Point/Counter Point: Mo Money Mo Problems/ Less Money Mo Problems

The private practice of law is a business – although not generally a well run business.

For most lawyers, fees and accounts receivable (AR) can make or break a practice. While definitive statistics are not available, anecdotally around 20% of attorney fee claims result in a legal malpractice counterclaim.

Fees are more art than science but the temptation to get the work by lowering the required retainer agreement can quickly become a deal with the Devil.

A simple litmus test is: if you have sued a client for fees, you’re doing it wrong.

Vetting at intake is your best defense. A realistic but conservative retainer fee is sure to uncover any red flags the would-be client is hiding. Your bespoke retainer agreement should clearly define the anticipated fees and providing a realistic, conservative budget is important. Constant written communication with the client is key risk management and should update the client about any changes to the budget or anticipated issues.

Contrary to popular advice, your bills should not tell a story – they should be bills, think store receipt. Provide all of the necessary information for the client (or eventually the Court) to understand what work you did and why but be wary of including too much information and remember, bills are usually not privileged. Tell the story in your constant written communications, not your bills.

Audit your retainer fees, your budgets and your billing – even a small sample can reveal problem areas BEFORE you have a problem.

Figure out your AR threshold and have a plan (outlined in your retainer agreement) to withdraw if you are not being paid.

Consider waiving or reducing outstanding fees to avoid trouble. Finally, if allowed in your jurisdiction, think about waiving/discounting in exchange for a release from your client.