My office has a system where every client who says they will pay us on a monthly basis gets a bill every month. We have a system for preparing these bills - making sure they are reviewed by a "work with" person to be sure all of the time is in the bill. We have a system for being sure each person who has any time in the bill reviews the whole bill and finally, we have a system for the "responsible lawyer" to finally approve the bill. We do one more thing before we just put the bill in an envelope and mail it to the client. We make a determination as to whether or not a cover letter will be helpful in allowing us to more easily collect the bill.

Cover letters slow down the billing process, but I am a firm believer they "speed up" the collection process. In order to have a cover letter be placed with a bill, the "responsible attorney" needs to put a notation on the pre-bill they are approving to be done in final and sent to the client, that the bill cannot be sent until a cover letter is prepared and sent with the bill. The bookkeeper is in charge of ensuring that all bills, where it was noted that a cover letter is necessary, do not go out before the cover letter is prepared and attached to the bill and mailed to the client.

Our system states that any final bill that needs a cover letter must be done within 24 hours of the final bill being prepared. We work very hard to meet this 24-hour deadline.

The preparation of cover letters is not as onerous as it may sound, because you can come up with a template that sets out what it is you want to say in most cover letters, and you can simply bring that up on your computer and in many cases, simply fill in the blanks. You want to tell the client you are enclosing their latest bill, and you want to say what it is you need to say about the bill that will make it easier for the client to pay it more quickly. You want to be sure you give a thorough explanation of any issues of any kind regarding the bill. Finally, you want to ask for the client to either make a payment or to pay the bill in full immediately.

One of the most frequent reasons for having a cover letter is where a payment has been received in a subsequent month and that payment is not reflected in the bill itself. Simply taking the time to indicate that a payment has been received and it will be shown on their next month's billing, saves a tremendous amount of confusion and unnecessary communication about something that can easily be cleared up by the use of a cover letter.

Cover letters are also helpful to use is when a client has more than one matter in your office. You can put all of the client's matters together in the cover letter so the client knows what their overall bill is from you in a given month for all of their matters.

If you have an agreement where a client will pay you so much per month, it is a very good idea to continually remind them in a cover letter the exact status of their payment. If a client needs to replenish a retainer, a cover letter is a good way to remind them of that. If a case was handled on a flat fee basis for a particular part of the case and that "flat fee" has been used up, a cover letter is a good place to not only tell that to the client, but also to enclose a new engagement letter so the client can authorize additional expenditures of fees and expenses that may be necessary to move their matter forward.

In short, anything that will help you get your bill paid more quickly is good subject matter for a cover letter. There is rule of thumb taught at seminars that states: "A bill sent within 24 hours of the time that a matter is concluded will be paid within 24 hours by the client." Also keep in mind this popular comment lectured at seminars as well: "The further a bill gets away from the time that the matter has been concluded, the longer it will take the client to pay the bill."

We have a monthly billing system in our office, but it is possible to be able to get a pre-bill out to the client at anytime during the month. If you run a pre-bill and have that pre-bill put with a cover letter, and have that forwarded to the client, you will get the client used to paying your firm quicker. I cannot emphasize enough or state too many times that "a positive cash flow is happiness."

I have used cover letters to reassure clients as to the progress that is being made with their matter. During intake interviews, I often have stated to clients their "itemized bill" on a monthly basis is like a "storyline" as to how their matter is proceeding. If you can get the clients used to reading their bills, it is a very good way to communicate with them that you are actually working on their matter and that you are actually trying to move the matter forward to a conclusion. The danger of course is that in a given month, if you do not do any work at all on the client's matter, and therefore you have no bill for them, it becomes glaringly obvious that you are not doing anything to move the matter forward.

Be creative about what you are saying to your clients in your "cover letters" to always be projecting effort and to be saying things that help the client understand what you are doing for them and the cost for the same, and that they need to promptly pay their bills. When in doubt, communicate. When you communicate, over communicate. Lack of communication between lawyers and clients is among the very top complaints by clients against lawyers at the Office of Disciplinary Complaints and in legal malpractice cases.

Next week, we are going to talk about finance charges. We are going to discuss putting the concept of finance charges in your engagement letters, showing finance charges on your bills, expecting to get paid finance charges and also be quite willing to write off finance charges where appropriate. I think you will find my comments on how we use finance charges in our office to be very helpful. Remember, we are lawyers, not bankers!

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.