Collecting your fee is an integral part of sales. In the commercial world, every salesperson lives by the dictum, “The sale isn’t complete until the last dollar is collected.” Lawyers are much more lax about this, and it costs them.

Fee collectibility is influenced primarily by the client’s perception of value, which is influenced by your sales methodology. If your sale is based on the strategic-, operational-, and economic impact of the problem you’re solving, it’s easier for clients to recognize your value in economic terms, and be more willing to pay you in full and on time.

Unfortunately, most lawyers’ sales effort emphasizes the merits of their solution, i.e., their expertise, experience, etc., in effect encouraging the prospect to hire them because they’re really skilled. However, “really skilled” doesn’t translate into dollar value easily, and as the months of the engagement unfold and the bills come in, “really skilled” has little effect on the client’s perception of value, and resulting willingness to pay.

As a result, for many lawyers, write-downs and slow-paying clients are the norm and the consequences are more costly than the obvious problem of slow cash flow. Slow-paying accounts are time-consuming, force you to use expensive credit lines, produce stress, hurt morale and, can actually dull the desire to bring in new clients.

Let’s assume for the moment that you did everything right with this engagement. Using the Door-Opener principle and Cost of Doing Nothing process, you:

  • identified the business problem (“Problem X”) that requires your expertise
  • got the prospect to identify negative strategic- and operational consequences A, B, C, and D
  • elicited from the prospect a projected positive economic impact of $250,000 from solving the problem

In a collaborative discussion with the prospect, you’ve come up with a $25,000 engagement budget, which would deliver a 10x return on your fees. Sounds great so far.

Let’s assume that:

  • you bill them $5,000 per month for five months
  • you bill them promptly each month
  • there are no complaints and the client is happy with your work
  • the working relationship is positive and trusting

How do you raise the odds of collecting that $5,000 each month, in full, without delay?

One of the simplest, and most easily avoided, causes of delay is submitting an invoice that erects barriers to quick validation by giving a busy client another job to do. A list of time-and-activity entries requires the client to review them for legitimacy, and to correlate activity with progress.

A busy client could easily decide that she doesn’t have time right now for the time-consuming, low priority task of interpreting and evaluating that. She’ll set it aside until she has time to evaluate it. You’ve just missed your chance for her to approve it and get it started along the payment process. Your bill could easily sit in a stack of other low-priority tasks for days, maybe weeks. If a significant crisis occurs, she may forget about it entirely until you ask about its status a month or more later, at which point she’ll apologize and promise to review it, but it’s still a low-priority task that must compete with other matters for her attention.

To reduce this risk, write an Executive Summary that gives her enough evidence that encourages her to conclude that, while she may do a detailed evaluation when she has more time, the bill looks like it’s probably OK to approve, that she’s unlikely to get surprised later.

Show her a visual correlation between activity and progress. Here are a few examples:

This kind of visual information provides at-a-glance answers to the critical questions, “Are we on track? Is this under control? Does the pace of our progress reasonably correlate with the pace of budget expenditure?” That reinforces the idea that what you told her up front was well-informed, that you’re on top of things, and that you deserve to be paid promptly.

Apart from promptly getting paid in full, think of the competitive value of this billing approach. Other lawyers are probably not doing this. They’re sending the traditional bill that requires the client to bear the time-consuming tedium of evaluating time entries. Might your comparatively painless, more credible approach encourage the client to send more work your way?

Mike O’Horo


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