Introduction. The most sophisticated or most appropriate billing method is a complete waste of time if a lawyer cannot collect the fees billed with a minimum of fuss.Having said this, the clarity of the billing method agreed with the client plays a significant role in the ease with which a lawyer is able to collect fees and eliminates surprises as has been noted.We will discuss some of the issues that militate against efficient collection as well as the steps that can be taken to address the33214
1. Law Firm Financial Management –Collection – How to Ensure that Clients Pay A Paper Presented by Dr. Babatunde Ajibade, SAN in Cape Town, South Africa on 26th March, 2010 at the International Bar Association’s African Regional Forum Conference, 2010.
2. Introduction The most sophisticated or most appropriate billing method is a complete waste of time if a lawyer cannot collect the fees billed with a minimum of fuss.
Having said this, the clarity of the billing method agreed with the client plays a significant role in the ease with which a lawyer is able to collect fees and eliminates surprises as has been noted.
We will discuss some of the issues that militate against efficient collection as well as the steps that can be taken to address them.
We will also discuss the process and the attitude towards collection where clients fail to make payment voluntarily – To sue or not to sue? The X million $ / N / ZAR Question.
3. Billing and Collection There is a clear connection between the clarity of the billing method agreed with a client and the ease with which a lawyer can collect fees.
Irrespective of the method adopted, whether hourly rate, lump sum / value billing, it is essential in modern practice to ensure that there is a clear agreement with the client as to the method and quantum of billing.
Proper billing is a substantial undertaking in itself, especially when viewed from the collection viewpoint and this becomes glaring when bills are contested or have to be taxed.
4. Issues that Militate against Efficient Collection Cultural issues that affect billing and collection.
Tentativeness and diffidence when it comes to demanding payment.
Failing to recognise that your law practice is a business as well as or rather than being just a professional calling.
The intangible nature of professional services.
The failure to identify and segregate pro-bono work from fee paying work at the inception of instructions.
Failure to profile your client properly.
Inadequate justification for amount billed.
5. Essential Requirements and Tips for Efficient Collection
It is always useful to receive payment up front if the client will accommodate it where you have agreed on a lump sum or value billing.
The next best option is a payment on account, which you then retire over time, coupled with top up fees so you are always in credit.
Periodic billing in arrears, rather than a lump sum at conclusion of assignment, helps client’s cash flow.
A proper accounting system that enables you to track your receivables – You can get so busy you forget to get paid.
A proper accountant or an accounting and collections department that is dedicated to following up on your bills.
6. Enforcing Collection Opinion is generally divided on this and this has a lot to do with the anachronistic perception of legal practice as a professional calling rather than a business.
In modern legal practice though, the greater consideration would appear to be the ease with which collection can be enforced as against any scruples about enforcing collection.
Depending on the amount involved and the effort that will be required to collect, many a law firm will write off unpaid fees.
Where enforcement is required, the clarity of the agreement reached with the client as to billing and fees becomes of paramount importance.
In Nigeria, once there is evidence of a clear and unequivocal agreement as to the fees payable for legal services and once a lawyer’s bill has been presented in the format required by the relevant provisions of the Legal Practitioners Act, enforcing collection is straightforward.
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