Improving Collections in the Small Practice

• Publication year: 1997
• Pages: 85
• Citation: Vol. 26 No. 3 Pg. 85

26 Colo.Law. 85 Colorado Lawyer 1997.

1997, March, Pg. 85. Improving Collections in the Small Practice

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85

Vol. 26, No. 3, Pg. 85

The Colorado Lawyer
March 1997
Vol. 26, No. 3 [Page 85]

Specialty Law Columns
Law Practice Management
Improving Collections in the Small Practice
by Anne Rocheleau
C 1997 Anne Rocheleau

Column Eds: Law & Technology: Phil J. Shuey of Phil J Shuey, P.C., Englewood - (303) 680-2595; General Management Bobbie Kramer of Elrod, Katz, Preeo, Look, Moison &amp Silverman, P.C., Denver - (303) 832-1900, and Keith L. Jenkins, a sole practitioner in Denver, (303) 744-8616

This column is prepared by the Colorado and Denver Bar Association Law Practice Management Committees to share ideas on more efficient and effective law practice management. This month's article was written by Anne Rocheleau, Westminster, an independent management and marketing consultant for small law firms and sole practitioners, (303) 427-6558.

Lawyers are the recipients of much ill will based on the perception that they are greedy, expensive, and preoccupied with fees. To the contrary, many attorneys view the entire subject of billing and collections with distaste and write off or simply fail to bill a significant portion of legitimate fees each year rather than confront the issue of collections. For sole and small firm practitioners, this tendency can be even more serious than for attorneys practicing in large firms.

This article discusses the issues involved in collections in the small firm and suggests practices that can be implemented to help avoid billing disputes with clients.

Small Firm Issues

Often, small firms cannot afford to hire administrative staff to attend to financial recordkeeping. As a result, timekeeping may be inaccurate and billing sporadic. Larger practices can maintain stability because some associates and partners are bringing in fees while others are experiencing slow periods. That stability is lacking in very small firms, and the problem is often compounded by inadequate reserves and limited sources of credit.

Additionally, small firm practitioners often enjoy greater intimacy with their clients than do attorneys in large firms. While that intimacy can make the practice of law personally rewarding and is a valuable marketing asset, it can stand in the way of effective collections. When the attorney must confront a valued client personally about a delinquent account, the attorney-client relationship may be jeopardized. A fee dispute may become a personal issue, with the attorney either backing down from a sound position or defending an unsound one.

These factors mean that sole practitioners and small firms must devote extra care to timekeeping, billing, and collections. Many problems can be anticipated and prevented by instituting sound management practices.

Client Expectations

The underlying cause of many fee disputes may take root even before the attorney and client meet. Attorney advertisements can set up unrealistic expectations. While bold ads offering free consultations and low fees may bring in potential clients, they may also attract some who are unable to afford the cost of legal services. Prior to placing any advertisement, the attorney must determine what type of client he or she wishes to attract. Copy and graphics should be prepared with that target market in mind.1

When meeting with the client, the attorney must discuss not only the initial retainer and the hourly rate, but also the potential cost of the entire case. Attorneys often fear that they will lose a client by focusing on the negative aspects of their case. They may also have a genuine sympathy for the client's position, which can interfere with their realistic assessment of obstacles, costs, and the amount of effort involved. Clients deserve realistic projections of the cost of...