We are moving through the topic of “collecting” as the fifth 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 we talked about “accounts receivable calls.” This week we are going to talk about a concept that would have you put in place a program for discounting your legal bills for timely payment. Such a program needs to be put into an agreement, and so I think you can call these “discounts for timely payment agreements.”

Yes, I admit that I am actually a little squeamish about writing this article because I believe we should not ever have to discount our bills in order to get them paid, but we all know that is just not realistic. I have already been on my “soap box” with regard to this concept so I am not going to repeat my comments here. Suffice it to say that I simply do not know of any business that routinely discounts their bills in order to get clients to pay them the way that lawyers discount their bills.

I have said over and over that happiness is a positive cash flow, and therefore, you should consider any method that allows you to have a constant cash flow in your office that enables you to pay your bills and yourself on a timely basis. One of the ways I have worked out with various clients is payments on a more frequent basis than monthly. I have entered into agreements to bill clients weekly, I have entered into agreements to have clients send us bi-monthly payments based upon pre-bills and I have entered into agreements having clients either discount their bills or to bill them at a lower hourly rate if they will have a quick turn around on the payment of a bill, usually within twenty-four to forty-eight hours. I must admit that any clients I can get to work with us on this type of a quick payment basis, very quickly become my favorite clients and the people I will be sure are taken care of as though they were my “only clients.”

I have represented an insurance company for some time who literally will have a check for us the day after they receive their bill. You certainly can’t ask for any quicker turn around time than that. I presently have another client that pays our firm on a bi-monthly basis based upon a pre-bill we prepare for them, then they wire transfer the money into our account. We bill this client at a reduced hourly rate as an accommodation to them because of their excellent track record with regard to payment.

I can envision a set of circumstances where a law firm would operate just like any other type of business where they put on their invoice, or in this case on the legal bill, that the terms for the payment of their bill are on “x” percent discount for payment within a certain period of time. There is absolutely no reason why a law firm could not do this.

The most important thing to remember is that every relationship between a lawyer and their client is different. No two clients are exactly the same any more than any two lawyers are the same. It is important that you get a specific personal relationship with every client and find out what is best for that client with regard to how to bill them and how to get paid by them on a timely basis. Literally, your imagination is only limited by what is fair and reasonable and in keeping with the rules of professional conduct.

Recently I had a matter with a client where we agreed upon how a fee would be paid, and unfortunately the circumstances changed so dramatically that there was no way that the formula for determining the fee could any longer be accurately arrived at. Whenever that set of circumstances presents itself, you need to immediately stop work, and get a new fee agreement with your client. There is no reason why you should keep working if you know you are not going to get paid for what you are doing unless the client has been such a great client that you actually don’t mind working for free. I try really, really hard not to work for free because no matter how many times I try to do the right thing, it appears as though the old adage of “no good deed will go unpunished” rears its ugly head.

I have often said that clients by and large are honest and upright people and they expect to pay a reasonable fee for a reasonable amount of service. If you can establish that kind of rapport with your clients, you will obviously be successful. The client who is impossible to get along with will also be the person who will stiff you for your bill. The client who has fired numerous lawyers or made complaints about numerous lawyers will also be the person who will fire you or make complaints against you. You need to develop a sixth sense about which clients are the ones who will appreciate your accommodations and which ones are simply trying to take advantage of you. No, it is not easy, but it is actually impossible if you don’t try to develop this sixth sense.

If you expect a fair and timely payment of your bill for a fair amount of services rendered and let the client be aware of your expectations, you will often get exactly what it is you are looking for. If you hem and haw, don’t put things in writing, don’t make things clear and don’t let the client know what you have done for them, you certainly should not expect the client to read your mind and somehow throw money at you.

I know I have said this many times before, but in a law firm, the three watch words are “organization, organization, organization!” If you get an engagement letter with every client, if you give a client exactly what your engagement letter calls for, if you have a contingent fee and you stick by your contract and get your settlement distribution on the payment of your fee in writing, or if you itemize your bills and you bill the client for a fair amount of time for the matter you are handling, you are absolutely entitled to a fair and timely payment of your fee!

Next week we are going to talk about payment schedules and postdated checks as an additional way of getting your bills paid. I think you will find my comments on these two additional areas quite interesting.

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.