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Unless you have a longstanding relationship, take a retainer. Every time. I learned that quick when I was solo. I would use a firm that collects attorney fees, but its tough. The other side will often file a bar complaint, which could get dismissed as a fee dispute, but its still on the record.
As it is, I have outstanding open balances from existing clients, but I have ongoing matters with them. I use that and upcoming deadlines as leverage to collect.
Senior associate here and learning the retainer lesson the hard way. After about 120 days our accounting department starts hounding clients (to let the attorney step away) but we never take collection action because of the bar complaint issue you highlighted. Just not worth it.
If you have unpaid legal bills, please reach out to me. My firm handles commercial collection matters nationwide. I am admitted in NY and deal with a nationwide network of attorneys for collection matters outside NY
Our malpractice questionnaire always asks if we have sued anyone for fees. We never do it because in my experience the result is a suit for malpractice regardless if merits. We get retainers from people we don’t know, always. We also call people st 60 days out. Our bills go out by the 3rd of the month- we have found that is critical to prompt payment. Everything is fresh in their minds and the bills get paid faster.
This. As an inhouse counsel dealing with law firm bills for over 10 years, it is a huge help if you (a) send the bill as soon as possible and (b) are transparent about how that was formed. The guys who delay their bills 2-4 months are the ones who will get their payment last AND will get a write-off on it.
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We tried to get the partners at my old firm to use a firm that specialized in these collections because our realization rates were atrocious. They never did it because their partner salaries were covered, but associates didn’t get raises, bonuses, or paid a fair wage as lawyers. I would’ve used one of those collections firms in a heartbeat for some unpaid bills totaling $20000 or more…
The statistically quickest way to get sued for malpractice is to try to collect earned fees, regardless of outcome in the matter. Retainers are the standard or be prepared to write off the debt.
Managing partner is right on about this! Also, in Colorado, the statute of limitations can be revived if what you’re suing about is substantially related so the possibility of the malpractice counterclaim never goes away.
Wouldn’t use an external firm for collection since it damages your relationship. But my firm has a strict policy that we won’t do any further work if the accrued payables exceed a set amount. Partners get fired/deequitised if they end a year or two with north of the limit in uncollected bills.
Pay to play.
A year is way too long IMO. The older the debt, the lower the chances of collection.
As others have said, getting a retainer is a good idea. Ever read Jay Foonberg’s classic book on starting a law practice? The client who can’t or won’t pay before you do the work is the same client who can’t or won’t pay after you do the work. And if you’ve already done the work, what leverage do you have to get paid?
If you have serious concerns about non-payment, consider requiring an “evergreen retainer” that must be replenished once it drops below a certain amount.
To answer your first question, I largely avoid collection problems because my current practice area is consumer bankruptcy. Since our clients are all in money trouble and typically have a history of not paying their debts, the fees are structured in a way that minimizes the chances of non-payment.
Chapter 7 cases are traditionally done for a flat fee, cash up front. Most firms will let the client make payments, but the petition doesn’t get prepared or filed until the fee is paid in full. If you’re taking installment payments, set up automatic withdrawals via a debit card or ACH, ideally on the client’s paydays.
With Chapter 13, you can put some or even all of your fee into the plan. And your fees have priority as an administrative expense, so the payment of those is “front loaded.” Even of the case fails, as many Chapter 13’s do, most survive long enough that you’ll get paid. (ProTip: Put the client on a payroll deduction order so their plan payments get taken out of their paycheck by their employer.)