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Poor Business Practices Can Grieve You

April 10, 2023

As a parent, I pride my children for giving their best effort even when the result of that effort is mediocre or not what was desired. However, I express disappointment even at good results if the effort to achieve the result was below their ability. I am especially irked when a lack of bona fide effort causes them to make costly mistakes. Such mistakes are avoidable. As I tell them, everyone makes mistakes and that’s ok. But stupid mistakes, well, there’s no justification for making them.

Lawyers are smart, but they aren’t immune to making mistakes–stupid ones at that. As a law professor and business coach to lawyers, I am privy to many mistakes lawyers make in their practice. It is disconcerting to know that despite the amount of law school training devoted to careful research, timely follow-through, and deliberate action, many lawyers are hurting themselves professionally through easily avoided mistakes. In this blog post, I touch upon four simple mistakes lawyers make that can result in their being grieved by a client.

  1. Treat the practice only as a profession and not as a business.

When you have a legal practice, you have both a profession and a business. These two components are necessary for a healthy and successful practice. They are equally important, yet serve different interests. The profession serves the public; the business serves you. You are in the profession of providing legal services to the public and you are in the business of making money for yourself. From the business perspective, your goal should be to develop the business so that it becomes financially self-sufficient. Financial self-sufficiency makes the lawyer less likely to be tempted to “borrow” from the client or charge unreasonable fees.

  1. Failure to ask for money up front.

Failure to ask and obtain some cash up front sets the stage for involuntary pro bono. Oftentimes this failure is the result of a perception on the part of lawyers that it is beneath them as professionals to ask for money. Lawyers don’t like to sell and lawyers don’t want to appear to be after money. It is a profession, after all. But as was mentioned earlier, lawyers are in the profession of providing legal services to the public but are in the business of making money for themselves. It is important that this distinction is understood and appreciated. What lawyers provide to the public is a noble service and there is no shame in seeking payment for a benefit that only lawyers can provide. Jay Foonberg, in his now dated but still a good read, How to Start and Build a Law Practice, aptly pointed out that “[t]he client who can’t or won’t pay you cash up front at the beginning of the case is the same client who can’t or won’t pay you cash during the case, and is the same client who can’t or won’t pay you cash at the end of the case.” Therefore, consistent with the recommendation of having your business financially self-sufficient, make it a practice to get some cash up front as an advance for costs fees or both.

  1. Failure to (timely) bill client.

Sometimes the solo or small firm practitioner can get so busy handling client matters that management responsibilities are put on the back burner. Hours are not faithfully recorded because the lawyer is too busy working on a client matter. Later, when the lawyer attempts to record the hours worked, memory fails. Statistics show that attorneys shortchange themselves when they complete timesheets from memory rather than dutifully recording hours as matters are worked upon. This failure to dutifully record often results in the failure to timely bill clients for services rendered. When the client is eventually invoiced, the client is caught off guard. A bill comes out of nowhere with a stockpile of services listed. The client, reeling from “sticker shock” resists payment and thus the stage is set—again, for involuntary pro bono or, at worse, a grievance against the lawyer for excessive fees and padding the bill. The lawyer should make a practice of billing the client on a regular basis, preferably monthly. Additionally, the bill should be detailed. Here, more is better than less. You are the fiduciary for the client and should inform the client of all actions carried out on the client’s behalf.

  1. Failure to collect.

Statistics show that attorneys have an increased probability of being grieved if they persist in seeking payment from a recalcitrant client. However, if the attorney does not exercise such persistence, the attorney ends up with involuntary pro bono. It’s important to note that collection procedures don’t begin at the time of billing but at the time of drafting the engagement letter and incorporated fee agreement. This sets the expectation for the retained client. In the letter, the attorney outlines the services expected to be rendered based upon discussions had with the prospective client in the initial consultation. The fee structure and timing of payments should be detailed, including whether any retainer is necessary. The letter and fee agreement have space for the client to initial and sign–preferably electronically, indicating that the client has read the letter and fee agreement and agrees to the terms. The attorney and the client should both have and retain a signed copy of the engagement letter and fee agreement. Communication with the client is also an important part of the collection process and should be done throughout the representation. A copy of every letter sent to third parties, as well as every motion, pleading, etc., prepared for the client’s matter, should be sent to the client marked “For Information Only—No Action Required.” Along with keeping the client informed, these documents provide support for the attorney’s monthly, detailed bill and provide an excellent record if the attorney is ever grieved regarding fees.

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