As a cyclist, I truly understand the importance of a well-balanced wheel for ensuring a successful ride. After completing my recent ride, I thought about the analogy between the smooth bike ride and a successful client engagement. The difference between my smooth rides and not-so-smooth rides can be the condition of the wheels – one loose or out of balance spoke can lead to a bumpy ride or even a ride ending crash. In comparison, the difference between a successful, profitable client engagement and one that is bumpy or ends in a crash can come down to having a well written and executed fee agreement. A fee agreement is a contract which outlines the terms of your business relationship.
There are many resources out there to help you design a fee agreement contract. Having reviewed and helped design a few, I believe incorporating these 8 key elements or spokes into your fee agreement will help you on your way to having a successful and profitable client engagement. As illustrated below, each spoke contributes to the success of the client/attorney engagement.
8 Key Spokes = Fee Agreement Elements:
1. Who is the client and what legal services are you providing. Are you representing the company or the individuals in the company? For a probate matter, there can be multiple parties. In this first section, be clear about who you are representing and for what.
2. You’ve conducted a conflict check and documented the results based on your own internal procedures. But how will you handle the situation of a conflict arising during representation? You have a duty to notify existing clients of a potential conflict. Spell it out here so the client understands. Great article: Conflict Checking Systems from A to Z by my friend Jim Calloway. Continue reading
By Peggy Gruenke, COO Godbey & Associates
From a previous post, not only is an informed client a happier client – they also tend to pay on time and keeping on the theme of building great client relationships to build a profitable practice – if a client gets a bill each month and pays each bill every month, you have yourself a good client relationship.
I my previous post, I described 3 types of clients in relation to getting paid: 1) Clients on retainers; 2) hourly billed clients; and 3) clients who are habitual late payers. Today I am talking about type 2 clients. These clients seem to be consistently paying as long as the invoices are getting mailed on a regular monthly cycle and there are no large chunks of previously unbilled fees showing up on an invoice. Clients don’t like these surprises and they will perceive this as a breakdown in communication.
In your initial client meeting, in addition to discussing the hourly billing method, you should be including a discussion about the frequency of invoices, when they can expect to receive their monthly bill and payment terms. Set the expectation. Spell it out in your fee agreement, and don’t cause your own collection problems by failing to explain your billing and payment policies at the beginning of the engagement. Edward Poll published an article about getting paid that is worth reading: http://apps.americanbar.org/lpm/lpt/articles/fin09061.shtml
By Peggy Gruenke
The other day I was working on billing, accounts receivable and collections and I noticed a pattern which shed some light on our cash flow and receivables. I was able to identify 3 types of clients and how they pay their invoices.
Type 1 – The client, who paid an original retainer which has now been depleted and never replenished. Reviewing the bills of these clients, they were starting to accumulate past due balances. I had a feeling that this was happening because they somehow expected that was all they would have to pay.
Type 2 – A client who is on hourly billing without a retainer. For the most part they seemed to be paying consistently as long as the invoices were getting mailed out monthly, without big surprises like large amounts of previously unbilled time now showing up on an invoice.
Type 3 – Clients who we allowed to become late payers. Who’s in charge here? Continue reading