How the Legal Billing Topic Caught My Attention
Early on, I learned fee collection is an active process—and a vital one.
No one taught me how to get paid as a lawyer, but I quickly sensed, even during my first year as a lowly associate at a small San Francisco firm, that something was not being handled right. Filling out time sheets often was neglected, bills didn’t go out in any regular intervals, and seriously non-paying clients were still being provided legal services. Having grown up in a family where money was in short supply, I knew that something wasn’t right there. Though it was not obvious at the time, my early exposure to economic scarcity seems to have fueled this observation. I knew from the get-go that if I didn’t bring in the cash on a regular basis, paying my own bills was going to be a problem.
Three years later I landed a position in a larger firm, run in a totally professional manner. The managing partner was a master in the business of law, and he knew how to motivate us to meet his high standards. We were taught how to fill in our time cards each day, which were collected weekly for entry into the firm’s billing system. This was before the era of personal computers, but in its place we had Sharon, the office manager to contend with, if we didn’t turn in our time sheets by the end of the week.
The monthly review of the draft bills was a major office event: multi-sheet printouts would be arrayed in the conference room, with each of us scheduled to review our bills, edit out the errors, and confer with the managing partner on any uncertain entries. We also were shown, from day one, the payment status of any matters we were working on, so that any sign of an emerging deadbeat could be addressed.
Even in this well-honed system there were problems, for the simple reason that some clients didn’t pay their bills. I’m not sure why I caught the attention of my boss, but somehow he sensed that this was a topic that interested me, and I was assigned the deeply uncomfortable task of dealing with our non-paying clients. This wasn’t just a matter of sending out dunning notices. I was instructed to speak with the clients and circle back to the attorneys who had worked on their cases. Ironically, this was the best possible education I could ever receive. I would listen to complaints of misleading fee estimates, lack of updates on the case status, bills lacking descriptive detail, and of course, tales of financial woe.
My primary job was to nudge the clients into paying, but of perhaps equal importance, advising on when to compromise the account for fear of a malpractice claim, and educating the lawyers who had worked on the case on what they had done wrong, in the hope that their performance would improve going forward. I don’t recall what percentage of the bills got paid in full or how many of the associates learned the important lessons, but the experience certainly set me on the right track, when I opened my own practice a few years later.
The message here is obvious: If you aren’t certain how to master a particular task like getting paid, pay close attention to your performance and that of others around you. Some of the material is quantitative, such as how many hours get billed and how much money is coming in. Of equal importance is the fuzzier sort of information: how you enter into an effective retainer contract, how the flurry of legal work gets assembled into an invoice, and what factors determine whether the bills get paid. Listen closely to what the facts are telling you!
Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.
"The Art of Getting Paid" is a one-year series of blog posts that provides a comprehensive training to lawyers on how to get paid.
We welcome your questions and comments – and of course, your suggestions on how to master this insufficiently respected aspect of practicing law.