Communication is key to getting clients to pay their bills in full

Getting paid is fundamental for business success, and much has been written on the effective management of lockup and billing cycles. However, speed of payment is greatly affected by how clients feel about the fairness of their bills.

It's bad for business when clients delay payment or query their bill. Time is wasted on renegotiating fees and chasing payments, which has a knock-on effect on cashflow. And then there is the inevitable negative impact on your whole firm's relationship with the client and the
client's inclination to recommend your
firm to others.

We took part in LawNet client satisfaction surveys over the past two years to find out how happy clients were with our services and bills. Much to the partners' relief, clients said they were generally happy with Andrew & Co, although they highlighted some areas
for improvement.

Costs information was high up the list, not only at the start of the matter but also around ongoing updates and proper reasons being supplied for increasing the bill. When we looked closely, it became clear that clients were talking not so much about the amount of fees charged but rather about the extent of communication on those fees.

Responding to feedback

In response to the feedback received, we developed a programme to ensure clients are in tune with our costs throughout the matter process. This has involved each team taking ownership of the way they work, both in the context of the client feedback provided and in designing benchmarks for service delivery. This
has resulted in the establishment of very cost-effective internal audit services.

Too many firms waste huge amounts of partner time on what are generally ineffective audit processes; auditing is not a core skill for most lawyers. A key aspect of selling this programme internally has been properly and fully explaining the distinction between achieving consistency on the basics and mindless conformity, as well as guiding each team on how they can improve client communication.

If consistency on a few key processes and ways of working is established, it soon becomes part of 'business as usual' and happens automatically in the background. The big win is that it enables our lawyers to really concentrate on what they do best, which is giving individually-tailored advice to their clients.

Improving lockup

As a result of the programme, a number
of teams have started to drive down
their lockup numbers. For example, the family team is now in top-quartile lockup territory, despite having a practice area that carries a number of financial 'elephant traps'. What follows are examples of
the protocols they put in place to
improve lockup.

• At the very first meeting, alongside the usual assessment of the facts and establishing the client's objectives and case strategy, the client's preferred method and frequency of contact is established and recorded so that they are aligned right from the start. It is agreed that payments on account must be received at this first meeting or within seven days of the client care letter at the latest.

• The team explain at the outset that
  the payment will be retained until the final account has been submitted -
  it cannot be used to settle any interim bills. Each file is billed monthly unless the work in progress is less than a
  de minimus figure.

• The team set clear but realistic guidelines on returning calls, responding to emails and replying to letters. Up-to-date 'out of office' messages on email and telephone answering systems are always required.

• Clients want the firm to be proactive, so any period of unexplained inactivity (beyond a fixed number of days) is noted on the file and, unless instructed otherwise, clients will receive an update (even if there is nothing to report).

Gaining buy-in

Before sending the final bill, it is important to confirm with the client that the outcome matches the strategy established at the outset. Where this hasn't been possible, the reasons for this should be clearly communicated and understood to secure a stronger emotional buy-in from the client, in readiness for the bill they are about
to receive.

A client who has received regular updates on a matter which has achieved the desired outcome (or, by consensus, the next best solution) and has had a stable relationship with the firm throughout the matter is more likely to smile than to quibble. Quite seriously - why shouldn't a client pay your firm
under these circumstances?

Simon Smith is a management consultant and a former law firm
CEO and LawNet board member