A common problem that I, and anybody starting a law firm, will have is getting paid for your work. The easy answer to always getting paid is to ask for a large enough retainer for the work you know you are going to be doing. Easy, right? Good luck getting a lot of work, I say.
Here is the problem: other attorneys will charge less than they should to get a new client. An example: Attorney 1 says to the potential new client that I charge $2,000 for an initial divorce retainer. Attorney 2 says to the potential new client that I will $1,500 for an initial divorce retainer. Who is the client going to choose? Most of the time, I would bet, the potential new client will pick lawyer 2. It’s a simple market issue.
Now, let’s say you sometimes lower your retainer to stay competitive in the market. The problem that this can create, and which I have often faced in my own practice, is that clients often pay the initial retainer and that’s all you are going to get. You can sit there and recite the trust account, bill-by-the-hour, security deposit speech to the potential new client until you are blue in the face. The client will even sit there, appear to be listening, and nod his or her head like they understand. Then, three months down the road when the initial retainer runs out, the client doesn’t pay another bill. Another month goes by and no payment. You get the idea.
To combat this problem, a useful to call the client and say: “Hi Joe, your divorce is going fine and I think we are close to an agreement. I’d like to get this finished up, but I am waiting for a payment. When do you think you will be making this payment so we can get this finalized?” The client is often sightly embarrassed and may respond: “Oh, sure, I’ll pay that off in a couple weeks.” That doesn’t sound too evil does it?
I don’t condone not finishing work all the time. Your first duty should always be as an officer of the court. If a judge or another attorney is expecting you to do something you should do it – and you should bill for doing it. Afterwards, you can always call the client and tell them about what you just did for free and how you won’t be doing much more on their case without a payment. If they still insist on not paying you, send them a nice withdrawal letter, file a motion to withdraw with the court, give them their client file, and wish them luck. (If they owe you a lot of money, many jurisdictions allow you to file an attorney’s lien on the case so you can hopefully get paid after you withdraw).
When starting and building a successful law firm, you must always be concerned with getting paid. That is how you pay the rent, the utilities, the paper costs, and all the other fun overhead expenses. I’m sure I don’t need to tell you that you get paid by collecting these fees for your law firm as well.