We recently asked our law firm clients to submit questions regarding management issues that cause them sleepless nights. Here are a few of their concerns.
Q. Our firm is having problems getting paid timely by clients. Do you have any suggestions?
A. We have seen more law firms and other business firms destroyed by poor cash flow than any other calamity. Cash flow is what keeps owners, partners and administrators awake at night.
Many of our law firm clients have asked us for tips on getting paid. Here are some thoughts and suggestions:
• Build a solid foundation with new clients and establish a sound relationship based upon trust, integrity, and open communications.
• Develop a sound client intake system. Screen both new clients and matters, and ensure that they meet your firm's profile, requirements, competencies, and capabilities.
• Check the client's credit history within your firm on prior matters and in the general business community at large.
• Establish credit limits for your clients.
• Charge interest on delinquent accounts.
• Accept credit card payments if you work with individual clients.
• Discuss fees and expenses up front with the client.
• Require retainers in advance when appropriate. Collect additional retainers as needed.
• Execute fee agreements/engagements with clients on all matters.
• Bill clients promptly upon completion of work or billing cycle.
• Consider billing more frequently than once a month.
• Bill completed matters immediately rather than waiting for the month-end billing cycle.
• Cut off your monthly billing cycle early, and date bills and mail, so your client receives them in the current month.
• Send out statements (reminder bills) on the 15th of each month.
• Assign someone to be in charge of monitoring collection of delinquent accounts receivable and to be held accountable for results.
• Implement an accounts receivable collection system consisting of a series of follow-up letters after 30, 60, 90 days outstanding; phone follow-ups; payment plans and other arrangements agreed to with the client.
• Refer uncollectable accounts for further action. (Internal billing committee, partnership, collection agency, suit, etc.)
Q. We find it very difficult to differentiate our firm from the competition with respect to marketing, etc. What specific suggestions might you have regarding methods and/or ideas that we could use to increase our market share?
A. You need to begin asking you clients about their needs and thinking from your client's perspective. Budgetary certainty and knowing in advance how much a matter is going to cost is important to clients.
An efficient operation and the general office environment are important. Lawyers should listen to their clients and understand their problems.
We believe that satisfying client needs and expectations, providing outstanding service quality, and adhering to the highest level of ethical standards is a strong beginning.
Q. I have been practicing law for 10 years and I feel that I am in a rut. I am working for a firm, and the relationship is no longer working out for me.
I don't have enough time for my family. My kids are growing up fast and I don't have enough time to enjoy them. I need to make a change. Where do I start?
A. A balanced personal and professional life is becoming more important to everyone. Time is a precious commodity. You should:
• Develop a personal life plan and career/practice business plan.
• Develop skills in time and money management.
• Determine what is important to you and define your personal-professional life boundaries.
• Enjoy life and get involved in activities other than the practice of law.
• Take charge of your quality of life; it is your responsibility.
• Obtain training in the business of law.
• Become entrepreneurial; think like a business man.
Begin by conducting an inventory of your life. Start with your personal life. Identify your personal and family goals. Then move on to your professional and career goals. Develop both a career plan and a business plan for your practice.
Once you have defined your personal and professional goals, you can formulate your action plans as to how you will get there and incorporate them into to a career/business plan.
We are frequently asked questions pertaining to a variety of management topics by readers and clients alike. Some of these questions are posted on our Web site in our Asked and Answered Section at www.olmsteadassoc.com/Resource/oacforum.asp
We encourage you to use this section as a resource and to post management questions. Contact me via e-mail at jolmstead@olmsteadassoc.com or post your question on the Web site.
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