We are still talking about the topic of “collecting” as the fifth and last area of the five areas that make up every business in the world. As you know, the other four areas are as follows: “Clients” or “customers”; “Administration”; “Getting the work done”; and “Billing.”

Last week’s article was about utilizing “payment schedules” and “post-dated checks” in order to have a constant cash flow and to get your clients to pay their bills. This week we are going to talk about “introducing your clients to a friendly banker for a loan to get your bills paid.” I believe that if you are in business you have got to figure out a way to get your bills paid by your clients and customers or you will quickly be out of business. You have to be creative with regard to finding ways to get your clients to pay your bills. You must always be honest and ethical as well as being “firm but fair.” Introducing your client to a friendly banker who would be willing to give them a loan so you can pay your bill is a good idea. Obviously, any of the clients relatives that would be willing to loan them some money in order to pay your bill is also a method you can use to get your bill paid. I have previously discussed taking credit cards on bills and that has turned out to be an excellent way to get bills paid by clients.

Recently I had a client pay me a substantial new retainer, but they wanted to pay it by utilizing a credit card where they could get frequent flyer type miles for the payment. This obviously was a “win-win” situation for both of us. The client got their bill paid, the client got their frequent flyer miles, and I got a new retainer that allowed me to continue to work for this client to get ready for a hearing date that was quickly approaching.

It is important to remember that over 50% of lawyers in the United States of America practice in law firms of ten lawyers or less. Most of these law firms do not have “silk stocking, blue chip” clients. It seems the majority of my clients when they come to me have some type of a financial crisis to begin with. Somebody owes them money and they are not being paid, or they owe somebody some money and they don’t have the money to pay them. This general concept appears in almost every set of circumstances whether it be personal injury cases, family law matters or business corporate and commercial cases. In fact, the only matter where it seems clients actually have the money to pay you without any particular problem are those matters that are transactions where someone is buying or selling a company or a business. People who are willing to spend some money to do some estate planning are also and exception to this rule. But, by and large, as I have often stated before, “nobody calls a lawyer with good news!”

If the majority of your clients are in a “pinch of need,” you will be hard pressed to find a way to get enough retainer to handle the matter to have your client stay current with your bills, and to ultimately get all of the money you have billed and your client for the services you have performed. There is absolutely no excuse for not staying on top of your billing, staying on top of communicating with your client about the status of your bills, and staying on top of collecting your bills as you go along to be sure you do not end up with a large accounts receivable at the end of a matter.

If you can find a friendly banker you can introduce your clients to, this is a great way of having someone else become the bank for your client instead of your law firm. In this age of credit cards, debit cards and home equity lines of credit, there certainly has to be some way for you as a lawyer to put other people in the position of being owed money for the legal services you have delivered.

It is perfectly permissible for a lawyer to “qualify the buyer” of their legal services prior to the time they perform such services. I have often discussed this concept of “qualifying the buyer” with people in other professions. Real estate people, automobile dealers, store owners, remodeling contractors, “everybody qualifies the buyer.” It does not appear as though lawyers spend very much time trying to “qualify the buyer,” but it is something that lawyers need to learn how to do and to become involved in unless they want to end up with large amounts of uncollectible accounts receivable and ultimately being out of business.

Talking with people ahead of time about how much legal services they can afford is not only acceptable, it is smart! I am often reminded about the question, “how much justice can you afford?” Obviously, this can be a very cynical comment, or it can be a very practical comment. It is very important to know what you are getting yourself into with a client before you get into it because the client will ultimately not be very happy if you do not communicate with them about what their legal matter is going to cost and how you expect to be paid for getting them the result they are after.

Any method you can use that makes it easier for the client to pay you and easier for you to get paid is the way to go. My very, very strong suggestion is that you have these kinds of conversations with your clients at the very earliest time you can. I try to have discussions about what it is going to cost to achieve a legal result for the client and how the client will be able to pay for my services in the very first conference that I have with the client. I put those arrangements in writing in my Engagement Letter, I bill on a monthly basis, and I expect the clients to pay my bills within thirty days of the date of the bill. Obviously, there are many arrangements that I make with clients with regard to payment, but I always start from this baseline of being paid promptly, and then start working from the clients to change that baseline if it is necessary in order to get a positive cash flow.

Next week we are going to be finishing up the area of “billing” as the last of the five areas that makes up every business in the world. We are going to talk about “accepting personal property and real property” in lieu of cash for a fee. This is a very ticklish area under the code of Professional Responsibility, so I think you will find some of my comments very interesting with regard to this concept of accepting property in lieu of cash.

Talk to you next week!

Jim Wirken is a civil trial attorney and the Chairman of the Board of The Wirken Law Group in Kansas City.