CLIENT SATISFACTION IS KEY TO LAW FIRMS' COLLECTION PROBLEMS.
Law firms large and small are learning that client satisfaction is the most accurate predictor of any client's willingness to pay. Here are six steps to improve client satisfaction, which in turn eliminates reluctance to pay.
1. Learn each client's expectations. Your highly satisfied clients are glad to pay you (and also to refer other clients). However, you should realize that the quality of your service is relative, and will be evaluated by each client, whose criteria may be very different from yours. Beginning with the initial client meeting, listen carefully to determine what each client expects. What problem(s) are you being paid to solve, and how quickly? What are the client's expectations with regard to communication and accessibility? Discuss with each client your usual practices and make sure these are, at the least, acceptable. Eliminate unrealistic expectations up front. We have found that unrealistic expectations are the greatest impediment to getting paid.
2. Practice your "Money Talk." This discussion should be as structured and well rehearsed as any closing argument. Discuss with each client your hourly billing rate. Provide both a realistic and a worst-case estimate of the total number of hours required, and of your total fee. This is a good time to explain the "moving target" nature of our legal process, and to remind the client that additional fees will be charged for additional services. The client must understand that your billing is hourly, not contingent. Charges will be determined by the complexity of various issues, not by the results. The client must agree to pay - win, lose or draw. You may want to agree with the client upon an upper limit for fees, to be exceeded only with the client's permission. We have found that the second greatest reason clients give for not paying is that they "never thought it would cost this much". Include all significant provisions in your retainer agreement or letter of engagement.
3. Introduce the client to "Their Team." The client is less likely to dispute part of an invoice if all of the players are known. Each client should personally meet at least your receptionist and secretary, since some portion of each bill pays your support staff. These folks work for the client, just as the attorney does. It may be appropriate to introduce other attorneys, secretaries and paralegals, depending on their involvement in the case. All business clients should meet your accounting personnel, as should any other clients likely to interact with them.
4. Mail early and often - YOUR BILLS! Your service is fresh in the client's mind. Now is the time to send your bill, not weeks from now. Remember, as the client's recollection fades, so does his willingness to pay. Be sure that the wording of your invoice is clear and in plain English. Have someone else proofread the bill for clarity. There should be NO SURPRISES in the bill - the client should be fully aware of the charges, and ready to pay. Be sure that your bill's format clearly shows the balance due, the due date, the address for payment and a phone number.
5. Have someone call the client if the bill remains unpaid over thirty days. Someone (not the attorney) should call the client and ask if there is any problem with the bill. This call must be courteous and professional. About 80% of these calls should result in full and immediate payment. Another 18% of the called clients will need to make "special arrangements" (2% or so will be unable or unwilling to pay). Remember that collectibility declines over time. When setting up arrangements, try to get something NOW, even if it's just a token good faith payment, and try to get something every payday. Make it clear that there must be an end date (e.g.: full payment within ninety days) or else a date to discuss the arrangement again ("let's talk in sixty days if it's not paid off").
6. Stop working for the client on credit if any bill remains unpaid over sixty days. Put the client on a cash basis. Do not do any more work without a retainer. Remember that expecting to be paid does not offend clients. Clients who are highly satisfied will gladly pay their bills on time. If there is any problem, now is the time to address it. Remember that all bad debts were unpaid at thirty and sixty days. If the problem cannot be resolved, doesn't it make sense to minimize your loss?
Be proactive. Set policies and procedures in place which will increase the client's satisfaction with your work. This alone will dramatically increase their willingness to pay. If there is a problem so serious that it precludes your client from paying, it should either be resolved at the thirty-day point, or else you should stop work, minimizing your A/R exposure.
Contact us today with any questions!
© 2003 Velvet Touch, Inc.
