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Birmingham Bar Association Spring 2014

Client Fees Michael E. Baker; Partner, Dent Baker & Company, LLC Clients Continue to Put the Squeeze on Fees What does the ‘new normal’ mean for you? In part one of this article, published in the December 2013 issue of the Bulletin, I described a recession-driven environment in which clients do not hesitate to price shop legal services. Th e result of this and other developments has been the emergence of a variety of Alternative Fee Arrangements (AFAs). In part two we get practical with tips for handling conversations about fees and maximizing profi tability by improving your billing and collections. Stuff you didn’t learn in law school In a case that went all the way to the Ohio Supreme Court, an attorney received a two-year suspension for submitting false time records. Some observers faulted the legal education system for not adequately preparing lawyers for the real world of practice. Others believed the lawyer was essentially stealing from her client. Even those who disagree about the issue would concur that the legal curriculum is not typically strong in practice management. One challenging area, even for experienced legal hands, is conversations about fees. Part II Th ese days, such discussions often center on Alternative Legal Fees. Th ese include fl at rates with a cap, project fees, collars and other departures from the traditional hourly rate. Leave no question Approach fees in the same confi dent, consistent manner you use to address other practice matters. Northeastern Law School professor Sofi a S. Lingos urges attorneys to work on “creating a clear fee schedule, establishing competitive rates, communicating the terms clearly, capturing the agreement in writing, and consistently collecting….” But how do you prepare for those potentially awkward conversations about fees? I recommend four steps. Get a system in place. Some fi rms have developed models and alternatives depending on the size and scope of the work. How closely you stay within those guidelines is a point of refi nement that will diff er by fi rm. Keep your cool. It’s easy to get frazzled when a client or potential client challenges your fees, especially when faced with “gotta-have-it-now” or “gottahave it-cheap.” By staying positive and devising a workable solution you show the client how you operate under pressure. You also may be aligning yourself for more work as some fi rms off er additional discounts if client fees reach a certain level over a 12-month period. Make lemonade. Working through a diffi cult discussion about fees can strengthen a business relationship. Remember, it’s far more diffi cult to replace a client today than it was fi ve years ago. Respond graciously. Th e fact that you got the call is a sign that the client values your contributions and wants more. At the end of the day, a reasonable Alternative Fee Arrangement is almost always preferable to no fee. Where’s my money? I am amazed by attorneys who complain about their collections, yet admit to infrequent billing. Ultimately the client is the chief arbiter of the bill, service and perceived value delivered. An attorney friend likes to say that professionals should be paid “well and often.” Here are some tips toward that end. Bill regularly, at least monthly. 38 Birmingham Bar Association


Birmingham Bar Association Spring 2014
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