I keep asking family law attorneys how things are going with their business during this recession. I keep getting the same answer – “we’re busy.” I’ve learned to probe when I get that answer. I followup with “how are revenues?” That’s when I get the important answer. Frequently, the response reveals that the lawyer is busy billing for work that might ultimately be written off.

The quantity of work is up and the collection rate is down. Clients are in difficult financial situations and aren’t always paying their bills.

The collection problem was an epidemic before the recession. Now it’s a pandemic.

Family law attorneys are, in many instances, failing to collect a huge percentage of their receivables.

It does you no good to be “busy” if you can’t collect for the work.

So what do you do to avoid the probem?

1. Get a written client agreement.

2. Collect a sufficient retainer, in advance, to cover the costs. Refresh the retainer each month. Keep up with balances weekly and if you are going to exceed the retainer balance call the client and refresh. Stop working on the file until the client replenishes the retainer. Do not get in the hole.

3. Don’t incur expenses on behalf of a client without the client paying in advance for those expenses.

4. If permitted in your jurisdiction, have the client preauthorize a credit card charge to automatically replenish the retainer.

5. Consider a fixed fee arrangement and have the fee paid in advance.

The bottom line – don’t extend credit. No one else is. Why are you?

Times are tough and you’ve got to be sure you’re fairly compensated for the work your doing.

The time you spend working without being paid could have been spent marketing, building practice systems, training employees, doing pro bono work or taking a vacation.