Keeping clients happy is not just about providing quality service and results, but also ensuring your fees are fair and your billing is professional and transparent.
Avoid Surprises, Avoid Disputes
Most clients’ biggest fear is how much they will pay. They’re always afraid of getting a massive invoice at the end of the month. Before they hire you, make it crystal clear how much your services should cost. Clearly document all timekeeping, fees, transactions, and payment details to avoid conflict. If possible, set maximums to give clients some sense of certainty.
You should never have to do unpaid work or sue your client for unpaid fees. Here are five tips for making sure you do your best to never get involved in a fee dispute with a client.
1. Define Your Time Properly
It’s easy to fall into the trap of working all day, getting distracted, and then guessing how many hours you worked. To make matters worse, some attorneys write a short description of what they worked on all day, not providing the client with any transparency. This is actually fairly common among less experienced attorneys, but it can cast doubt into the minds of your clients. By lumping tasks together, you may give the impression that you are hiding inefficient practices, or worse, overcharging.
The easiest way to define and manage your time is by keeping a detailed record of what was done and at what times. You can use Excel, Google Sheets, or a case management software to keep track of this. Whatever method you choose, make sure not only that you are not over-billing the client, but that you are not under-billing, either. We find that many attorneys actually don’t bill enough, giving many freebies away like phone calls, emails, short meetings, text messages and more. If you have an app on your computer or phone that can quickly start a timer, that would be ideal. The most important thing is to always track your time accurately and provide detailed logs.
2. Track Billable Expenses
Clients want to see exactly how their money was spent. If they suspect a single dollar has been spent on expenses that weren’t necessary, then a fee dispute might occur.
If you use practice management software already, make sure to download its iPhone or Android app, and take pictures of every billable expense and receipt and upload them to the client’s file. All of this information can be turned over to the client when providing an invoice, or if you’re audited one day.
It’s also wise to discuss with your client how much money will be used from their retainer payment to pay any third-party expenses. Fee disputes are far less likely when the client has agreed upon a timeline, a price, and general expenses, and it’s in writing.
3. Beware of Delegation and Multi-Billing
It’s common for senior attorneys to use paralegals to help with a case, but when a client is paying senior attorney fees, it becomes not only unethical but fraudulent. Avoid falling into this trap by properly organizing how you will manage a case. If a paralegal will be involved in fulfilling certain milestones, simply include this in your planning documents and adjust the fee accordingly. If you’re using case management software, this is as easy as selecting another person when adding a time entry, and it should automatically calculate their personal hourly rate.
Multi-billing — when a number of attorneys appear at a deposition, for example, and regularly work on a case that can be handled by one attorney — is another cause for concern. In some cases, this might be necessary, but in the event that only one lawyer was required, a fee dispute is likely. It’s essential that a client is given the services that they need and no more — unless they specifically ask for it.
4. Get a Signed Fee Agreement
A signed fee agreement, simply put, is a document that outlines what a client will pay. Typically, these documents are provided not only to ensure a client pays only for what they agree to, but also to set out provisions in the case of unexpected events. So, in addition to outlining expenses and general overhead costs, you will want to add provisions to cover any additional fees or expenses. For instance, explain specific circumstances that may require more attorneys or staff to begin working on the case in the fee agreement. This puts the client’s mind at rest, knowing that the case will only cost them more than expected if an unexpected event occurs, or if they agree to involve more people to improve their chances of success.
A signed fee agreement should also outline whether retainer fees will be necessary.
Fee agreements benefit both parties, helping you avoid fee disputes and ensuring you maintain your reputation while also giving clients the best insight into what their case will cost.
5. Use a Client Portal for Evergreen Reports
If you have a client portal available in your practice management software, show it off. Let your clients know they will be able to log in to your client portal from your website and view, for example, how much money is still in the trust account and how much has been paid so far. They should even be able to view all previous and pending invoices, if you allow them to do so. Trust me, they will love the transparency.
You should also ask your software company if they have an “evergreen” retainer feature that will automatically notify you if the trust account balance dips below a certain dollar amount. This way, you will know that the client’s retainer needs to be replenished before further work is done.
Apply These Tips to Avoid Malpractice Claims and Fee Disputes
You just learned the keys to avoiding fee disputes, so put them into action. If you do find yourself in a billing dispute with a client, always take a step back, calm down, and think about how you can prevent it from happening again. Every bad experience can be a learning one.
Adapted from “The Secrets to Marketing and Automating Your Law Practice: A Lawyer’s Guide to Creating Systems, Getting Clients, and Becoming a Legal Rainmaker” by David M. Bitton (Practice Panther, 2018). Download the PDF version of the book here or buy the softcover or Kindle version of the book on Amazon (at cost).