Saying that client fee suits are a leading malpractice claims cause might be a little misleading. Underlying reasons for the payment issues may be the cause. Studies suggest that client fee suits cause 33% of the malpractice claims. Law firms that carry large percentages of over 90 days past due receivables are firms that tend to have problems trying to collect the past due amounts. The underlying problem opens the firm up to attorney malpractice claims and bar complaints. By taking the following steps a law firm may minimize the need for client fee suits:

1.       Screen clients at client intake, if you are the 3^rd firm to take a case, think twice.

2.       Discuss and have a meeting of the minds as to the potential fees up front prior to accepting the client.

3.       Tie part of attorney compensation to past due clients.

4.       Collect an adequate retainer for the work.

5.       Have formal billing procedures for transactional work in place for billing ongoing matters. Billings should be at least monthly. Accurately describe the billed services for the work performed.

6.       Designated one person to review and follow-up on all past due accounts. This process includes bringing matters to the attention of the management committee of any accounts that exceed the law firm’s guidelines. Determine if the reason the client is not paying is because of dissatisfaction with the services provided. If so, address the service deficiencies with the client.

7.       Send statements out on all matters that are past due monthly.

8.       If the account is over 90 days past due remove the account from the billing lawyer and turn it over to someone else for collection follow-up.

9.       If a past due client submits a “reasonable” amount to settle an account, take it and write off the remaining debt. Law firms can spend too much time pursuing deadbeat clients.

10.   If you feel it is necessary to pursue legal collection remedies, make sure the debt is worthwhile and the services properly performed. Remember collection activity can trigger a client to file a counter suit. Suing a client for a couple hundred dollars might make you feel better, but the consequences of a disciplinary complaint or a claim made against the firm can cost far more in attorney malpractice insurance premiums than the amount in dispute.

Minimizing the amount the firm carries in past due accounts helps the law firm’s cash flow, reduces time spent chasing deadbeat clients for money, and minimizes potential retaliatory claims. With less time chasing dollars, you will have more time to spend practicing law.

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    Managing Director, CEO
   

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