Client expenses are a profit-killing blight on many firms. You’ve got to deal with them aggressively, or they’ll deal with you.

Here’s what I mean:

You’ve done a great job for the client. The case just settled right before the trial, and you negotiated a deal that made your client happy. Well, “happy” might be overstating it. The client was satisfied, smiled, and hugged you, but she blames you for every concession she had to make on every tiny issue. She’s happy enough to sign the documents, say nice things about you, and go away, but it’s not as if she’s overjoyed.

Two months after the case is finished, you get a bill from a court reporter. You pay it, and you bill the client for payment. The bill is for $1,500.

She doesn’t pay.

Your bookkeeper calls her about payment.

She says “nope” and mumbles something about a Snuggie. Huh?

You call her. She doesn’t want to pay. After all, she explains, he got the collection of Snuggies he wanted so badly. He should pay for the court reporter.

OMG!

One day, you might collect the $1,500. If you do, it will be preceded by several more painful calls in which you discuss Snuggies and other ridiculous issues.

If you collect the money, you will have wasted your time. If you give up on the money, you’re out $1,500.

The bottom line is that fee on this case didn’t cover the loss of $1,500 after the file was closed. A case you had made a profit on will now turn into a loser: that’s unacceptable.

You need a system for collecting client expenses in advance and making sure the funds are available when the bills show up.

Overlooking client expenses can easily make a profitable practice a money loser.

Every jurisdiction is different. Every practice bills differently. It doesn’t matter how you do it; just do it. Be certain that taking actions that cost money results in automatic action to collect that money from the client—ideally, in advance of incurring the cost.

Consider tasking someone like your paralegal with collecting the funds before sending the notice of deposition and having those funds deposited in your trust account. Maybe the person calling the house appraiser should ask for the funds before hiring the appraiser? These systems are going to vary practice by practice and state by state, but you’ve got to get the funds in advance or arrange direct liability for the client rather than for your practice.

Don’t incur expenses without a plan for obtaining payment. The last thing you want to do is find yourself collecting client expenses long after a case is closed.