How to Get Paid for Your Services and Enjoy Practicing Family Law

People who are going through a divorce are often strapped for cash, and if they are not hurting now, they will be. When the marital estate is divided and two families are living on the same budget that barely provided for one, it will be difficult to pay for the divorce. Resolving the issues surrounding the financing of a divorce must be worked out jointly between the attorney and the client. The attorney must address the issue head-on with the client and discuss the problem frankly — no matter how difficult the discussion.

What to Tell the Client

Discuss your fees at the first meeting with your client, carefully explaining your hourly rate and how you bill your time – whether in quarter-hour or tenth-of-an-hour increments. Explain to the client how you apply the retainer to the bill. Many clients expect that the retainer will cover the cost of the entire divorce. Explain that you bill for telephone calls, office meetings, and both incoming and outgoing correspondence. Even though this may be explained in your retainer agreement or seem self-evident, it bears repeating in person. It is not uncommon for clients to complain when they actually pay their bill that they did not understand they were being billed for telephone calls, office conferences, photocopying, or research.

In that first meeting, work out with the client exactly how you are going to be paid. Most people cannot afford to pay your fees from their monthly income. Your clients will need assistance in financing their divorce — either through credit cards, loans from relatives, second trust deeds, or a payment plan. Clients like to know in advance how much a divorce is going to cost. Although it is difficult to estimate the cost of a divorce, explain the many factors that influence the cost. Avoid putting a number on the total cost of the divorce, but if you must provide an estimate, document the factors upon which your estimate is based. For example, if you estimate the divorce will cost $5000, specify that this estimate is based on no litigation, cooperation from opposing counsel, and the client's cooperation. If the estimate is not in writing, it is likely that the client will forget that your estimate was based on the divorce proceeding smoothly. Invariably, divorces do not go smoothly. List the factors that will increase the cost of the divorce, such as retaining experts, litigating contested hearings, or a lack of cooperation by either party. In short, educate the client as to the costs of a contested divorce and that you cannot predict what it will ultimately cost.

Trust Accounts

The best way to ensure payment of your bill is to maintain a trust account with enough money as security against any future unpaid bills. Many attorneys require payment of a retainer, but they use that retainer fee in the first month or two. A better practice is to hold that retainer until the end of the case as security for the last bill. Bill clients monthly – including the first month – and insist on payment immediately. In that way, clients get accustomed to paying you monthly. They will understand that you bill for all the time you spend on the case. If a client does not pay the first bill, you can draw on your retainer, and you know early in the case when clients do not understand their obligation to you. At that point you can withdraw from the case, allowing the client sufficient time to find other counsel.

It is likely that the only source of financing a client may be able to obtain is through credit cards. Many attorneys rely on a credit card for their retainer, as well as payment of their monthly bills. Include a credit card authorization with every bill. If you do enough volume with the merchant credit card company, you can negotiate favorable rates. Some credit card companies charge rates that make it impracticable to continue accepting them.

Do not give your client the impression that the spouse will pay your fees and costs. If you do, it will be difficult to get paid. Explain that on occasion the court awards one spouse fees and costs based on need and the other spouse's ability to pay, but that the client is responsible for payment whether there is a contribution from the spouse or not. Clients who do not pay their bills will not assume responsibility for their legal decisions. Thus the decisions in the case will not be based on a cost-benefit analysis.

Goading Yourself to Demand Prompt Payment

One reason attorneys run up large accounts receivable is that they are not aware of what their clients owe them. Many billing programs allow attorneys to review their receivables at any given time. The accounts should be reviewed weekly. If a client owes money, collect what is owed or withdraw from the case, if permitted. If the case is moving toward trial, make a plan as to how the client is going to finance the litigation. If you wait to get paid until the case is over, there is a good chance that you will have to discount the bill.

One way to motivate yourself to focus on getting paid is to have a business plan that is specific. The plan should include both short- and long-range goals. It should describe exactly what you want to make monthly and annually. Once you have your plan in mind, you can track it with bookkeeping software. Generate reports comparing this year with last on a monthly basis. Evaluating these reports will remind you to collect what you are owed. Keeping track of the status of what clients owe you, combined with keeping track of your earning goals, will give you the incentive to make those difficult calls to clients explaining that unless they pay you, you cannot represent them.

Another way of giving yourself the motivation to insist on being paid is to link something cherished by you to your receivables. Draw the connection between the receivable and your lifestyle, your spouse, your children, or your recreation. A $100,000 receivable translates into your child's education, a new car, a down payment on a home, or a much-needed vacation. Paste a photograph of that coveted treasure on your desk so that you will remember the significance of even a small receivable. That $100,000 receivable represents 500 hours at $200 per hour (about 71 average working days) or 250 hours at $400 per hour (about 36 average days). This thought will encourage you to take action to avoid receivables, and if you are foolhardy enough to have them, you will then take action to eliminate them.

Preparing Your Bills with the Intention of Being Paid

Your bill should arrive as close as possible to the first day of each month. People are paid near the first of the month. They also receive their other bills near the first of the month, and they habitually pay their bills all at one time. You want your bill to arrive with the other bills — but when you obtain a good result for the client, present your bill immediately. Call your client to discuss the bill, explaining an unusually large one, or inquiring how they are going to pay the bill and when.

A comprehensive bill explaining your services and your successes will more likely be paid. Family law results are hard to quantify. Wins are not clear. Explain your accomplishments in a positive light. Often, clients will not realize you were successful unless you tell them. Thank clients for paying you, but do not act surprised or they may get the impression that you never expected them to pay in the first place.

Involve your staff in the collection process, but do not give up control of it. You must make sure that the bills go out on time. Instruct your staff to provide you with accounts receivable aging reports and profit and loss statements regularly.

The Consequences of Not Insisting on Prompt Payment

Collecting your bill on time is the best method of getting paid. A poor second choice is suing the client – whether through arbitration or litigation. A lawsuit against a client often results in a cross complaint for malpractice, which must be turned over to your insurance carrier. Furthermore, when you are litigating, the trier of fact expects you to justify every bill. This is when detailed bills come in handy. Still, there is something insulting about having to defend the work you performed months or years before. Now everyone has the benefit of hindsight. Assuming you are awarded some or all of your bill, and you have avoided the malpractice threat, you must now collect it. This can be time-consuming and fruitless. The bottom line is, it is a lot less expensive in time and money to collect the bill when it is incurred than after the fact.

Common Billing Errors

Many collection problems are avoidable. If we do not bill often enough, or we wait too long to demand payment, the bills become too large for the client to pay. There is also a psychological barrier to paying large bills or bills that are overdue. Clients are more willing to pay smaller bills that are delivered like clockwork. Bill every 2 weeks if necessary. If you allow clients to skip a payment in any given month, they will assume that getting paid is not important to you.

Collection Is a Psychological Issue

We give ourselves a lot of excuses and rationalizations for not being paid for the work we perform. Here are a few of them:

• My services were not worth what I charged.
• The result was not good enough.
• The bill exceeds what the client can pay.
• I will wait until the end of the case to determine what I will get.
• The bill is too large.
• Another attorney would not have charged this much (or would have been more efficient, or had more success).
• I should not charge for X — whether a continuance, an office conference, or some other matter that in retrospect seems unnecessary.
• The client is a good person and deserves representation (without paying).
• I am the only one who can represent him/her (for free).
• I did not go into this business for the money (Your nose is growing longer … ).
• The case is good experience for me or my staff – cheaper than Continuing Legal Education (with 100 times the risk).
• This is my public service for the year (and every year thereafter, and fortunately someone else is paying your bills).
• I am too busy to collect the fees (because you are working for free).

Conclusion

You can ensure better collection of your fees by selecting better clients – clients who can afford you and who are willing to pay their bills. When you have those clients, insist on prompt payment. If they do not pay, take quick action to collect the bill or terminate the relationship. If you are having trouble getting paid, address the obstacle to collection – whether it is a lack of proper office procedures or your own psychological roadblocks. Maintain constant vigilance over your collections by tracking your budget and establishing financial goals. Measuring your success in collecting will motivate you to make that difficult telephone call to the client who is delinquent. By getting paid for your work, you may begin to — or continue to — enjoy the practice of family law.

With money in your pocket, you are wise and you are handsome and you sing well too.

–Yiddish proverb

The practice of family law can be fulfilling and profitable if you ensure that your clients pay you. If you are paid for your work, your practice will be successful and you will be happy; if you are not paid for your services, you will abhor family law.

People who are going through a divorce are often strapped for cash, and if they are not hurting now, they will be. When the marital estate is divided and two families are living on the same budget that barely provided for one, it will be difficult to pay for the divorce. Resolving the issues surrounding the financing of a divorce must be worked out jointly between the attorney and the client. The attorney must address the issue head-on with the client and discuss the problem frankly — no matter how difficult the discussion.

What to Tell the Client

Discuss your fees at the first meeting with your client, carefully explaining your hourly rate and how you bill your time – whether in quarter-hour or tenth-of-an-hour increments. Explain to the client how you apply the retainer to the bill. Many clients expect that the retainer will cover the cost of the entire divorce. Explain that you bill for telephone calls, office meetings, and both incoming and outgoing correspondence. Even though this may be explained in your retainer agreement or seem self-evident, it bears repeating in person. It is not uncommon for clients to complain when they actually pay their bill that they did not understand they were being billed for telephone calls, office conferences, photocopying, or research.

In that first meeting, work out with the client exactly how you are going to be paid. Most people cannot afford to pay your fees from their monthly income. Your clients will need assistance in financing their divorce — either through credit cards, loans from relatives, second trust deeds, or a payment plan. Clients like to know in advance how much a divorce is going to cost. Although it is difficult to estimate the cost of a divorce, explain the many factors that influence the cost. Avoid putting a number on the total cost of the divorce, but if you must provide an estimate, document the factors upon which your estimate is based. For example, if you estimate the divorce will cost $5000, specify that this estimate is based on no litigation, cooperation from opposing counsel, and the client's cooperation. If the estimate is not in writing, it is likely that the client will forget that your estimate was based on the divorce proceeding smoothly. Invariably, divorces do not go smoothly. List the factors that will increase the cost of the divorce, such as retaining experts, litigating contested hearings, or a lack of cooperation by either party. In short, educate the client as to the costs of a contested divorce and that you cannot predict what it will ultimately cost.

Trust Accounts

The best way to ensure payment of your bill is to maintain a trust account with enough money as security against any future unpaid bills. Many attorneys require payment of a retainer, but they use that retainer fee in the first month or two. A better practice is to hold that retainer until the end of the case as security for the last bill. Bill clients monthly – including the first month – and insist on payment immediately. In that way, clients get accustomed to paying you monthly. They will understand that you bill for all the time you spend on the case. If a client does not pay the first bill, you can draw on your retainer, and you know early in the case when clients do not understand their obligation to you. At that point you can withdraw from the case, allowing the client sufficient time to find other counsel.

It is likely that the only source of financing a client may be able to obtain is through credit cards. Many attorneys rely on a credit card for their retainer, as well as payment of their monthly bills. Include a credit card authorization with every bill. If you do enough volume with the merchant credit card company, you can negotiate favorable rates. Some credit card companies charge rates that make it impracticable to continue accepting them.

Do not give your client the impression that the spouse will pay your fees and costs. If you do, it will be difficult to get paid. Explain that on occasion the court awards one spouse fees and costs based on need and the other spouse's ability to pay, but that the client is responsible for payment whether there is a contribution from the spouse or not. Clients who do not pay their bills will not assume responsibility for their legal decisions. Thus the decisions in the case will not be based on a cost-benefit analysis.

Goading Yourself to Demand Prompt Payment

One reason attorneys run up large accounts receivable is that they are not aware of what their clients owe them. Many billing programs allow attorneys to review their receivables at any given time. The accounts should be reviewed weekly. If a client owes money, collect what is owed or withdraw from the case, if permitted. If the case is moving toward trial, make a plan as to how the client is going to finance the litigation. If you wait to get paid until the case is over, there is a good chance that you will have to discount the bill.

One way to motivate yourself to focus on getting paid is to have a business plan that is specific. The plan should include both short- and long-range goals. It should describe exactly what you want to make monthly and annually. Once you have your plan in mind, you can track it with bookkeeping software. Generate reports comparing this year with last on a monthly basis. Evaluating these reports will remind you to collect what you are owed. Keeping track of the status of what clients owe you, combined with keeping track of your earning goals, will give you the incentive to make those difficult calls to clients explaining that unless they pay you, you cannot represent them.

Another way of giving yourself the motivation to insist on being paid is to link something cherished by you to your receivables. Draw the connection between the receivable and your lifestyle, your spouse, your children, or your recreation. A $100,000 receivable translates into your child's education, a new car, a down payment on a home, or a much-needed vacation. Paste a photograph of that coveted treasure on your desk so that you will remember the significance of even a small receivable. That $100,000 receivable represents 500 hours at $200 per hour (about 71 average working days) or 250 hours at $400 per hour (about 36 average days). This thought will encourage you to take action to avoid receivables, and if you are foolhardy enough to have them, you will then take action to eliminate them.

Preparing Your Bills with the Intention of Being Paid

Your bill should arrive as close as possible to the first day of each month. People are paid near the first of the month. They also receive their other bills near the first of the month, and they habitually pay their bills all at one time. You want your bill to arrive with the other bills — but when you obtain a good result for the client, present your bill immediately. Call your client to discuss the bill, explaining an unusually large one, or inquiring how they are going to pay the bill and when.

A comprehensive bill explaining your services and your successes will more likely be paid. Family law results are hard to quantify. Wins are not clear. Explain your accomplishments in a positive light. Often, clients will not realize you were successful unless you tell them. Thank clients for paying you, but do not act surprised or they may get the impression that you never expected them to pay in the first place.

Involve your staff in the collection process, but do not give up control of it. You must make sure that the bills go out on time. Instruct your staff to provide you with accounts receivable aging reports and profit and loss statements regularly.

The Consequences of Not Insisting on Prompt Payment

Collecting your bill on time is the best method of getting paid. A poor second choice is suing the client – whether through arbitration or litigation. A lawsuit against a client often results in a cross complaint for malpractice, which must be turned over to your insurance carrier. Furthermore, when you are litigating, the trier of fact expects you to justify every bill. This is when detailed bills come in handy. Still, there is something insulting about having to defend the work you performed months or years before. Now everyone has the benefit of hindsight. Assuming you are awarded some or all of your bill, and you have avoided the malpractice threat, you must now collect it. This can be time-consuming and fruitless. The bottom line is, it is a lot less expensive in time and money to collect the bill when it is incurred than after the fact.

Common Billing Errors

Many collection problems are avoidable. If we do not bill often enough, or we wait too long to demand payment, the bills become too large for the client to pay. There is also a psychological barrier to paying large bills or bills that are overdue. Clients are more willing to pay smaller bills that are delivered like clockwork. Bill every 2 weeks if necessary. If you allow clients to skip a payment in any given month, they will assume that getting paid is not important to you.

Collection Is a Psychological Issue

We give ourselves a lot of excuses and rationalizations for not being paid for the work we perform. Here are a few of them:

• My services were not worth what I charged.
• The result was not good enough.
• The bill exceeds what the client can pay.
• I will wait until the end of the case to determine what I will get.
• The bill is too large.
• Another attorney would not have charged this much (or would have been more efficient, or had more success).
• I should not charge for X — whether a continuance, an office conference, or some other matter that in retrospect seems unnecessary.
• The client is a good person and deserves representation (without paying).
• I am the only one who can represent him/her (for free).
• I did not go into this business for the money (Your nose is growing longer … ).
• The case is good experience for me or my staff – cheaper than Continuing Legal Education (with 100 times the risk).
• This is my public service for the year (and every year thereafter, and fortunately someone else is paying your bills).
• I am too busy to collect the fees (because you are working for free).

Conclusion

You can ensure better collection of your fees by selecting better clients – clients who can afford you and who are willing to pay their bills. When you have those clients, insist on prompt payment. If they do not pay, take quick action to collect the bill or terminate the relationship. If you are having trouble getting paid, address the obstacle to collection – whether it is a lack of proper office procedures or your own psychological roadblocks. Maintain constant vigilance over your collections by tracking your budget and establishing financial goals. Measuring your success in collecting will motivate you to make that difficult telephone call to the client who is delinquent. By getting paid for your work, you may begin to — or continue to — enjoy the practice of family law.