MAKE SURE YOU GET PAID
Published: March 28, 2010
By David Baugher
Special to Missouri Lawyers Weekly
The last thing you want is to fend off an opponent in court only to find yourself in a feud with your own client over past-due bills for services rendered. But unless you work on contingency or collect a retainer upfront, there’s always a chance that when the case is over the client might not pay. What are some ways to handle the problem of delinquent payments?
An ounce of prevention
"There should be ... an honest discussion about how those fees are going to be paid by the client." Chris Stiegemeyer, director of risk management at The Bar Plan Mutual Insurance Co. Karen Elshout photo
The best way to deal with past-due accounts is to avoid them in the first place. "Some of this is how these issues are handled in the engagement process," says legal management consultant Wendy Werner, founder of Werner Associates, in St. Louis. "One of the things you need to make clear in your engagement process is how you are going to handle billing and what the expectations are of how your client fulfills their responsibilities."
Ask questions
Another important way to avoid the past-due trap is to make sure clients have the means to make payment before the case is accepted, says Chris Stiegemeyer, director of risk management at St. Louis-based The Bar Plan Mutual Insurance Co. "There should be a conversation not just about what the fees will be, but also an honest discussion about how those fees are going to be paid by the client. What are the resources that the client has available to pay the fee?"
The personal touch
Werner says attorneys should have a point person to deal with collections, and the individual who sends the invoice should know the person in the client’s office who pays it. "If clients are having a difficult time paying bills, they all have choices about whose bill they pay first," she says. "And they are more likely to pay a bill from somebody with whom they have a relationship than somebody that they don’t."
Issue a reminder
The squeaky wheel gets the grease. Don’t let past due accounts slide. Be vigilant. "Say, ‘I’m just calling as a reminder. We sent an invoice, and we just want to make sure that you’ve received our bill and don’t have any questions about it,’ " Werner says. "Start out by making sure the client understands the bill and is not unhappy with it."
Develop procedures
Random calls placed at irregular intervals are not the key to an efficient billing strategy. "Make sure that the firm has a collections plan as to what will happen," says Linda Oligschlaeger, membership services director at the The Missouri Bar. "Will it be the office manager who will call? That can vary with the firm, but it’s important to have some sort of a collections strategy that is already in place for when that situation comes up."
Find out what the problem is
Some people with past due accounts can’t come up with the cash. Others are true deadbeats. Treated correctly, the former may be amenable to a payment plan that could slowly recoup some or all of the amount owed. "The first step is to talk with the attorney who is assigned to that particular matter,"
Oligschlaeger says. "That’s what needs to be determined. Is it that the client can’t pay or won’t pay? Those situations are dealt with differently."
When late isn’t late
Remember that some clients may be slow to pay. Take that into account before classifying them as delinquent. "Some large corporate clients are changing their pay structure," Werner says. "They may send letters out to their service providers saying, ‘We just want you to know that we’re not paying any bills for 60 or 90 days.’ "
Find a mediator
Gary Stamper, a Columbia family law attorney with Walther, Antel, Stamper & Fischer, says The Missouri Bar offers binding arbitration and nonbinding mediation when a fee dispute arises. The St. Louis and Kansas City bar associations also offer similar services, he says. "It’s a valuable service that the bar association provides because, in the end, both the members of the bar and the consuming public come away much more satisfied than discordant."
Avoid suing
Oligschlaeger says filing suit over an unpaid bill can sometimes cause more trouble than the bill itself. "Most malpractice insurers really discourage suing for fees," she says. "It can trigger an ethics complaint, a fee dispute, a malpractice suit or a whole lot of other unpleasant things. Whether they are warranted or not, you still have to take the time to defend."
If you do sue …
Those who decide to sue over an unpaid fee should conduct a thorough review of the case to make certain there are no issues of malpractice, unreasonable fees or liability that may arise. Stiegemeyer says that in a firm setting, a lawyer not associated with the case should undertake the effort. "The principals of the firm can get together and say, ‘In our experience, what are the things that we need to be careful about when we decide that we are going to sue for a fee, in terms of how the representation went forward?’ " he says. "Policies and procedures in that process of review should be put in place before there is a situation of having to sue for a fee."
What will you get?
Stiegemeyer notes another important point about the potential pitfalls of legal action. "Before you go to the trouble of getting a judgment, confirm that there are assets to recover against," he says. "You don’t want to go through the whole process, get a nice judgment and still not get paid the fee."
The final option
Werner says while sometimes firms may opt to use a collection agency, it is truly a last resort. "I think a collection agency is the last place you want to go, because then the relationship is no longer in your hands," she says. "What you’ve decided at that point is that your relationship with the client doesn’t matter to you anymore and that it’s all about getting paid. The question is do you want to do that, or do you want to write it off?"