What’s the most important part of running a law firm?  In my opinion, it’s getting paid and it harder to do than it sounds.

Most solos and law firm owners know this – getting clients to pay the full bill is like pulling teeth.  You either won’t get paid at all by some clients, or you get nickled and dimed by others.  It is the exception rather than the norm that you get paid on-time and in full by a client.  Knowing that’s true for the majority of law firm, it’s sad.  Because at the end of the day, we’re running a business.  And businesses need to earn money in order to keep offering services and survive.

So what are some ways to ensure that you get paid or at least, don’t get burned as often?

Flat Fee Billing

This is what I do and this is what works for me.  It might not work for everyone and it is not the only way to always get paid.  However, I have $0 in receivables at the moment or for the past several years for that matter.  That means that no one owes me money and I am paid in full by all of my clients.  The reason is because I never begin representation of a client before my legal fees are paid in full.  I bill for the entire case up front.

Now, there are of course challenges to flat fee billing, such as how to set your rates and hedging your bets against really complicated cases, but those challenges can be overcome.  My friend, Jay Shepherd, runs a consulting practice called Prefix where he helps professions set flat fee rates.  The mistake that most people make when setting flat fee rates is that they’re estimating the time it takes to complete the case and simply charge it up front.  Well, then it’s not really any different than billing hourly if you’re still trying to bill the same number of hours.  Jay Shepherd advises you to bill for your advice and knowledge instead of your time.  It’s very tricky but definitely can be done.

Bill Early and Often

This is usually the common sense advise that most older lawyers give to younger lawyers.  Bill early and bill often.  That way, when a client doesn’t pay, at least you give yourself time to withdraw and if you don’t get your last bill paid, at least it’s only a little bit of time and money lost.  This is a great model to use IF you stick to it.  Problem is, lawyers are busy people and the time it takes it bill early and often, most of us would much rather do legal work.

So if you have the money, it is useful to have a secretary or paralegal do the billing for you.  However, if your books and accounting is a total mess and you think that just by hiring a secretary or paralegal, they will come in and magically organize your life, you will surely be disappointed.  A helper can only follow your system and rarely will you be able to hire someone that will develop a system for you to stick to.    I’ve hired many interns and helpers in the past and I’ve found the opposite to be true.  I develop a system and it’s hard to get those you hire to stick to them.

So if your law practice is a mess, you need to simply sit down, organize yourself, develop your own system and hire someone to help maintain it.  You cannot expect others to do the hard work for you and planning and systematizing is usually the harder work.

Do you have any other suggestions for reaching that $0 receivable karma?  Let me know in the comments.