The attorney client relationship can be a tenuous one. A positive experience can be great for referrals, which is the best way to grow your client base. However, an angry client can sour potential clients to your practice. Avoid unnecessary conflicts with your clients over your fees and any awkwardness over the invoice with a few simple initial steps.
Make sure fees are known up front.
During your initial consultation with the client, you will be able to determine what services they need. Different services require different fees.
Consultation fees: Some lawyers will charge potential clients just for the initial consultation to determine whether or not you can help them. If you are going to charge this fee, it’s important to tell the client before you meet with them.
Flat fees: Lawyers charge flat fees for certain services. Drawing up wills, negotiating real estate contracts and closings, or filing an uncontested divorce.
Hourly fees: Most cases are charged by the hours a lawyer puts into them. During an initial consultation you can estimate how long you think you’ll spend on a case so the client can determine if the cost is worth the potential payout from the case.
Retainer fees: When charging an hourly rate, a client may have to pay a retainer fee up front. The retainer is placed in a trust account and the lawyer withdraws from it as services are rendered. Any portion of the retainer that goes unused is generally refundable to the client.
Contingency fees: The most well known type of contingency case applies to personal injury law. Generally a lawyer will work for a percentage of the judgment. Therefore it’s in the lawyer’s best interest to attain the best settlement or judgment possible.
Make sure that your client signs off on the fee schedule.
This is the most important step. Before any services are rendered, the client needs to read and sign a fee agreement. The agreement terms need to be clearly drawn so the client can understand and not claim ignorance once you begin working for them. Too much legalese may protect you in the event the client fights you on the contract, but an easy to understand agreement can save you from ever getting to that point.
Be mindful of multiple representations.
When representing several clients at once for a case, make sure the written agreement includes the breakdown of payments. Who will be paying what portion of the fees? If the main client is paying a greater portion, make sure the other clients know their liability and sign their own fee agreement.
Include all expenses in your budget estimate.
Will the case require hiring an expert witness? Will you have to go overnight out of town to take depositions? Will you need to hire a private investigator? You may not be able to determine all of the costs of the case at the initial consultation, but the client does need to be updated as additional expenses are added. Updates to the fee agreement need to be signed as well.
Fully explain the fees.
At the end of the case, you will give the client an invoice that details your services. Some of the items on the invoice may be a surprise to the client like photocopying, postage, or research. If you’re going to be itemizing your expenses on the invoice, make sure you’re clear about what they’re for and why. This involves careful bookkeeping on your end. It is likely that your office will be working on multiple cases at once. To be efficient, tasks will be divided by type, not by case. An hour of photocopying or scanning shouldn’t be billed to multiple clients when each one only took ten minutes. Impeccable bookkeeping will save you from conflict later.
You’ll need to fully train your employees to record their tasks. This is where an accounting firm like JADDE Financial Solutions comes in. We can set up a recording system for you and educate your office in how to properly account for their time. When your record-keeping is done accurately, your billing will be seamless, helping alleviate any potential client protests over fees.