Get That Bag: How to Build a Collection Process for Your Law Firm

September 24, 2024 - Law Practice Management

Law firm accounts receivable can be gnarly – sometimes extending into the six figures. Now, there are a couple of responses to that. The preferred option is to eliminate accounts receivable altogether, which can be done using epayment options and potentially evergreen retainers combined with stop work orders. Of course, you may not ever get to 100% collection rates – that’s a tall order – and you may have some accounts receivable to deal with already. So you’ll need to establish a collection process, and that should flow from your engagement agreement.

The components relating to money that you need in your engagement agreement, aside from your rate(s) and/or basis of your rates, would be: an escalating series of penalties for non-payment; an arbitration clause, potentially including access to the Wyoming State Bar’s Fee Arbitration Committee; and that stop work order. This will allow you to put pressure on non-paying clients via an internal process. And if those systems don’t yield eventual payment, you’ll also want to have an ‘out’ clause that will allow you to terminate the attorney-client relationship as a last resort.

You can make all the money you earn, but, as with most business-related items, you just need a system to get there.

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The Wyoming State Bar offers free law practice management consulting services through Red Cave Law Firm Consulting.

To request a consult, visit the Wyoming State Bar’s law practice management page, and start running your law firm like a business.