OBLIC policyholders who call our loss prevention hotline often pose questions concerning how to collect overdue legal fees from clients. The best answer is to avoid getting into such a position in the first place. One way to avoid this predicament is to discuss your legal fees and other costs associated with your representation upfront and use a written fee agreement signed by you and the client. Moreover, you should consider using an “evergreen” retainer to help avoid non-payment issues. Click here for sample Evergreen Retainer language.
Another way of improving the collection of fees is to provide regular written status updates to the client. These should be sent at least a week before your monthly invoice. That way the client will already know what you’ve been doing on their matter BEFORE your invoice arrives. Don’t let your monthly invoice be your only communication with your client updating them on the progress of their case.
If your client hasn’t paid your last invoice when it’s time to send the next one, don’t let it go! Give the client a call simply stating that you noted the last invoice hasn’t been paid and then let them respond. At that point, you can consider the client’s reasons for non-payment and take appropriate action as necessary. You have the option to decide whether you will continue the representation, perhaps making adjustments in billing, or if you will withdraw from the representation (if possible). Staying on top of your billing should help you maximize collecting your legal fees.
At the conclusion of the representation, always send a file closing letter. Sending a file closing letter at the conclusion of the representation meets the termination prong of the legal malpractice statute of limitations. The letter should clearly state the matter which is concluded so the client will understand the attorney is ending the representation only for that matter (and not other matters the attorney may be handling). Click here for a Sample File Closing Letter.
Fee Collection Best Practices
- Discuss legal fees and expenses with your client at initial meeting
- Always use a written fee agreement
- Consider using an Evergreen Retainer
- Provide the client with regular status updates
- Send monthly invoices
- Follow up immediately if the client does not pay
- Decide if you will adjust your invoice or if you will need to withdraw
- Send file closing letter at conclusion of representation
If you have questions, please do not hesitate to contact OBLIC. We’re here to help you!
Gretchen K. Mote, Esq.
Director of Loss Prevention