Money, Small Law Firms

Getting Paid In SmallLaw

What about asking clients for outstanding fees? It requires some tap dancing.

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Nowadays, I just don’t see the fun in bi-weekly direct deposits. How mundane. Isn’t life too short to spend it on something other than chasing down clients for your fees?

The pecuniary aspect of SmallLaw can lead to all sorts of situations. Once a prospective client I had been courting for months called wanting to engage me that day because he needed something done immediately. (This happens a lot.) I was about to leave the office and was going out of town the next morning, so I met him that evening on a crowded sidewalk — during a snowstorm! — by a phone booth on Eighth Avenue, where he handed me the retainer. It felt like being a part of a drug deal. Certainly a bit more adventurous than a direct deposit.

And in Biglaw I missed the joy of developing a tempestuous relationship with my bank, which is seemingly out to sabotage my credit score by delaying transfers between my business and my personal accounts when they know it’s one I need done fast (though if it’s just a routine transfer, it goes through lickety-split).

But what about asking clients for outstanding fees, you say? It requires some tap dancing. I’m not exactly sure what happens in Biglaw: I presume the first person to contact a client when a bill is past due is someone in the billing department. Way too easy. The whole point of SmallLaw is doing everything yourself. You get to use your judgment, which is only going to improve over time. I give my clients a certain number of days to pay. I don’t call them up on the morning of the (x + 1) day and start belligerently asking them where my money is, just like the first time I meet someone I don’t start asking them how many kids we should have.

Right now my strategy is to call the client when it’s been a few days and they haven’t responded to my email or hard copy mailing, and then after a few perfunctory how-do-you-dos I go silent. People can’t resist filling the space. It’s compulsive. Next thing they know, they’re telling me, “Oh yeah, I’ve been meaning to send you the check for your bill, I’ll get that in the mail today.”  And then if I’m still silent: “I’ll even bring it down to your office!” Afterwards they’re probably kicking themselves saying, “He didn’t even ask me about the bill!”

I’ve heard of attorneys who say they spend 30% of their time trying to collect their fees, which is an absurd amount. What is the attorney’s marketing strategy to wind up with that many deadbeats? Maybe time to find a new practice area? Ideally, the script will be flipped and clients will be so impressed with your work they’ll want to keep you happy (it happens!), so they’ll pay right away. Like in minutes. Boom-boom.

A lot of seasoned attorneys who have gotten burned a few times not only insist on retainers before they do any work, they make their clients replenish their retainer before it runs down to zero. It creates a bit more administrative work, which is why I haven’t starting doing this yet, though I suppose at some point I’ll tell new clients that’s my policy too (hopefully not because I got burned a bunch). One litigator I know tells his clients that when he gets paid upfront he only has one thing to worry about, but if he agrees to let a client pay afterwards he has two things to worry about.

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So yup, getting paid can be an issue. But, you definitely aren’t going to get paid if you don’t have clients at all (“you miss 100% of the shots you don’t take”), so for any SmallLaw practitioners out there desperate enough to take my advice, from my point of view it’s not worth worrying about as long as you have the bandwidth to do the work. You might as well focus on the “going out and getting clients for legal work” part, and cross the whole “getting paid” bridge when you come to it.

One of my longtime clients pays their past bills only when they want me to do new work, and then last year completely, totally out of the blue — with no prompting from me whatsoever — they FedExed me nearly all of their outstanding balance the day before I left for my long Argentina trip. I guess they figured since I was about to go without income for a few weeks I probably needed it. It was a reminder that at the end of the day, corporations are people too.

Gary J. Ross opened his own practice, Jackson Ross PLLC, in 2013 after several years in Biglaw and the federal government. Gary handles corporate and compliance matters for investment funds, small businesses, and non-profits, occasionally dabbling in litigation. You can reach Gary by email at [email protected].

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