You've experienced the frustration of pouring hours into a case or providing expert legal advice to what you thought was a legitimate client, only to be met with silence when it's time to collect payment.
This all too common scenario for lawyers is not just disappointing - it disrupts your cash flow and questions the value of your hard-earned expertise.
What can a lawyer do to get their client to pay an invoice, though? You’ve come to the right place. We’ll share effective strategies to encourage timely payments along with steps to take when faced with non-payment.
Plus, we’ll introduce the best AR automation software specifically for lawyers: InvoiceSherpa. We’re the only accounts receivable automation software that integrates with Clio, designed specifically for legal professionals.
Discover how you can reap the accounts receivable automation benefits to transform your payment collection process, letting you focus on what you do best - practicing law, not chasing payments.
The importance of cash management cannot be overstated for any business, but this is especially pressing for lawyers. Your services often involve a significant time and intellectual investment on your behalf upfront before you’re paid.
This issue is prevalent in the legal field due to the nature of the services provided. Legal matters can be complex and prolonged, leading clients to sometimes underestimate the cost of these services. Moreover, the sensitive nature of legal work can make clients hesitant or unable to settle their dues promptly.
Ignoring late payments or being overly patient can send the wrong message. It might imply that delayed payments are acceptable or that your services are not a priority. This perception can harm your firm’s reputation and your stance as a professional.
Therefore, it's crucial for lawyers to view timely payment not just as a financial necessity but as a reflection of their professional standing and the value of their legal services. So, what can a lawyer do to get his client to pay an invoice?
Managing client payments effectively is as crucial as providing top-notch legal services. After all this is how cash flow problems usually start for law firms.
That being said, here’s a detailed breakdown of strategies lawyers can employ to encourage prompt payment of invoices, avoiding the frustration and costs that occur when an account becomes uncollectible and must be written off.
The foundation for timely payments is laid at the very beginning of the client-attorney relationship. Clear communication about fee structures, billing cycles, and payment expectations should be established and documented.
This could be in the form of a retainer agreement or a detailed engagement letter. This includes how and when invoices will be sent, accepted payment methods, and consequences of late payments.
You must express your invoice late fee wording clearly from the beginning so there are no surprises when these are applied down the road. This can also act as a deterrent for nonpayment or late payment, so be sure to read up on the maximum invoice late fees by state so you can use these to your advantage.
One of the best small business accounting tips and tricks we can offer for lawyers specifically is to take a good hard look at your invoicing process. Invoices should be sent out promptly post-service delivery. A delay in billing can often lead to delay in payment.
You should also provide detailed, itemized bills that clearly outline the services rendered. This level of detail helps clients understand what they are being charged for, reducing the chances of disputes or confusion.
Furthermore, you can facilitate faster payments by accepting electronic payments. Platforms that enable credit card, ACH, or online transfers can expedite the payment process significantly. This is one of the many reasons investing in billing automation software is such a great idea - but more on that later.
If you don’t mind getting paid slowly over time, you can consider setting up a payment plan for your client. This approach can maintain client relationships while ensuring eventual payment.
Similarly, retainer agreements can be an effective way to manage payments for ongoing clients. Clients pay upfront, which can be used against future services, reducing the need for constant billing.
If your initial invoice goes unpaid, you can promptly send a polite but firm email reminder within a few days or a week. The tone should be professional yet empathetic, acknowledging the possibility of oversight while reiterating the need for timely payment.
Maintain a record of all communication regarding payments. This practice is not only beneficial for internal tracking but is also crucial if legal action becomes necessary.
Sometimes, a more direct approach such as a phone call or a face-to-face meeting can be more effective if a client won’t pay your legal fees. These interactions allow for any misunderstandings or disputes to be addressed immediately and can often expedite payment.
As with written follow-ups, it's important to remain professional but assertive during these conversations. Clearly state the importance of settling the invoice while being open to discussing any issues the client may have.
If all other attempts fail, sending a final demand letter may be necessary. The demand letter for payment should be clear, concise, and assertive, stating the outstanding amount and the consequences of non-payment.
Ultimately, though, not all clients will pay for your legal services after you’ve rendered them - and it sucks. It’s part of the gig, though, and you can take additional steps if you’ve tried everything to get your client to pay without success.
Now…what happens if you don’t pay a lawyer? Surprise, surprise, you’re met with legal action! While nonpayment puts you in a challenging position that no lawyer wants to be in, you can consider legal recourse to seek what you’re owed.
Once you’ve sent a formal legal notice about nonpayment, you’re well within your rights to pursue legal action if the debt is not settled. This is where you’ll need to consider hiring the help of a collections agency.
This should be done with caution, ensuring the agency operates within the bounds of the law and ethical guidelines of the legal profession.
As we discuss in our guide on how to send an invoice to collections, this doesn’t always pan out. Sometimes you only capture partial payment, and it may take a toll on your reputation while causing irreparable damage to certain relationships.
The final step in legal recourse is to file a lawsuit against the client. This step is usually taken as a last resort due to the costs and time involved, and the potential impact on the client-lawyer relationship.
Even in the face of non-payment, maintaining a professional demeanor is crucial. This preserves your reputation as a lawyer and the integrity of the legal profession.
Now, what if there was a way you could avoid the hassle and headaches that come with chasing payments from your clients? Wouldn’t it be nice to streamline your invoicing process to get paid faster? This is possible when you invest in automated invoice processing with InvoiceSherpa!
Our software is a revolutionary solution for lawyers grappling with the often tedious task of chasing payments. It’s uniquely designed to address the specific billing and accounts receivable challenges faced by legal professionals.
This includes seamless integration with Clio, making it the only platform that offers this level of compatibility specifically for lawyers. This integration ensures that your billing, payment tracking, and client communication are effortlessly synchronized with your legal management software.
You can automate the entire process of invoice reminders from sending initial polite prompts to escalating follow-ups for overdue payments. This not only saves valuable time but also maintains a consistent and professional approach to payment collection.
The user-friendly interface makes it easy to customize payment reminder schedules, tailor messages to suit the tone of their practice, and even set up automated payment plans for clients.
Moreover, InvoiceSherpa provides real-time updates on payment statuses, helping lawyers keep a close eye on their cash flow. With these insights, legal professionals can make informed decisions about their practice’s financial management.
The best part? You get all this at a fraction of the cost of professional accounts receivable management services for lawyers. Some of our users have said that it’s like having a full-time AR employee for $49/month!
You can see what makes InvoiceSherpa a great addition to your legal tech stack today with a 14-day free trial, too. Getting set up takes just a few moments, and you’ll be well on your way to eliminating the frustration of nonpayment!
So, what can a lawyer do to get their client to pay an invoice? More importantly, what can a lawyer do if you don't pay them - is there any legal recourse on your side? We hope to have answered these questions and others for you in this guide.
In conclusion, effective management of client payments is crucial for any legal practice. By establishing clear payment terms, implementing proactive invoicing strategies, and utilizing tools like InvoiceSherpa, lawyers can significantly streamline their payment processes.
Want to learn more about the world of invoicing and AR? Our blog has resources on how to calculate accounts receivable or how to forecast accounts receivable. Or, you can learn about what is a good receivables turnover ratio, accounts receivable outsourcing, AR reconciliation, increases to accounts receivable, unbilled accounts receivables, and more.
Ready to enhance your practice's financial health? Start with InvoiceSherpa today, and experience the ease of managing your legal invoices and payments, all seamlessly integrated with Clio. Take the first step towards a smoother, more efficient billing process now!
Posted on February 2, 2024
