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Law Practice Management

Law Practice Management. Class #9 Billing. Billing Essentials. Fee Contract Fee Sharing Setting Fees Credit Card Payments Creating and Sending Invoices Keeping Clients Satisfied Withdrawing for Non-Payment Handling Client Costs. Fee contract. Must be in writing

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Law Practice Management

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  1. Law Practice Management Class #9 Billing

  2. Billing Essentials Fee Contract Fee Sharing Setting Fees Credit Card Payments Creating and Sending Invoices Keeping Clients Satisfied Withdrawing for Non-Payment Handling Client Costs

  3. Fee contract Must be in writing Define the matter involved Amount of the fee if non-refundable, cite the relevant ethical requirements Payment terms What the fee covers What the fee does not cover

  4. Fee contract (cont.) Out-of-Pocket costs Right to terminate services Client signature on agreement Many other possible clauses See Foonberg, pp 255-260 for examples

  5. Private Practice FL Attorneys Using Written Fee Agreements

  6. Non-engagement/disengagement Need contact info for all potential clients Name, mailing address (street address preferred), email address, fax number Confirm in writing if you will not be taking case Confirm in writing when representation is completed Useful to trigger running of statute of limitation on possible malpractice action

  7. Non-engagement letter Protects both lawyer and non-client Important because you can be responsible for both malpractice and ethics violations for even minimal contact: No money asked for or received Single telephone consultation Casual conversation with friend or relative Pro bono consultation or bar assoc project Response to email inquiry

  8. Content of non-engagement letter Specify nature of contact(s) with non-client Refer to the nature of the matter discussed Give a reason why you are not taking the case Don’t give advice on statute of limitation problems Encourage non-client to seek advice from other lawyers (include number of local lawyer referral service) Return client papers (and mention that in letter) Make it clear that you are not taking case and will take no further action

  9. Fee Sharing Division of Fee Usually requires some sharing of work and responsibility Referral Fee Generally no requirement of shared work or responsibility Sharing Fees with Non-Lawyers Prohibited Except bonus plans within firms Out-of-jurisdiction lawyers are often deemed non-lawyers

  10. General conditions for fee sharing Fee must be no higher than if only one lawyer were being compensated Client must be notified in writing or consent in writing to the fee sharing arrangement

  11. FL rule on fee division Rule 4-1.5(G) Division between lawyers in different firms must be: Proportionate to the services performed by each lawyer With client’s written consent

  12. FL rule on referral fees Rule 4-1.5(F) 25% referral fee permitted in personal injury cases Must be a written agreement to assume joint responsibility and be available for consultation Can’t collect referral fee if you referred the matter out due to your own conflict of interest

  13. Setting type and amount of fees Easy to make a mistake, must learn from those mistakes Readsurveys on law office economics sponsored by local or state bar associations Talk to other lawyers in your community and/or doing similar work

  14. Some clients are willing to pay more for good advice – others not

  15. Types of Fees Hourly – remains most common Contingent fee – mainstay in personal injury work Flat or fixed fee – becoming more popular Value – also increasing in popularity, may include bonus for good result Blended – combining one or all of above

  16. Primary Billing Methodfor FL Firms2012 Survey

  17. Hourly fees May not be appropriate for brand new lawyers Hours devoted in first few cases will be high as you learn, then drop with each successive case High hourly rates can scare away working class clients who want to know what the cap will be

  18. FL hourly rates2012 survey

  19. Breakdown of hourly rates2012 Survey

  20. Comparison of hourly rates2010 to 2012 Survey

  21. Hourly Rates by Region2012 Survey

  22. Billable hours2012 Survey

  23. Private Practice Attorneys Who Keep Time Records (%)

  24. Attorney Salaries2012 Survey

  25. Salary Trends2012 compared with prior surveys

  26. Contingent fees Know state limitations on percentage See FL Rule 4-1.5 which specifies varying % depending on: Stage proceedings at which case is settled or resolved Amount of recovery Contingent fees prohibited in some practice areas such as criminal and domestic relations

  27. Contingent Fees% of Firm’s Cases Handled on Contingency

  28. Contingent Fees Prohibited FL Rule 4-1.5(f)(3) says that a lawyer shall not enter into an arrangement for, charge, or collect: (A) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or (B) a contingent fee for representing a defendant in a criminal case.

  29. Flat or Fixed FeesFoonberg calls them “lump sum” Fixed fee no matter how much or how little work is done More common in criminal and domestic relations Many clients like to know that they have a fixed fee Starting to penetrate into business and commercial law firms Fixed range of fees with a minimum and a maximum

  30. Value Billing Lawyer and the client determine the fee together Focus on client needs, wants, expectations, and values Focus not on lawyer’s time or specific services provided Must define scope of the engagement, the results the client wants to accomplish, and establish value with the client up front The fee, or a substantial portion of it, is paid up front

  31. Bonuses Fees related to results Increase fee for unusually good result Reduce fee for unexpectedly bad result Requires client’s agreement in advance FL does not permit result-based fees in domestic relations, but other states do

  32. Consultation charges? Foonberg does not Thinks it creates wrong impression Lawyers concerned only about money I did (in my trial court divorce practice) Clients don’t appreciate what is free Consumes otherwise billable time (assuming you have a full case load) Small compensation for being conflicted out of representing other party

  33. Unbundling legal work Report by Florida Bar on 2003 rule for unbundling of legal services in family law cases (860 So 2d 394) Florida Family Law Rule of Procedure 12.040 permits limited appearances for only specific matters or proceedings in family law matters Designed to make legal services more available and affordable

  34. Quoting fees Don’t quote fees over phone or by email Don’t give legal advice over the phone or by email Get potential client into the office Impress them over phone only enough to get them to come in Save your efforts to impress for the face-to-face consultation

  35. Fee “bedside manner” Be firm Use phrases such as “my standard fee in matters like this” to instill confidence Don’t ask client what the fee should be Distinguish between uncertainty in the final amount of the fee and uncertainty n the manner of setting the fee Don’t back down Don’t be swayed by client reports of what other lawyers are charging

  36. Fee “bedside manner” (cont) Don’t reduce fee on promise of future referrals (they never materialize from clients who use this tactic) Discuss fees at initial conference Use “5” in quoting fees (i.e. $195 rather than $200 per hour) Suggest the client borrow the funds or use a credit card to pay fee

  37. Cash up frontFoonberg’s rule Client who won’t pay cash up front likely won’t pay later Your choice Do the work and not get paid Don’t do the work and not get paid Hint: The latter is better for you You, not the client, should decide when you do pro bono work

  38. FL Lawyer Receivables

  39. Getting the cash Consider “evergreen” retainers Client expected to keep a certain balance in trust account to be used for costs/fees Time/billing software can make this easy to manage Make it clear to clients that you are not a banker Let them find another source for financing the fees Always discuss fees at the initial meeting Clients need the relatively certainty of knowing what the legal services will cost

  40. Handling cash fees payments Call in a staff person to count the money and give receipt to client Deposit the cash intact in the bank, with the deposit ticket indicating the source of the fee Make sure the client knows that cash payments are recorded in your books and will be reported on your tax return May need to report to IRS large cash* payment (over $10,000 in single or series of transactions) on Form 8300 *includes cashier’s checks in some circumstances, money orders, etc.

  41. Alternative fee/billing arrangements Credit cards Client borrows from family, friends, financial institutions, credit card cash advances, etc. Client refinances assets Client sells assets You offer a contingent fee arrangement Whole, or in part

  42. Alternative fee/billing arrangements (cont.) Sharing work with client Outsourcing clerical or other work Flat or fixed fee Outsourcing some work to lower-priced persons Law students, underemployed lawyers, etc. Matching payments to client cash flow (installment payments)

  43. Credit card payments No longer considered unprofessional Florida Bar Approved Credit Card Processing (LawPay) New lawyers should be especially eager to accept credit card payments Look for state or local credit card merchant arrangements or ISO’s (Independent Service Organization) Client paid for honeymoon trip to Hawaii with second wife from miles earned using credit card to pay fees in divorce from his first wife

  44. Credit Card Requirements LOMAS article on requirements: No commingling of client and firm funds Requires multiple Merchant Service Accounts (MSA’s) One tied to General or Operating account Another tied to Trust (IOTA) account Firm must absorb merchant fees or “discounts” charged by merchant service provider – can’t charge back to client

  45. Credit card options Web-based PayPal – works, but fees are on high side Virtual Payments Systems (formerly ePayOps) – client pays “convenience fee” for using system Integrated with software PCLaw – time/billing/accounting software includes credit card processing Traditional merchant accounts (swipe terminal) Bar-approved member benefit (LawPay) Independent services for lawyers Chard.Net Your bank

  46. Credit card options Mobile PayPal Here Square Intuit GoPayment

  47. FL Lawyers Accepting Credit Cards

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