Communication/Clarity At All Stages Pervade These “Rules.”
We thank NALFA for summarizing an article by Todd C. Scott, Vice-President of Risk Management at Minnesota Lawyers Mutual, entitled “Nine Rules For Billing Ethically and Getting Paid on Time” (which came from an ABA website article). Here are the rules, to which we have added some gloss based on the commentary accompanying them (but with our takeaways):
1. Communicate the fee arrangement before you start the case — usually, in writing (sometimes required depending on the jurisdiction, unless you want to be relegated to quantum meruit recovery).
2. Your fee better be reasonable.
3. “Nonrefundable” does not mean that you can be paid for doing nothing.
4. Verbal flat fee arrangements are as good as the paper they’re written on.
5. Availability (“true retainer”) fees are separate and distinct from legal services fee.
6. If the fee is shared with someone outside the firm, the client should know exactly where it is going.
7. Three keys for effective invoicing: detail, detail, detail — including “no charge” entries for services which are not being billed for payment.
8. When the payment is late, be direct. Clients like direct — lawyers need to communicate they need payment as much as any other service provider.
9. Foonberg’s rule: If you’re going to get burned, get burned cheap — if the client bill starts to spiral too high, get payment or get out unless a short-term catch up can be done. (Jay Foonberg is author of a popular publication, “How to Start and Build a Law Practice.”)