Why is Collecting Your Money so Difficult?

Well, we have finally reached it. We are now ready to talk about the last of the five areas that make up every business in the world, and that area is “collecting.” The other four areas that make up every business in the world are: “Clients” or “customers”; “Administration”; “Getting the work done”; and “Billing.”

I believe it is probably fitting that we have left “collecting” to the last. Not only does “collecting” chronologically come at the end, but it is probably the most important area that makes up every business in the world as well as the most difficult area when it comes to the practice of law.

I know I have eluded to this concept before, but I honestly believe that most people who have grown up in the United States in the last half century have been taught to believe that “asking for money is an unnatural act.”

It is not the purpose of this article to try to determine why this asking for money is such a difficult task, but rather to simply deal with the reality that almost everybody seems wired in such a way that asking for money just does not come easy. Maybe this has to do with our parents, their backgrounds through the 1920’s, the depression, World War II, the Korean War, and things thereafter, but I have certainly seen the phenomena over and over again in all the different kinds of law offices I have been involved in for thirty-six years of practice. Simply stated, lawyers by and large simply want to do the legal work and not be involved in anything else. Maybe this is just more evidence of people seeking their comfort zone and not wanting to operate outside of that zone.

I think it is clearly understood that you can have “clients or customers,” you can have “administration,” you can “get the work done,” you can “bill” for the work, but if you don’t “collect” those bills, you are very quickly out of business. You have to develop some mentality of expecting to be paid for what you do!

I think that, by and large, the practice of law must lend itself to setting up circumstances where people just don’t want to pay their lawyer. Let’s examine this phenomena. Most people do not call a lawyer with good news. Nobody ever calls up and celebrates the fact that they have been involved in an accident and they have been injured. Nobody calls up and celebrates the fact that the IRS is after them. Nobody calls up and says they are happy that they are in a dissolution of marriage. Nobody calls up and says they are excited to be able to work with their lawyer because somebody has breached a contract. By and large, most areas of the law are areas where the clients don’t call the lawyer with good news. Surely, there are adoptions that are done, surely, there are mergers and acquisitions and other types of positive and “go forward” activities that lawyers can be involved in, but by and large, even the best set of circumstances that a lawyer deals with deal with advocacy, negotiations and compromise.

Because the law business is a service business, the concept has been to perform the services, then build a client, and then wait to get paid. This service business of the law is not unlike other kinds of service businesses, but I believe that many of these other service businesses have the same problems that lawyers do in getting paid. One of the few service businesses I can think of that does not appear to have too much of a problem getting paid is the medical profession. Health insurance has made it easier for doctors to get paid, but dealing with health insurance carriers is certainly not an easy task. The doctors have been smart enough, for the most part, to extricate themselves from this collection procedure and have simply delegated that task to other individuals. For some reason, other kinds of professionals such as engineers, architects, accountants and lawyers have always had to become involved in the collection process personally. I believe the reason for this is that there is oftentimes, a much closer personal relationship between these other professions and the work they are doing, than there is between a doctor and a patient. It is not to say there aren’t personal relationships between doctors and patients, but I certainly have come to the conclusion that it appears that more often than not, lawyers seem to spend a lot more time with a one-on-one relationship with their clients than do doctors spend on a one-on-one relationship with their patients. Obviously, there are exceptions to this, but by and large I think that concept is accurate.

Maybe it is this personal relationship issue that creates such difficulty in lawyers collecting their bills. Maybe we as lawyers are always afraid that somehow we are going to offend our clients and that somehow they will never come back to us again for any further legal work, and worse yet, we will become a “walking billboard” of bad mouthing about us as lawyers. Maybe it is time we all became involved in collective therapy to get over this problem, and to realize that if you have performed valuable services for a client and you have reasonably billed them, that you should be entitled to be reasonably and timely paid. Is it our own paranoia that keeps us from expecting to be paid? Is it our zeal to try to get as much legal business as we can that puts us in a position where we feel we need to discount our hourly rates or discount our bills in order to get paid? Are we beginning to believe all the lawyer jokes and all the bad publicity about lawyers, and do we thereby fall into the trap of not only believing, but living by the concepts that are being communicated through the negative publicity?

Next week we are going to talk about the first concept I would like to share with you about the area of “collecting,” and that is monthly bills, even if no work is being performed, where there is an outstanding account receivable. I think you will find the comments I make with regard to this quite interesting, and will help you do a better job of being a collector.

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.