Paid, Not Played
Estimating Fees, Charging High Retainers Help Solos Avoid Payment Hassles
Posted May 28, 2005 9:03 AM CDT
By Margaret Graham Tebo
Getting stiffed is almost like a rite of passage for solos. Whether it’s a client who used to be a friend or one who simply disappeared, experience is often the best teacher when it comes to matters of collection.
Take Joan M. Swartz’s story.
The St. Louis lawyer once handled a case for a client who was being sued for $25,000 in damages. Swartz won the case, but the client decided not to pay her bill. The client had a home remodeling business and offered to work off some of the fee by working on Swartz’s home. After ripping off wallpaper and removing towel bars in a bathroom, though, he promptly vanished.
Steamed at the double betrayal, Swartz continued to pursue payment. One day the client’s wife called and tried to talk Swartz into forgiving the outstanding balance. Swartz refused. “I said, ‘You’ve got to be kidding,’ ” she recalls.
These days, Swartz takes a smarter approach to getting paid: She customizes her engagement letter for each client to include terms of payment that she has discussed at the first meeting. When someone doesn’t pay as agreed, her paralegal will call the client with a reminder. If money is tight, Swartz says she’s always willing to revise the payment schedule, as long as the client pays something on a regular basis.
One thing she tries to avoid is suing the client for unpaid fees. She weighs the consequences and the likelihood of recovery carefully. “Any malpractice insurer will tell you that the fastest way to get sued for malpractice is to file a suit for fees,” says Swartz. For Joel Selik, upfront estimates are the easiest way to ensure getting paid in full.
Selik, who has practiced in San Diego for more than two decades, always tries to estimate the total cost of the representation at the first visit. He asks for a large portion of the estimated fee as a retainer. Clients are rarely unhappy with this approach, he says, because they know he’s being forthright with them.
“One thing I’ve learned is, it’s much easier to get paid when they need you,” he says. “Never, ever wait until the representation is over before you get paid.”
Selik says he’s also found that clients tend to pay bills more regularly when he puts a due date on the invoice because most people are used to credit card bills that have due dates. He also bills frequently, sometimes twice a month, because people tend to be more willing to pay a bill for services they’ve just received than for something that happened a while ago, he says.
Set Upfront Minimum
Richmond, Va., solo Shane Jimison agrees that the best time to get paid is before the representation starts. Jimison’s clients are usually plaintiffs in employment cases or spouses going through a divorce.
“They’ve been hurt and money is a question mark. If they’re sitting in the chair across from me, they need me. I need to know I’m not working for free because I have bills to pay, too,” says Jimison.
He frequently asks for a retainer that equals the amount he needs to earn from the case. “If I never get another dime after the retainer, at least I’ll have the minimum I needed to make the case worthwhile,” he says.
Jimison notes it’s important to send invoices regularly even when still working off the retainer. Keeping clients informed of exactly where the money goes helps keep them vested in their cases. He also does little things like making sure his bills go out by the 25th of the month so clients have them in hand when they sit down to pay bills on the first of the following month. He always includes a return envelope.
“You can’t be shy about asking for what you’ve earned,” he says. “Value your services and, most of the time, the client will, too.”