Fee Setting and Collections

Increase Revenues with Higher Fees and Timely Collections

Setting the right fee is one of the most effective ways to increase revenues. Too many lawyers leave thousands of dollars on the table by setting the wrong kind of fee.

Despite our reputation as fierce negotiators, many people with a legal education go to great lengths to avoid fee resistance from prospective clients. But if no one ever complains that your fees are too high, they are almost certainly too low. That is why 75% of the time we advise our clients to increase their fees.

Of course revenues cannot be increased if fees are not collected. In addition to helping lawyers negotiate higher fees, we help them avoid collections problems through the use of late-fee provisions and other strategies.

Gideon has written extensively about fee agreements and collections issues. He is the author of the fee setting chapters for the State Bar of California’s treatise, “Opening and Managing a California Law Office.”

Who We Have Helped

Since 2005, Gideon has been helping lawyers negotiate higher fees and reduce collections issues.

An attorney who specialized in defending malpractice actions frequently ran into collections issues. At the beginning of the representation it was unclear whether the client would actually be sued. Thus the attorney charged a modest retainer based on an hourly rate. This made it necessary for the lawyer to return often to the client to collect his fees. In turn, the clients began to balk at the cost of the representation once a complaint was filed and the case was more actively litigated. Our solution was simple. After examining the history of such cases, we advised the lawyer to quote a flat fee for the representation that preceded the filing of the complaint. The fee was set at an amount exceeding the cost of prior cases. This had the effect of better preparing clients for the real cost of litigation. His clients paid the flat fee and then were dramatically less likely to object to paying the hourly rate once a complaint was filed.

A family law attorney had represented a client for several months in an actively litigated divorce resulting in fees of approximately $40,000. When the client received the fifth or sixth bill, he sent an angry email questioning several of the charges, complaining about the cost, and hinting that he might report the lawyer to the state bar. The client was angry and so was the lawyer, who felt the client’s letter was completely unfounded. After conferring with our client, we agreed that the best course of action was to respond quickly to the email emphasizing that he appreciated the client’s frustration and offering to respond in more detail. A few hours later the lawyer wrote a detailed response that clarified the questioned time entries. He then offered to meet in person to discuss the bill as well as the overall strategy for the case at no charge to the client. The client agreed to meet, the lawyer agreed to write off a few thousand dollars, and the representation continued with the client feeling more certain about how the case was unfolding and where his money was going.

A transactional lawyer was fearful of raising his longstanding rate of $265 an hour believing his clients wouldn’t accept the rate increase. We identified certain selection criteria that would help identify which clients would be candidates for quoting an increased fee. Among those criteria was a new potential client who wasn’t referred by an existing client or referral source. One week after setting a new fee structure, the lawyer was contacted by someone to whom he had no prior connection. The lawyer was able to quote and receive a rate of $350 an hour.

How We Can Help You

We can help you increase your revenues by assisting with every phase of the billing process from fee setting to bill collection, including:

  • Setting a higher fee
  • Helping structure fee types and fee amounts
  • Advising on the use of late-fee provisions
  • Reviewing bills to identify issues that create resistance to timely payment
  • Advising on how to resolve a potential fee dispute
To find out how Rainmaking for Lawyers can help you, call us at 310.734.6073

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