We are still on the topic of “collecting” as the fifth of the five areas that make up every business in the world. The other four areas are: “Clients” or “customers”; “Administration”; “Getting the work done”; and “Billing.”

Last week we talked about what documents to use with regard to assigning your accounts to a third party entity who can then pursue collection of your bills against clients.

This week we are going to talk about a concept of setting up a time every month for “accounts receivable calls” as a method to try to communicate with your clients on a personal basis about the status of their account.

I think it would be helpful if you would actually put on your calendar a date every month when you would get together with the people in your office and jointly make “accounts receivable calls” in the afternoon to collect your bills. Literally, set aside an afternoon that everyone knows will be a time when you will be working on collecting accounts receivable.

I find that the bills in our office that are for hourly rate matters will go out of the office usually no later than the 10th of the month. It is usually too soon to set up a time for “accounts receivable calls” anytime before the 10th of the month. Usually the best time to make phone calls would be on the Monday that starts the fourth week of every month, usually somewhere around the 20th to 25th. In my office, the majority of the clients come in through, so I am the logical person to go over the accounts receivable list and assign phone calls to the various individuals who are the primary lawyers handling the cases. Once a month, I sit down with the accounts receivable list and review each and every account we have that is outstanding. I circle the account and I put a lawyer’s or the bookkeeper’s initials by the account that needs to be collected. I then have my staff make copies of the accounts receivable list so each person can have their own. I then have this list handed out and I ask everybody to work on the list. If necessary, we try to get together in an office where there are multiple phones and have all of us make the calls more or less at the same time.

One of the things I have always tried to do is to give authority to lawyers who are the primary parties responsible for handling a case to enter into payment arrangements with clients or to discount bills in return for lump sum payments. It is not enough to just tell people to use their best judgment. I have found it is best to state clearly what discounts and what payment arrangements are available than to leave the matter up to “by guess and by golly.”

I have often asked if some client walked into my office today and said they were willing to pay me a very large retainer, how much legal service would I be willing to give them for that retainer? Obviously, the answer is more legal services than just a dollar for dollar basis. We all need to remember that the practice of law is a business and in any business, positive cash flow is happiness! If we would be willing to do this for a client who just walked in and is willing to give us a retainer, why wouldn’t we do the same thing with regard to a client who is willing to pay a bill? We have a standing policy in our office, that a ten percent discount will be given at anytime for a payment now. If the account is large enough, we obviously would be willing to give further discounts in return for payment, sometimes even as high as a 1/3 discount.

Another thing that we try to do is get clients to pay us on a periodic basis if they cannot make a lump sum payment. I have always been surprised at how quickly an account can be reduced if an amount is received of something in the neighborhood of $500 per month. Over the years there have been circumstances where people have paid us as little as $25 per month on accounts, and as high as $8,000 to $10,000 per month on accounts. The constant question you have to ask yourself is are you better off with the legal business and the periodic payments or without the legal business and a smaller cash flow? I always find it amusing that lawyers somehow think their business is different from every other business in the world. It just isn’t so. The same concepts that apply to every business in the world apply to the business of running a law firm. Obviously, since we are licensed professionals, there are additional standards that we need to hold ourselves to that are not the standards of the common business person, but once those standards are put in place and scrupulously maintained, the rest of the business is pretty much the same.

I believe there is a constant theme that continues to run through all of these articles I have been putting forth over the years and that is that you have to be organized, you have to be disciplined and you have to be able to make a profit. If any one of those three things breaks down, it is not long before you are in hot water with your malpractice carrier, the Office of Disciplinary Complaints or your banker.

I must admit that no matter how hard I try to make all of the systems as perfect as possible, I am constantly reminded that this is an imperfect world. No matter how hard you try, there are going to be some clients that you just can’t satisfy. I believe the secret to a successful practice is to try to do everything you can everyday to satisfy every client, and if for some reason some client is not satisfied, to try to work with that client as best you can to get them satisfied. But then, as my wife has told me on many occasions (She being the one of fewer words than I.), “do your best, forget the rest!”

You cannot let one matter that doesn’t go the way you want it to, totally discombobulate you and your whole law firm on the hundreds and even thousands of other matters that have been very successful and clients who have been very happy with your work. I suppose it would be a lot easier if we just tried to figure out a way not to care, but many of us got in the legal profession because we did care, and it is not easy to understand that despite all of our hard efforts, and all of the things we try to do that are right, you simply cannot “please all the people all the time.”

When you are making these “accounts receivable calls,” try to please as many people as you can, and I believe if there is a phraseology you need to try to live by. That is, “Be firm, but fair!”

Next week we are going to talk about discounting your fees when a matter is taken on, as well as discounts for your fees if timely payment is made. I think you will find some of these ideas quite helpful with regard to getting clients and keeping the cash flow positive.

Talk to you next week!

Jim Wirken is a civil trial attorney and the Chairman of the Board of The Wirken Law Group in Kansas City.