The Lawyer's Office

Office management forum focused on getting paid

By Paul J. Sullivan

If you missed the breakfast symposium, sponsored by the Committee on Law Office Management and Economics, during the ISBA Annual Meeting, you missed a lively discussion on accounts receivable, collections, and general business practices on how to turn your billable time into cash.

In prior years, the format was a roundtable in which someone would moderate the discussion at each table on a variety of topics. Although that format often is successful, we found in recent years it just wasn't working for us.

This year, we decided to go back to a forum whereby one topic would be moderated by one person for everyone, and the discussion of the topic would come primarily from the participants.

As the moderator of this session, I must say that many participants commented to me on how much good information they received because of the great discussion among almost all of the attendees and how much they like this new forum.

One person who has been at almost everyone of the breakfasts over the years told me it was the best one he had ever attended.

The discussion was kicked off by establishing the premise that “Cash Flow is King.”

As an administrator with a law firm for more than 20 years and a business owner for 10 years, I can attest first-hand that cash flow is the fundamental issue facing every business, regardless of its product or service.

Although cash flow is composed of many components, the topic for discussion that day was accounts receivable.

There are four reasons why clients don't pay their bills. The first is that they don't have the money.

At that point, it's a little late in the cash flow management process to do much about it. This sparked some discussion on proper methods of intake of new files, including when to just say no.

The second reason is that clients don't realize they owe you. Good billing systems, and proper review and follow-up of outstanding invoices are essential to good management. If you have large clients, such as an insurance company, it could be the bill is going to the wrong person.

Is your billing on a regular cycle? This brought up some discussion on electronic billing requirements by large companies, wording on bills, format of bills, etc.

The third reason clients don't pay bills is that they are experiencing slow cash flow themselves, and they will hold off those who aren't calling them asking for payment. The squeaky wheel gets the most oil.

This brought discussion about the need for engagement letters, retainers, accepting credit cards, and a variety of methods other lawyers use to make contact with their clients about delinquent accounts.

There was also discussion on charging interest for late payment and how to do that within legal limits.

The fourth reason clients don't pay is that they don't want to pay. It's usually from a bad result.

That brought discussion about whether a client should be sued, how that would affect professional liability insurance, and what other alternatives there are to resolve such issues.

Next year we'll do it again, and hopefully we'll come up with a topic that has as much appeal for as many people as it did this year.

If you feel you missed something by not attending the symposium, or you want to hear more about cash flow and its other components, be sure to sign up now for the ISBA Solo and Small Firm Conference from Sept. 14 to 16 at Pheasant Run Resort in St. Charles.

I will present a session titled “Show Me the Money - How Finance and Accounting Systems Can Increase Your Income.” This session will focus on how a non-financial lawyer can use and understand systems to keep informed on where the money comes from, where it goes, and how to have more of it to take home.

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Paul Sullivan, chair of the ISBA Committee on Law Office Management and Economics, is administrator of Quinn, Johnston, Henderson & Pretorius, Peoria. He may be contacted at (309) 636-7252 or sullivan@qjhp.com for answers to management and economics questions.