It can be an extremely stressful situation. You take on a client, complete several tasks related to the matter, and create an invoice for your services – only to be met with pushback, resistance, and unwillingness to pay your fees. Now, you are left with uncompensated work and the extra effort of getting your invoice paid. Almost every law practice, from the megafirm to the solo office, has been faced with this scenario at one time or another. It’s irritating and troublesome enough to warrant proactive measures of prevention. This article will discuss tactics for preventing client push back to your law firm bills. It will look at a few common reasons why clients are resistant to paying invoices and some things you can do to lessen these objections.
The problem of unpaid legal fees has become more common in recent decades due to a number of reasons, including:
- Widespread economic hardships
- Increased access to pro se legal resources
- Extensive corporate billing guidelines
- Savvier legal clients
- Increased competition among attorneys
All of these circumstances have created an environment where clients feel empowered and entitled to push back against legal fees and invoices. Let’s look at some of the reasons they often give for their resistance.
Hourly rates are too high
One of the most common complaints given by clients for not paying a legal invoice is the rate of pay. Though lawyers have traditionally earned hourly rates that are higher than the workforce average, clients sometimes balk at these rates and refuse to pay them. Just think about it. A person earning $20.00 an hour may have an extremely difficult time wrapping her head around a $200 an hour legal fee. This trepidation is further complicated by the uncertainty of not knowing how many hours your case will require. When faced with this situation, a client will painstakingly review every aspect of the invoice, looking for items to dispute. Once they find something, whether reasonable or not, they use it as justification for not paying your fees. Frustrating, right? But what can you do about it? Actually, you can do plenty.
First, you can rethink the whole hourly billing model for compensation. I know the hourly fee is a staple of the legal profession, but in the current legal climate, it may be doing you more harm than good. Think about transitioning from an hourly rate to billing fixed fees for your service. It allows you to still earn what the case is worth, while also calming the fears and concerns of clients. Now, instead of hearing $200 for an unknown number of hours, your client hears a set fee amount that can be paid up front with a retainer or over time at mutually agreed upon milestones.
With a fixed fee billing arrangement, your client knows up front how much the matter will cost, so there are no unexpected or hidden fees down the road. They can either agree at the onset of representation or choose to seek legal representation elsewhere. But if they choose to agree, you can rest assured that they will be much less likely to push back against your invoice after work is done on the case.
Transitioning from hourly billing to flat fee arrangements can be challenging, but TimeSolv time tracking and legal billing system has numerous resources to make the change easier. For example, TimeSolv enables you to run more than 30 reports regarding your legal practice. This is extremely helpful when setting flat fees because it gives you an accurate picture of how much time similar matters took in the past. So, you can make an informed determination about an appropriate fixed fee amount.
Fees are not justified
This complaint often arises in situations where law firms fail to adequately describe the individual tasks completed on a matter. Simple descriptions like “Telephone Call”, “Conference”, or “Document Preparation” do not go far enough to inform the client about the work completed on their case. Add that lack of information to concerns about the amount of the bill and you have the perfect push back scenario.
A more comprehensive bill provides the client with greater details – and I’m not talking about entire paragraphs of explanation. A simple one sentence statement can go a long way towards calming your clients’ nerves and preventing some of the dreaded push back. For instance, instead of simply listing “telephone call”, the invoice could state “telephone call with opposing counsel to discuss discovery request.” It’s not that many additional words, but they can save you time and money when payment becomes due.
Another key to preventing invoice resistance is to ensure that your bills are always accurate. It only takes one billing mistake to damage your credibility with a client and create a situation where every bill is unreasonably scrutinized and questioned. Accurate billing starts with accurate time tracking, and that is extremely difficult to accomplish without a system that makes time tracking simple, efficient, convenient and precise.
Once again, TimeSolv is your go-to for accurate timekeeping. Their proven software allows you to easily record your time with the click of a mouse, even allowing multiple staff members within your firm to track work on the same matter at different price points. The system is cloud-based, with mobility that allows you to track time from virtually anywhere in the world – even without an internet connection. The system then efficiently creates accurate bills that correctly reflect all work done on a client’s case. You can even program billing codes, which cut down on the amount of time spent creating invoices, while still providing clients with the information they need to feel comfortable with your bill.
By taking proactive steps and utilizing a comprehensive system like TimeSolv, your law firm can effectively address client resistance to bills and invoices. Click here for a free trial of TimeSolv and discover all of the ways this legal time tracking and billing system can help your law firm.
About Erika Winston:
Erika Winston is a freelance writer with a passion for law. Through her business, The Legal Writing Studio, she helps legal professionals deliver effective written messages. Erika is a regular contributor to TimeSolv and a variety of other publications.