote them based on what you feel the overall cost will be, rather than just indicating an hourly rate. Start with the high end and advise clients as to the cost of a trial, the cost to conduct Examinations for Discovery, the cost to conduct an interim application, the cost to conduct settlement negotiations and the cost to complete the paperwork to effect the settlement. The client then has the full range of potential costs.

3. Keep notes of quotes

Make a practice of noting any quotes or ranges of quotes given, including any conditions (eg. $1,000 plus disbursements if the other side is noted in default, i.e. no negotiation, no court) on the same place in every file, or even confirm it in writing to the client. If the client then argues that a quote was given, and clients often have selective memories of this, you can refer to what was actually said. This reduces disputes and problems in payment.

4. Use language everyone understands

Sometimes a fee quote can be more easily understood by comparing legal fees to other forms of services. For example, when you take your car into the shop for repairs, the bill presented includes a portion for labour (fees), parts (disbursements), shop charges (other charges) and GST. Then, depending on the matter presented, the lawyer can estimate the total cost to the client based on three categories: minimum, realistic and what if. A range of costs is set out under each heading. At the conclusion of the first meeting, the client is given your rough notes setting out fees. This is later followed up with the proper retainer letter.

5. Estimating realistic fees

Learn how to estimate costs of certain steps in advance. Be honest about the fee you expect to charge for specific steps (i.e. discovery, trial). Clients need to know this information and it helps them make decisions on proceeding.

6. Fixed fees

If you can estimate the cost of doing routine matters (real estate transactions), or certain segments of legal services (pleadings, Examinations for Discovery, etc.), many clients prefer a fixed fee approach. An hourly rate can still be used for the trial or other services. A fixed fee system motivates the lawyer to work efficiently and economically to maximize results in profits. The client knows what the service is going to cost and can budget for the amount in advance. Computers and the development of forms and systems help reduce legal costs and thus increase profits based on the fixed fee. Risk is shifted from the client to the lawyer.

7. Minimum/maximum fees

A minimum/maximum fee is a variation of the fixed fee arrangement. The fee is set on the basis of the results achieved. If the results are above a certain level, the maximum fee is charged. If the results are below a certain level, the fee will be the minimum sum. In this way, some of the downside risk is covered on the lawyer's behalf, but if an excellent result is obtained, the lawyer is compensated at a greater rate. In one example, I am aware of a lawyer conducting a spousal support variation application where the lawyer advised the fee would be a certain rate if the spousal support were increased by up to $200.00, and a greater rate if the spousal support were to be increased greater than $200.00. However, a minimum/maximum fee arrangement may be deemed to be a contingency fee agreement and these agreements are void in some jurisdictions, or require specific provisions to be enforceable.

8. Talk about fees early

Clients are often reluctant to ask about fees. It is up to the lawyer to discuss fees and disbursements with the clients at the first meeting. Try to provide an estimate of fees at each stage of the proceedings. Make it clear that the estimate of fees may change depending upon what the other party does and the level of cooperation. Talking about fees reduces accounts receivable, complaints to the Law Society, stress and conflict.

9. But not too early

In 1994 the State Bar of California conducted research on individuals who had formerly been family law clients. A number of the respondents felt that their lawyers mentioned fees too early in the process and too adamantly, leaving a perception that the lawyers only wanted to squeeze money out of the clients and this was their first and only priority. The lawyer must be sensitive to the actual problem of the client rather than just the cost to help resolve it.

10. Standard Forms

When your client initially meets with you, provide them with a standard form for them to fill out basic information. At the bottom of the form, include a statement indicating how the client will be paying for the first interview: cash, cheque, Visa etc. In this way, before you even enter the room the client expects to have to at least pay for the initial interview.

11. Listen

Given the time constraints of a busy practice, an experienced lawyer likes to direct the client to the main issues quickly and efficiently. However, it is usually better to let the client tell their story with minimal guidance on the part of the lawyer. Listening gives the client that opportunity to tell "their" side of the story. This in itself is a part of the healing process that clients seek from their lawyers. Take the time to listen to your clients. Clients develop loyalties to their lawyer for many reasons. Perhaps one of the biggest (even above results obtained) is that they felt heard and understood. A loyal client is more likely to pay than one for whom you may have obtained the results but not their loyalty.

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B. Retainer Agreements

12. Signed Retainer Agreement

Ask the client to sign a Retainer Agreement and provide the lawyer with a stated initial retainer fee prior to commencing any work on the file.

13. Monthly billing

Your Retainer Agreement should provide for a clear description of interim billing procedures to effectively reduce collection problems and increase billings. Generally, this is set out as monthly billing. The bills must detail the service provided in each month. The Retainer Agreement should provide for payment within 30 days, after which interest is charged. Payment of accounts is made from the initial retainer amount. Once the initial retainer is used up, it must be replaced. If payment is not received in a timely fashion, the lawyer reserves the right to withdraw from the file unless alternate satisfactory payment arrangements are made. Such alternate satisfactory payment arrangements may include the taking of security or assignments. Account reminders are sent monthly on any outstanding amounts.

14. Charging interest

Charge interest on your outstanding accounts and DON'T offer competitive rates! Make sure your client understands that the interest you charge is much higher than that charged by the bank or even on their credit card. Of course, make sure that the interest is contracted for in the retainer agreement.

15. Trust transfers

Provide in your retainer agreement that, should you receive any monies in trust on your client's behalf, any money owed by them to you will be paid form the funds held in trust. This may be obvious to you, but often is not obvious to the client.

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C. Retainers

16. Get money up front

This simple rule will solve all problems.

17. Afraid to ask for a retainer?

Put a picture of those people/that vision you value most (i.e. your kids, that perfect car or vacation spot) on the wall or bookshelf immediately above where your client sits. Before asking for the retainer, take a deep breath, glance at that picture, and ask. It makes it easier.

18. Sob story

Ask for the appropriate retainer at the first reasonable opportunity. Preferably before you have heard all of the details of the client's tough luck story. Lawyers sometimes empathize too much to be able to take the tough stance and ask for an appropriate retainer. But if you do not look after yourself appropriately you will, in time, be not much use to your clients.

19. Good rule of thumb

If you are not the first lawyer on the file, multiply your retainer by the number of prior lawyers on the file (i.e. if you're the second lawyer, multiply your retainer by two).

20. Really big retainers

Consider really big retainers in the following cases:

1. If a client cannot put up a $2,000.00 retainer today, he or she will not be able to pay a $2,000.00 account rendered a month from now, after you have gone to Chambers on the client's behalf.
2. Try not to underestimate the total fees at the beginning of the file. If the client wants to embark on a difficult court battle, request a $10,000.00 retainer. (If they cannot come up with it, they cannot afford the fight).
3. Ask for "serious" retainers and a series of post-dated cheques for the full estimated cost when a client initially hires you. The client knows right up front of the costs and you will reduce your collection problems.

21. Make the spouse pay for legal fees

If you are dealing with a Family Law matter, some jurisdictions allow an interim application to either advance property to the impecunious spouse, or seek costs in order to prosecute (or defend) a matrimonial case. The evidence for the Court should set out the issues in the case, the complexity of those issues and the estimate of legal and paralegal time and hourly rates to yield a total fee. One spouse's needs are offset against the other's ability to pay. Also confirm the client's intent to prosecute and defend the action in good faith. Case law setting out the legal requirements would obviously be beneficial. A successful application of this sort will go a long way to solving your and your client's dilemma of how to pay for this case.

22. Post-dated cheques

Where a client is unable to provide a full retainer, ask for a series of post-dated cheques which will be placed in trust even if fees are not outstanding so that the trust funds will build.

23. Trials

Insist on receiving all anticipated trial fees and disbursements 30 days in advance of trial, to be held in trust pending resolution of trial.

24. Replenish retainers

Once your account is rendered, trust-transfer to pay the monthly bill, but send a cover letter with the bill that asks the client to replenish the retainer back up to its original level. The account should also have a statement of the amount of funds left in trust. The statement might read: "The retainer which you provided has run out. Please provide a further retainer pursuant to the retainer agreement which you signed at the start of your file, together with the outstanding amount of this account. The requested monies are required before any further work will be completed on your file." If the client has not replenished the retainer by the time the next month's bill is rendered, contact the client immediately. This way, you will always have $1,000.00 or $1,500.00 in trust which covers most monthly bills.

25. Retainer in the end?

Amend your retainer agreement and adopt the practice of holding a portion of the initial retainer (say, $500.00) as a credit to the client's final account with the right to apply the retainer to any interim account which remains outstanding for 30 days. If the account is not paid at the end of 30 days, work will be stopped until the account is paid in full and the retainer is replenished.

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D. Clients Need to Know

26. Detailed information to client

An informed client is a happier client, and a happier client is more likely to pay. Although most lawyers now provide a form of retainer letter or agreement to their client, more information may be required. Some lawyers provide a detailed list of information they want from the client at or shortly after the initial meeting.

27. Educating clients

Educate clients on how to get the most for their legal dollar. Put together a package for each client which sets out the framework for the work you are about to do and answers some of the frequently asked questions. Give your clients ongoing cost benefit analysis of their situation. Explain different ways of keeping costs down to make matters more efficient (eg. wasted time with telephone calls, wasted meetings, etc.) If the client feels that the time they spend with you was time well spent, they are happier—and a happier client is more likely to pay.

28. I'm like your doctor

Don't be afraid of delivering the tough news. Even at the beginning. That way you will not set up false expectations on behalf of a client, who will later be disappointed and less willing to take responsibility for their legal costs. Here is a technique that helps people understand the situation. In general, most people have never dealt with a lawyer, but almost everyone has dealt with a doctor. Emphasize to the client that when they see their doctor, they want an honest and informed diagnosis, not false hope. If you have cancer, you want to know the truth so it can be dealt with in a constructive manner. The same goes for accurate "diagnoses" from lawyers.

In addition, advise your clients that you may not have the answer right away, and may have to send the client out to a specialist like an appraiser, a chartered accountant, a psychologist or a business valuator for further professional advice and opinion. Explain to your client, in an effort to obtain their understanding of the necessity of outside professional costs and disbursements, that like a physician who may need the assistance of other specialists, you will access the appropriate specialists.

29. Client is not a blank cheque

Share with clients that you do not consider them to be a blank cheque, and that you will discuss with them all of their options and suggest methods of keeping their legal costs realistic. Then do so. That way, when they receive your account they will know that together you have made decisions about how to spend their legal dollars.

30. Extra activity

In the event there is a lot of activity on a file in a particular month, the bill should be accompanied by a letter dealing with work which has been done and the context of why it has been done. Provide detailed billing, referencing time on letters, phone calls, etc. The process is to ensure the client is kept fully advised as to the work being done and fees expected.

31. Status report

When billing monthly, always accompany accounts with a letter setting out the status of the file and the status of the account and the retainer. The status report should provide sufficient information to the client so the client understands what is happening on the file.

32. Ongoing discussions about fees

Update clients about how legal costs are headed as things progress. Have regular discussions about money so the client will feel more comfortable. Clients often want to avoid money questions. Discourage that behaviour.

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E. Security for Payment

33. Security on property

Where the client does not have the proper cash flow or assets to pay you an appropriate retainer at the beginning of the file, consider obtaining security on the client's property to cover your fees. If you are "carrying" the fees (never carry disbursements) for a client, obtain security by registering agreements for fees at Land Titles Registry if applicable or obtain Irrevocable Assignments of sale proceeds of property.

34. Caveat on home

If fees are not to be paid until some time in the future, protect your position by registering a caveat against your client's interest in his or her home. While you must be careful if the home is in joint tenancy, if your client has severed the joint tenancy, you can caveat his or her interest. If your client is both parties to a joint tenancy held home, then you need the agreement of both parties to file the caveat.

35. Other forms of security

Sometimes your client may go bankrupt as a result of legal proceedings. Consider these options:

1. Get an appropriate retainer. If you receive a reasonable and appropriate retainer for the anticipated legal services on the eve of bankruptcy, the trustee cannot garnishee or seize this retainer. This rule applies even if the services have not yet been rendered.
2. Sue your client and file a Writ of Execution against the land. In some jurisdictions, a mortgage against the matrimonial home is void because of the statutory restraint against alienation (see Ontario Family Law Act). You may wish to arrange for unopposed taxations/assessments of your fees, and thereafter register a Writ of Execution;
3. Charge the land. If your work was instrumental in preserving or recovering property, then you may be entitled to a lien or charging order to be secured against the property that was preserved or recovered;
4. Lien on cost award. If you received a successful Court Order and costs were awarded, you may claim a solicitor's lien over the cost award. The award will survive the payor's bankruptcy and can be enforced even if your own client becomes bankrupt.

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F. Interim Billing

36. Just like paying regular bills

Bill your clients regularly. Clients tend to pay their accounts if they are more frequent and smaller. Imagine if you got your Visa bill only once or twice a year and then had to pay it all at once! Waiting too long to bill and having the client receive a big bill usually results in the client becoming hostile and panicky: not a condition conducive to paying.

37. More reasons for interim billing

Interim bill without fail every four to six weeks unless the interim bill would be less than $500.00. Send out even a small bill every two to four months where there has been a lull in the action. Frequent interim billing is crucial for a number of reasons:

1. The lawyer is less likely to discount his or her own work when it is fresh in his or her mind and the overall bill is a smaller number;
2. This gives you plenty of advance warning if the client is going to be difficult about paying;
3. It gives the client an opportunity to fully understand the cost of litigation, even in circumstances where the client will be paying out of the proceeds or in monthly installments which will not be keeping up with the running total of the interim accounts. Even with prosperous clients, it is easier for them to pay a series of smaller accounts than big bills every six months or so;
4. You are far more likely to get paid in full while your client still needs you than after the fact;
5. It increases your cash flow;
6. It is definitely easier to obtain payment of smaller accounts than it is to obtain payment of a few larger accounts. Not only can the client budget for legal fees, but with more frequent accounts describing the work that has been done, clients can see that the lawyer is interested in, and is giving attention to the client's problems, which seems to help "inspire" payment.

38. Exception to monthly billing

Bill monthly, no matter what. Exception: if you have a big win or loss - bill immediately!

39. Set a minimum billing policy

Always bill clients monthly where work/time/disbursements exceed $500.00.

40. Monthly account reminders

Always send out monthly account reminders.

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G. Words of Wisdom

41. What goes around comes around

Encourage new clients who have changed lawyers to pay their previous lawyer's bill. What goes around comes around. Don't take a file over unless you can get the entire file from the other lawyer and ensure that the other's lawyer account is taken care of. For one thing, leopards don't change their spots. If the client is going to stick one lawyer (don't you believe that it was the other lawyer's poor lawyering that justifies this), they are going to stick it to you. Also, if we all adopted this practice, or at least you gain the reputation for this practice, then hopefully the next lawyer will ensure that appropriate arrangements are made for your account.

42. Setting client expectations

As lawyers, we want to help our clients. We hear the details of their case and we want to solve the problem. It is easy to get caught up in the facts of the case and then promise certain outcomes. It is very easy to say "don't worry about that, I will take care of it".

Lawyers sit in a unique position with clients. We have authority, yet we counsel clients. We receive sensitive and confidential information. We have duties to ourselves, the Court and the client. It is very much a balancing act.

Setting client expectations at the earliest stages of a file will undoubtedly make the matter move in a much more positive direction. Clients need to have their expectations set at a very reasonable level, both in terms of outcome, timing and cost in order to help them through this difficult time in their lives. The best way to handle this is at the very first meeting, and then followed up with written documentation (in standard form?) to the client setting matters out in detail. Retainer Agreements are also helpful in this regard.

43. The procrastination problem

We all have files that cause us anxiety and result in procrastination. Here are some suggestions on how you might want to handle those files so that you can increase your chances in getting paid:

1. Try setting aside 20 minutes to review the file and deal with only one issue. Often the mental block was something not as bad as you had originally envisioned.
2. Try having your assistant review the file for you to put it in a form which is manageable. This may mean reducing the correspondence pin, summarizing the pleadings or preparing a history for you. This makes dealing with it much more manageable.
3. Some lawyers suggest having monthly meetings with other counsel in their office and do an exchange of files. Each of you takes one or two procrastination files and they are shifted to another lawyer. The file which causes you brain freeze has now been passed on, and you get a new one which may be of more interest to you. Of course, client consent is required (but will not likely be denied given that nothing is being done on the file!)
4. If it is a real problem, maybe you have to get off the file. Sometimes a candid discussion with your client will be enough to get the client onside. Then, help transition the file appropriately to a new lawyer. The client will appreciate it and your life will be much simpler.

44. You're worth it

It is important that you record all of your time. Many of us have a tendency to discount our work too frequently for a variety of reasons, such as a concern about the mounting costs, or clients with little money. It is better to record the full time, then when billing, you have the discretion to reduce the account as required under the circumstances. If you discount your work at the moment you record your time, you will never know what your true cost is.

45. Get the work done!

It's easier to bill and demand payment when you have just accomplished something tangible or are about to take a big step that the client understands requires financial backing.

46. Strike while the iron is hot and then get it billed

When you have settled a file, especially after a meeting where the client was present, get the paper work (the settlement agreement or court order) done ASAP. The enthusiasm for the settlement can pale if there is too much time between the meeting of the minds and the paperwork, and clients are much more happy to pay when they have some immediacy - the settlement followed by concrete evidence of it.

47. Get something from everyone

You should always get paid something from every client. Half a loaf of bread is better than no loaf. Perhaps charge one half of your hourly rate for the initial consultation. You will train your clients to come to your office bearing gifts of legal fees.

48. Matrimonial Assessment

Some clients may not want to retain you until they have had a chance to meet you and discuss their legal problem. They may only want advice about their legal rights and responsibilities. Rather than quoting an hourly rate, consider offering clients a package deal for a complete legal assessment of their problem. For a flat fee ($300.00?) you will provide your client a meeting to review the facts and law, provide the client with options and strategies, together with brochures and other written information all for one fee to be paid and collected on the spot. (Experience shows that these people will eventually come back to you for other legal work anyway!)

49. It's a thankless job, but somebody's gotta do it

We often reduce our fees because we feel badly for our client or feel badly about unpleasant results that are no fault of our own. Rarely do we get appreciated for this (let alone thanked). Perhaps clients don't appreciate these reductions in fees because they feel that costs are high and deserve to be lowered. Worse yet, perhaps clients don't even notice when we reduce our fees! Then of course, is the frustration of the client who doesn't pay even your reduced fee on a timely basis. If you are inclined to reduce your fees, don't do so without discussion with your client. Talk to them and tell them why you are considering reducing your fees and suggest that you are prepared to do so provided that payment of the reduced fees is made within an agreeable amount of time under agreeable terms.

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H. Administrative Tips

50. Office efficiencies

Use your office efficiencies properly. For example, you may wish to block bill for a particular service(i.e. .7 for the drafting of a Statement of Claim for Divorce. On average, this makes sense).

51. Reward your staff

Ask your support staff to determine where expenses can be cut. If a suggestion is implemented, reward your staff for the savings.

52. Your accountant

Hire a good accountant.

53. Targets

Set billing and receivable targets and review the performance quarterly.

54. Variable billing rates

Consider charging variable billing rates for different aspects of a file. You may wish to charge a certain billing rate for normal services, and a somewhat higher billing rate for Court appearances, preparation and follow up.

55. Get help

Your initial retainer letter should provide advice to clients on how your staff help you. Encourage clients to contact your legal assistant for information so that they get faster service and you do not have a stack of phone calls to return every day. But if you are going to bill for your staff's time, explain that in your Retainer Agreement, and then do so.

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I. When to Say No

56. Saying "no"

Just because a client wants you does not mean you must always take on the file. Sometimes the best thing you can do is simply to say "no" to a client. Then there will be no collection issue at all.

57. Select your clients carefully

As simple as it may sound, it is important that you as the lawyer select the clients you want to deal with carefully. Just think back to many of your problem files in the past and you will see a number of danger signals that likely popped up at the early stages, but you chose to ignore them. Use your gut and if it doesn't feel right, turn the client away. Especially for young lawyers who feel that they are not very busy and they cannot afford to turn work away, it is much better to spend the extra time marketing to potential good clients rather than working and not getting paid for ungrateful ones.

58. Show me the money

Tell your clients that if you have a choice of working on a file where there is money in trust, versus a file where there is no money in trust, obviously you have to work on the file where there is money. Those clients have, in concrete terms, by deposit of funds, put their faith in you. You have to honour that faith. Then do that. Work on the files that have money in trust, or where payment is made regularly, first.

59. The no-nonsense letter

In the event there is a difficult account which is not being paid, then a no-nonsense letter to the client indicating that there will be no further activity until the account is paid, or substantially paid, will often do the trick.

60. Stop work!

Cease working on a file if your account remains unpaid after the time you have allowed for payment. Let the client know this both in your Retainer Agreement and in a follow-up letter when the account remains outstanding.

61. Get real and move on

There are times that you will have clients with whom you do not get along and they will fire you. When that happens, cut your losses, set your fees in an amount that will hopefully not attract taxation or assessment, and get on with other matters.

62. NSF cheques

Fire clients whose cheques are returned NSF. They are not reliable and waste administrative time as well as billable time.

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J. Hi-Tech

63. Voice mail

Use voice mail both to leave messages and receive them. There has been a lot of controversy over voice mail, but for the most part, it can add peace to your life and "profit" to your bottom line.

64. Use your computer

The computer you have in your office has fantastic capabilities. Computer programs are not expensive. Some good bets include Amicus Attorney, any legal software accounting program and maybe even consider using a Palm Pilot. Consider billing out some of the costs of computer-based research to your clients when doing research.

65. E-mail

The use of e-mail can cut down time and increase profitability. Especially if you can type at a decent rate, you can avoid those endless games of telephone tag. Sending a brief note or letter (sending a copy of the letter to your client with one click) can be done more quickly than the time and your cost of dictating a letter, and reviewing and signing that letter when done. Support staff's time and attendant cost is cut out. Clients appreciate the immediacy and if you are more efficient and respond quicker, consider premium billing for that premium service. Lawyers' major resistance to this method of e-mail is that they fear setting up unrealistic expectations in clients as to how fast they can reasonably be expected to respond. If you cannot respond immediately, consider sending a quick e-mail by return that simply says: "Your e-mail is acknowledged and will be responded to within the next week" (or another appropriate time frame).

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K. Make Payments Easier

66. Making payment easier

Include with your accounts a stamped, return envelope to make payment all that easier. Even better yet, pre-print envelopes with Canada Post Registration and make the envelopes slightly smaller than your standard envelopes for easy insertion when sending out your bill.

67. Make your bill obvious

When doing a reporting letter, send your Statement of Account under separate cover, or include it in a separate letter-size envelope and place it all in the larger envelope. From time to time a client will receive a reporting package and fail to notice the account enclosed.

68. Clients like to use credit cards

Accept a Visa or MasterCard payments and consider the following:

1. Obtain from the client a standing written authorization to pay by credit card any account remaining outstanding in excess of, say, 30 days;
2. A variation of the above is to obtain the client's signature on a number of credit card chits to be held on the file on the written understanding that the chits will be used to pay accounts as rendered (or specified amounts monthly);
3. Clients like to get the air miles;
4. Add to or enclose with each account a blank authorization for the client to complete and return directing that the account be paid by credit card. Or include a remittance sheet which sets out the amount owing and advises the client to either mail, phone or fax authorization payment of the account by credit card. For example:
5. "Please return one copy of this invoice with payment. To pay by Visa or MasterCard, complete, sign and return the following section.
6. File Name: _____ File No: _____ Amount to be paid: $_____
   Payment by: Visa _____ MasterCard _____ Card No: ___________________________________
   Expiry Date: _____ Name on Card: ____________________ Signature:_______________ "

69. Innovative use of credit cards

Instead of taking an initial retainer to be held in trust, the client may provide you with a credit card number and sign a preauthorized chit. You simply bill the client monthly and pay the account using the credit card within 15 days of the account being rendered. If the client wishes to pay in another way, he or she may do so within the 15 days. If there is any dispute as to the account, it must be discussed within the 15 days.

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L. Soft Sell Collections

70. Keep that list handy

Every Monday have your legal assistant print off an accounts receivable listing. Keep it by your phone. When your client calls, look up their name on the listing and talk to them during that conversation about their account.

71. Set time aside to collect

Mark off on your calendar an hour every week to deal with your accounts receivable and then don't let anything interfere with that hour. Invest that hour in yourself. You did the work. You did a good job. If you don't value yourself enough to get paid for it, your clients won't either.

72. Avoid burying your head in the sand approach

It is very easy to simply "bury your head in the sand" and blindly send out your bills to clients with the hope that the bills will be paid. Before sending out any account to a client, call them up and tell them the account is coming. Tell them how much it is and see if there is any negative reaction. If there is, that is the time to deal with the account. If there is no problem with the client when you indicate the amount of the account, the likelihood of having it paid increases as the client is fully expecting an account to arrive in that amount.

73. Personal service

In most cases, avoid passing the task of collections to other staff members. Personally review all your accounts receivable monthly and be an active participant in collecting your accounts. Act earlier to reduce the chances of not getting paid. On the other hand, in some cases, after reviewing your outstanding receivables with your legal assistant, you may find that your legal assistant has a good relationship with the client and may be better able to collect than you. Use whatever resources you have at your disposal to help you out.

74. Reward your staff

Give your staff a stake in the collections. Reward or bonus your staff for getting in that especially difficult to get payment.

75. Don't let them get old

Discuss any fee problem with your client as soon as you know there is a problem. The colder (older) an account gets, the harder it is to collect.

76. Personal telephone contact

If you are not paid within 30 days of your account, call the client about the collection rather than send out an account reminder letter. In all instances where an account is 60 days overdue, a personal telephone call to the client is absolutely essential, particularly if an ongoing solicitor/client relationship is to exist.

77. Pushy, but why not?

Phone your client up, tell them that their outstanding account has just come to your attention, and if they will please give you their credit card company right now, you will look after that right away. If they say they do not have the money to pay to the credit card company, remind them that the interest that you are charging them is higher than the interest rate that the credit card company is charging. (As it should be!)

78. What's the reason I'm not getting paid?

It is important to determine the reason why you are not getting paid: if it is because the bill is just too high, then this can be dealt with rather easily with payment options or some other technique dealt with in this paper. But if the reason you are not getting paid is because the client is unhappy with your representation, then that is a sure sign it is time to get off the file. You may lose your fees to date, but better now than later.

79. Get a commitment

When you call your client on a collection matter, get a verbal commitment from the client setting out the specific action to be taken by the client. This includes the amount to be paid, how it will be paid, how it will be received by you, when it will be received and how future payments will also be handled. Follow up your discussion with a letter to the client confirming the agreement. Most people do not want to renege on their agreements and this simple action may just get your account paid up.

80. Keeping pressure on

Although it is important that billing be completed monthly, the telephone follow-up on a weekly basis beginning on the 30th day after the rendering of the account is essential. Some distance should be between the law office and the collector since it makes it easier to maintain a good solicitor/client relationship. Consequently, if possible, have someone that is from the office (office manager?) but not the secretary who deals with the clients on a regular basis, as the person making the harassing follow-up phone calls. Even better is an outside person who calls on a very neutral basis.

81. Other collections people

Lawyers tend to be the worst at their own collections issues. Consider using a collections lawyer or collections agency to handle outstanding receivables greater than 90 days.

82. Passing the buck

Reluctant to ask for the cash on a slow account? Pass the buck. Tell the client that you need to collect because your banker is giving you a hard time about the collectible. (The banker may be you, your spouse, your mortgage holder, your conscience.) It puts the blame on a third party, making them the "bad guy".

83. The rules of effective collection letters

Although a telephone call gives a much greater sense of urgency, collection letters do have their place. The rules of effective collection letters include:

1. Keep the writing simple and understandable. Use short sentences and short paragraphs;
2. Convey to your client why it is a good idea for him or her to pay the bill, not how it will benefit you. Clients are not concerned about your pocket book, but theirs;
3. Explain in your letter the reason you are writing (the account is overdue, the client has not lived up to his or her promise, etc.), what it is you want your client to do, leaving no room for misunderstanding, explain why the client should do what you are asking (what is in it for him or her?) and be specific on what action you will take if the client still refuses to pay.
4. Also, avoid the following words:
   1. Remit - it is archaic. Use the word send, mail or deliver;
   2. Attached herewith - better to use here is a copy of;
   3. Contact - what does it mean? If you expect a telephone call say "please call me";
   4. Within 10 days - 10 days of what? It is much better to indicate that payment is required in your office by 4:00 p.m. on February 15.

84. More collection letters

Your collection letter should follow a pattern of increasing seriousness. These include the following:

1. Over 60 days - advise the client that the account remains overdue, the current amount outstanding, send a copy of the account and advise the client that immediate payment is required, or that you should be contacted immediately to make alternate arrangements;
2. Over 75 days - send a second letter to the client, by certified or registered mail. Threaten that the account will be turned over to collections (or an outside lawyer). It is sometimes beneficial to advise the client what may happen as a result of this collections process (i.e. a Judgment will be registered against the client and every credit reporting agency in your province will be notified. Wages will be garnisheed and assets will be seized and sold to pay the Judgment.);
3. Over 90 days - send another certified or registered letter to the client advising of the lawyer you will be using for collection (or the agency). Give client one last opportunity to pay before making final decision on collection or write off.

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M. Hard Sell Collections

85. In your face

This one works like a charm! If a client fails to respond to your letters and phone calls regarding payment, send them a copy of your actual Statement of Claim, or Small Claims summons, advising the date that the document will be filed if arrangements with respect to payment are not made prior to that date. This is a very graphic reminder (something about clients seeing their name as Defendant) and gets excellent results.

BONUS TIPS!

86. Sue the cheapskate

Take the most efficient route possible, but if the amount of the account is enough, sue the client! In Alberta, at least, it is increasingly more efficient to proceed through Small Claims Court whenever possible because at least 50% of the cases proceed by way of default and consequently, it is not necessary to make a single Court appearance. When the matter is contested in Small Claims Court, you have an Order after one step only rather than going through taxation or assessment and then a Notice of Motion in Chambers.

87. Part-time collectors

Often it is cost effective to hire a good part-time collections person whose only job is to chase receivables. Even one half day a week will work wonders in reducing those receivables. Collecting is unpleasant and unless it is someone's main priority or job description, it will always be left in the "To Do" pile.>

88. Collection agencies

Where the account receivable is $500.00 or less and has been outstanding for greater than 90 days, send the receivable to a collection agency. The difficulty of collecting yourself is not worth the effort or a shot to your reputation.

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N. Creative Collections

89. Solutions for the client

Be prepared to provide solutions to your client on how they can arrange proper financing to pay you out. These include a bank consolidation loan to pay off all debts (including yours), and make one easy monthly payment; finance companies (but they offer loans at higher interest rates); an increase of the existing mortgage or a second mortgage; asking a relative or friend for a loan so that you can be paid; or possibly sell off some assets.

90. Settle it

We often give our clients advice on settling a matter by compromising. We end up splitting the difference. And yet, when it comes to our own accounts, we lose all objectivity and we insist on receiving nothing less than full payment. Sometimes it is better to simply agree on some form of appropriate discount than to keep fighting with your client to receive every penny.

91. Discounts

Offer an early payment discount of five percent of fees for all accounts paid within 10 days of the account being rendered. This encourages clients to pay within the 10 days or ensure that there is sufficient funds in trust to pay all outstanding accounts immediately. It's much more satisfying to give the clients the break than pay the bank interest charges on the line of credit.

92. Christmas gifts

On November 15th, send all of your delinquent clients a letter telling them that, as a Christmas gesture, all interest on their outstanding accounts will be forgiven if they pay the stated principal amount on or before December 15th.

93. Free final consultation

Some lawyers have a free initial consultation. Have a free final consultation. Bring your client in. Give them their reporting letter. Ask them how they felt the matter went and ask for their feedback. Review your account with them and make satisfactory arrangements with them at that time for the payment of the account. Be firm. Don't let them go without a solid plan.

94. Say "Thank You"

Even clients' behaviour can be modified by positive reinforcement. Remember how you were happier to help your mom when she made a big fuss over your appropriate behaviour? Remember to say thank you to your clients every time you speak with them, or write to them to say thanks, when they behave appropriately and pay their accounts.

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