Attorneys in transition attract clients with alternative billing

J. Nick Augustine J.D. is the principal of ALR/PRA, Inc., a full service law practice management agency.  He advises and assists attorneys in transition in public relations and marketing, and also shares recruiting and staffing experience and tips for legal job seekers.

I have a colleague and friend who recently shared a unique model for billing clients who are short on money.  While some say there are no clients, others understand that there certainly are people in need of legal services, but they don’t have as much money for legal fees.  As a result of budget constraints, many would-be clients are going it alone, using self-help resources instead of hiring the attorneys in transition.

To attract the clients on limited budgets, consider developing an alternative billing and fee structure.  Allow clients to budget for legal expenses instead of living in fear of the growing invoices they expect from attorneys using traditional law firm billing practices.

Always perform a reasonable amount of due diligence when taking on a new client who has expressed financial concerns.  This is a red flag for many attorneys and when business is booming, most clients who report financial trouble are often redirected to bar associations for referrals.  Be careful when representing clients to whom you extend any type of credit – nobody likes the free lunch and bar complaints can be common from clients who received a discount on legal services.

Fixed-price fee schedules are an effective way of setting reasonable expectations for traditionally hourly-billed services.  Many routine processes and pleadings can be priced (based on value, time and complexity) so that a client knows what certain options will cost.  From a strategy perspective, a client may think twice about litigating certain issues and settle when they know what a protracted hearing will cost.  Don’t forget to think ahead and build in language in your fee schedule and engagement agreement so that non-routine events are still billable on an hourly basis when necessary, such as when you have an opponent who buries you with an exceptional amount of pleadings and discovery requests.

Fixed-price fees are common among transactional attorneys and the small and midsize firms have attracted budget conscious clients, particularly in the commercial business client space.  Consider taking a fixed-price item and allowing a credit-worthy client to pay in easy installments.  When cash flow is important, installment-based receivables, when paid on time (hopefully they pay on time) can reduce the stress of monthly overhead.

Percentage-based payments and extensions of credit may also attract clients who are expecting more money to pay fees in the near future, based on tax returns, year-end bonuses or cash settlements.  You can enter into an agreement wherein the client assumes your standard hourly fees and pays a percentage of the amount based on what they can afford.  In a sense this is a revolving credit account and you should always be mindful of commercial laws addressing attorney client and debtor/creditor relations.

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