Motivating Partners to Bill and Collect

As in refining any other law practice skill, the key to improving billing and collection is self-motivation, enhanced and supported by the firm's operative structure.

Because attorney self-motivation is crucial for the success of a law firm, the firm's management should protect and encourage self-direction, interfering only in exceptional circumstances. Recall that money is only one factor driving lawyers to succeed; they are also motivated by intellectual challenge, peer recognition, peer evaluation and the opportunity to work in a firm culture with clearly articulated priorities and values.

Cultivation of Billing Skills

To foster a sense of personal responsibility for the firm's overall financial success, management should encourage each lawyer to analyze his or her own contribution to the firm in areas such as billing, fee-producing hours, client development, outside activities and public relations for the firm.

Since attorneys do not acquire instant skills the day they become partners, have young lawyers practice billing clients on small matters early in their career. A good young biller and collector will be a good old biller and collector. Also establish one-on-one mentor relationships for discussion of billing and collection issues.

Some people are just not cut out for billing and collecting, however. They may not recognize the true value of their expertise to the client, are apprehensive to send an appropriate bill, and dread when it is time to pursue collection efforts. Recognizing this inability in young lawyers will avoid future problems. Weed out poor billers early: do not let them be responsible for billing major clients. And if a lawyer demonstrates reluctance or inability to send out appropriately priced bills in a timely fashion, consider removing that lawyer from billing responsibility.

Gentle Prodding

Even in a firm culture that breeds individual responsibility for billing and collecting, some attorneys may require a jump-start to focus on this important economic area. One effective motivational method is to publish to all partners and associates each individual lawyer's work-in-progress and aged accounts receivable. While the firm's managing partner or administrative director will review the report in detail with those who are behind in billings or collections, peer pressure resulting from publishing and circulating the report will be a very effective prod.

Not-So-Gentle Prodding

When implemented in an overall environment stressing team play and individual responsibility, these basic methods ' a culture of responsibility, sensible billing practices, billing skill cultivation and gentle prodding ' will greatly increase the effectiveness of a firm's billing. If some partners nevertheless fail to satisfy billing obligations, I leave you to consider the need for more aggressive strategies such as the following:

• Schedule billing meetings on weekends.
• Withhold draws from delinquentpartners.
• Adjust year-end compensation.
• Require approval of the managing partner, an executive committee member or the marketing committee before accepting new clients.

Administrative Support Needed

One cannot expect individuals to be effective billers, however, if the firm itself lacks an appropriate time and billing system, and appropriate administrative personnel to support the billing attorney.

(See See box below)

Joel A. Rose is a Certified Management Consultant and President of Joel A. Rose & Associates, Inc. [http://www.joelarose.com/], management consultants to the legal profession. Headquartered in Cherry Hill, NJ, the firm is national in scope. An MBA graduate of the University of Pennsylvania's Wharton Graduate School of Business and a member of this publication's Board of Editors, Joel has 36 years of experience consulting with private law firms, corporate law departments and government agencies on management and organization, strategic and financial planning, compensation, mergers and acquisitions, and marketing.

If some of your attorneys have difficulty with billing and collection, the firm can help them with these administrative practices and policies:

• Eliminate some billing altogether by having clients pay third parties directly for expert witness fees, court reporter fees and other substantial items. (This will also save the firm money, since such disbursements are merely interest-free loans to clients.)
• Reduce the need for collection activity by asking for retainers. When clients refuse to advance a retainer, you can anticipate collection problems and are better off without their business. Also, instead of crediting retainers to initial billings, consider negotiating retainers that are returned at the conclusion of the matter ' provided all outstanding bills and expenses have been paid.
• Help attorneys learn to provide detailed client-oriented bills. A client who is well informed of all the detailed work the firm has performed will more likely find the fee appropriate and pay promptly. Program the computer to prepare such bills in a format that requires minimal editing by the attorney.
• Have each lawyer's secretary input time-and-service billing data directly to the computer. The lawyer's own secretary is most likely to catch and correct dictation errors.
• After 30-, 60- and 90-day follow-up notices, turn an account over to someone other than the billing attorney for collection. Billing attorneys are reluctant to aggressively pursue their own uncollectible accounts.
• Demonstrate to partners that for problematic clients the firm will escalate to weekly billing, charging interest for late payments, insisting on advance retainers, and even suing if necessary. The partner will then be motivated to collect, in order to spare his clients from these sterner measures.

As in refining any other law practice skill, the key to improving billing and collection is self-motivation, enhanced and supported by the firm's operative structure.

Because attorney self-motivation is crucial for the success of a law firm, the firm's management should protect and encourage self-direction, interfering only in exceptional circumstances. Recall that money is only one factor driving lawyers to succeed; they are also motivated by intellectual challenge, peer recognition, peer evaluation and the opportunity to work in a firm culture with clearly articulated priorities and values.

Cultivation of Billing Skills

To foster a sense of personal responsibility for the firm's overall financial success, management should encourage each lawyer to analyze his or her own contribution to the firm in areas such as billing, fee-producing hours, client development, outside activities and public relations for the firm.

Since attorneys do not acquire instant skills the day they become partners, have young lawyers practice billing clients on small matters early in their career. A good young biller and collector will be a good old biller and collector. Also establish one-on-one mentor relationships for discussion of billing and collection issues.

Some people are just not cut out for billing and collecting, however. They may not recognize the true value of their expertise to the client, are apprehensive to send an appropriate bill, and dread when it is time to pursue collection efforts. Recognizing this inability in young lawyers will avoid future problems. Weed out poor billers early: do not let them be responsible for billing major clients. And if a lawyer demonstrates reluctance or inability to send out appropriately priced bills in a timely fashion, consider removing that lawyer from billing responsibility.

Gentle Prodding

Even in a firm culture that breeds individual responsibility for billing and collecting, some attorneys may require a jump-start to focus on this important economic area. One effective motivational method is to publish to all partners and associates each individual lawyer's work-in-progress and aged accounts receivable. While the firm's managing partner or administrative director will review the report in detail with those who are behind in billings or collections, peer pressure resulting from publishing and circulating the report will be a very effective prod.

Not-So-Gentle Prodding

When implemented in an overall environment stressing team play and individual responsibility, these basic methods ' a culture of responsibility, sensible billing practices, billing skill cultivation and gentle prodding ' will greatly increase the effectiveness of a firm's billing. If some partners nevertheless fail to satisfy billing obligations, I leave you to consider the need for more aggressive strategies such as the following:

• Schedule billing meetings on weekends.
• Withhold draws from delinquentpartners.
• Adjust year-end compensation.
• Require approval of the managing partner, an executive committee member or the marketing committee before accepting new clients.

Administrative Support Needed

One cannot expect individuals to be effective billers, however, if the firm itself lacks an appropriate time and billing system, and appropriate administrative personnel to support the billing attorney.

(See See box below)

Joel A. Rose is a Certified Management Consultant and President of Joel A. Rose & Associates, Inc. [http://www.joelarose.com/], management consultants to the legal profession. Headquartered in Cherry Hill, NJ, the firm is national in scope. An MBA graduate of the University of Pennsylvania's Wharton Graduate School of Business and a member of this publication's Board of Editors, Joel has 36 years of experience consulting with private law firms, corporate law departments and government agencies on management and organization, strategic and financial planning, compensation, mergers and acquisitions, and marketing.

If some of your attorneys have difficulty with billing and collection, the firm can help them with these administrative practices and policies:

• Eliminate some billing altogether by having clients pay third parties directly for expert witness fees, court reporter fees and other substantial items. (This will also save the firm money, since such disbursements are merely interest-free loans to clients.)
• Reduce the need for collection activity by asking for retainers. When clients refuse to advance a retainer, you can anticipate collection problems and are better off without their business. Also, instead of crediting retainers to initial billings, consider negotiating retainers that are returned at the conclusion of the matter ' provided all outstanding bills and expenses have been paid.
• Help attorneys learn to provide detailed client-oriented bills. A client who is well informed of all the detailed work the firm has performed will more likely find the fee appropriate and pay promptly. Program the computer to prepare such bills in a format that requires minimal editing by the attorney.
• Have each lawyer's secretary input time-and-service billing data directly to the computer. The lawyer's own secretary is most likely to catch and correct dictation errors.
• After 30-, 60- and 90-day follow-up notices, turn an account over to someone other than the billing attorney for collection. Billing attorneys are reluctant to aggressively pursue their own uncollectible accounts.
• Demonstrate to partners that for problematic clients the firm will escalate to weekly billing, charging interest for late payments, insisting on advance retainers, and even suing if necessary. The partner will then be motivated to collect, in order to spare his clients from these sterner measures.