The most important time to tackle the matter is at the beginning of your retainer, which should always be in writing. Before agreeing to take on a client, if possible, estimate for the client what their total fees could end up being in a worst-case scenario and determine if that is something your client can afford. Estimating your total fee may not be possible but either way, make it clear to your client that the initial retainer is not necessarily going to cover your entire fee.
If it is clear that payment of your fee is going to be a problem, you may be better off not taking the file at all. Doing otherwise may mean you will have to terminate the solicitor-client relationship during the midst of the retainer. Not only is this unpleasant and, for many, difficult to do, it can also lead to other problems including reports to your law society or badmouthing from your now disgruntled former client.
Get your retainer upfront and make it clear to your client that you will not start work on the file until the retainer is in your trust account. Also make it clear you will require a further retainer to be made promptly once the initial retainer is close to being exhausted. In other words, tell your client at the outset your retainer needs to always have a positive balance. Again, this needs to be made clear in your fee agreement.
As for the amount of the retainer, it is my view that you are usually better off overestimating. I have yet to have a client complain because my fee was less than I had originally estimated. Just the other day, I closed the file for an elderly client. When he came to my office to pick up the contents of his file, I gave him my closing letter including a cheque for trust funds not used. The gentleman was so happy he tried to endorse the cheque back to me so that I could “treat my staff.” Of course, I refused his kind offer.
Once you have started work for your client, be sure to account for your time on the file as you do it and make sure the time is input into your system on a daily basis.
When it comes to tracking the work, time is of the essence. Don’t make the common mistake of writing the time down well after the work has been done or inputting it into your system at some later date.
First of all, you risk forgetting to record the time altogether or else not recording it accurately. Secondly, you risk allowing your work in progress to exceed your client’s retainer. This can be problematic. It means you must now go to your client and ask for more money, not only to cover work done but the new work. It also sends a false message to your client that you are prepared to ignore your firm policy of always requiring a positive trust balance.
From a client’s point of view, it is my experience they are generally far more satisfied when they receive regular accounting. They are less likely to challenge your account and more likely to react positively when you request your further retainer. Doing this effectively requires discipline. It requires regular monitoring (daily or weekly) of your work in progress, and the funds in trust.
With modern law firm accounting programs the task is straightforward. If you are too busy to do this yourself, consider delegating it to your bookkeeper. Depending on the type of work you do, consider a policy of biweekly or monthly billings. Alternatively, consider a billing policy that requires billings whenever the gap between your work in progress and funds in trust reaches a certain amount, for instance, $500. At that point, consistent with your retainer agreement, have a standard letter that you can send to your client enclosing the account and requesting the further retainer.
Make sure to set a timeline for payment. Bring forward the file and if payment is not made by the time indicated in your last letter, contact the client again in writing and advise that unless payment is made by a certain time, you will have no choice but to withdraw as his or her counsel. Bring forward the file again, and if payment is still not made, review your ethical and legal obligations to your client and to the court and, if appropriate, withdraw.
In summary, effective management of firm receivables comes down to three things: clarifying your client’s fee expectation; managing those expectations; and, when necessary, enforcing those expectations.
Set your fee expectations out clearly at the beginning of the retainer and make sure your client understands it from the get-go. Once you have started working on your client’s matter, follow and manage those expectations by recording and accounting to your client for your work performed in a timely fashion. Finally, when necessary, remind your client of those expectations and, if necessary, follow through by enforcing your expectations while at the same time keeping in mind your legal and ethical obligations.