Just to warn you, this post is not going to be the most politically correct I've ever written. But this is a blog about how to start a successful law firm, so I have to tell it how it is. I will make a few broad generalizations that I know don't hold true to everyone. That is why they are generalizations. But the lesson holds true, and if you aren't following it, give it a try and see how much better your law firm runs.
Here we go. Your clients do not want to pay their legal bills. They think you are overpriced. They don't understand the kind of expertise, advice, and counsel that you give them, and they will probably never understand that. Your work is, for the most part, intangible. When it is all said and done, though you've worked your butt off and gotten a good settlement, avoided litigation, drafted and executed the perfect contract, or saved the client from jail time, they see the end result and think you didn't do anything - particularly enough to warrant the fee you've agreed to.
And even if your work is not done, as the expenses start piling up, you'll find your clients more and more reluctant to pay their bills on time, if at all. And they will soon find (after you don't get out when you should) that they know you will continue to work even if they don't pay. All of a sudden you are doing a lot of work for free.
But there is a way to avoid this problem. And if you read the title of the post you'll probably already know what it is - get your fee paid up front. This solves several problems. First, you'll know that your client can afford you, which is always a good thing. Second, you won't have to keep hounding your clients for money and you can focus on resolving their case in their best interests. And third, you can get paid for your work.
As a criminal defense attorney I accomplish each of those three goals by charging a flat fee for my work. The prospective client and I come to an agreement for a specific amount of money that includes whatever needs to be done on the case through trial. If the case is resolved earlier, the fee is still earned, as it is my expertise, experience, and skills that are paid for, not my time. I provide a value service, not a commodity, so I don't measure my work in increments of 6 minutes (and I honestly wouldn't even if I was litigating civilly).
If you are not a criminal lawyer and want to continue to bill hourly, this can be done by getting a retainer that is earned down as time goes by. Break it up into segments that the client can pay up when necessary. For example, you budget x dollars to investigate, draft the complaint, and file the lawsuit. Once that is done, you budget x dollars for discovery. Once that is done, you budget x dollars for the drafting and argument of your summary judgment motion. If, at any time, the client can't or won't pay, you can withdraw at a point in the case where the break is clean.
I learned this the hard way over the course of my first couple of years of practice. People will convince you that they can pay, just not right now. You will believe them, either because you want the work or they come off as trustworthy to you. And then time will go by and you won't get paid. And then more time will go by and you still won't get paid. Eventually you'll have to decide whether or not you want to try to collect from them using all the means at your disposal (and most of you won't because you are afraid of bar complaints - I always tried to collect).
When I started my law firm, I made a pact to myself. I promised myself that my new law firm and the success of my new law firm was more important to me than feeling busy. To be successful when starting a law firm, you need to make money. To make money, people have to pay you. If you are the best lawyer out there and can't pay your bills or feed your family you aren't the best lawyer out there.
If you are having trouble getting paid from your legal clients take a step back and think about how you are presenting your fee options. Think about how you value your services internally and what you deserve for the work you are providing - and don't take anything less than that. Moving forward, think about options you can present to your clients that allow you to actually get paid and allow you to do the work your clients need.
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