Pay your lawyers, really!

I read an amusingly titled post “PAY YOUR !*?@!%! LAWYERS!!!” yesterday which touches on a topic lawyers don’t often talk about: actually getting paid for services rendered. While the title of that post evoked a smirk, it hits home for the majority of lawyers who provide the best service they can, only to find that their clients either pay late or don’t pay at all.

Cash money

While experiences of this phenomenon differ, I have had both experiences in my career and it is a tremendously frustrating experience. I was chatting to my partner about this yesterday and she remarked that when you walk into a store, you pay for the goods when you leave (well, you should). When you go to your doctor, you generally pay when you walk out the door or your medical aid handles that for you. I think clients forget that legal services are frequently critical to help avoid, mitigate or facilitate a greater awareness of risk. That risk can be profound and good legal advice can make a world of difference. My partner was telling me that she once met with a major client which was considering a fundamental change to its operations and she identified a solution which helped turn that business around and become more profitable.

There is this insider joke many lawyers secretly share. We often joke that when we are in a meeting with a client, advising that client, part of our awareness is watching what is going on and wondering both where all that advice is coming from and why the client is actually listening? Its easy for a client to think that the individual sitting across the table is just one person and the value of the advice being given must be judged accordingly. This is one reason why clients visiting their attorneys in larger firms are faced with expensive boardrooms and half a dozen lawyers. It is largely an attempt to impress upon the client the importance and value of the advice being given. It is also a reason why fees are often a little higher than they need be. It comes down to a perception that the advice being given is truly valuable, quite independently of the quality of the advice itself.

Besides damaging an attorney’s business by not paying the attorney’s fees, non-payment or late payments have a knock-on effect on other clients. The article I mentioned above contemplates the effect of discounted legal fees but the principle applies to late or non-payment of fees too:

At the end of the year, the firms figure out their revenue and profit margin and realize that they didn’t make as much as they would like, so what do they do? They raise their hourly rate. If they are going to provide discounts, they want a larger base to discount from.

The outcome of this is that now everyone is paying higher hourly rates and we are all worse off. In fact, those of us who pay our bills are subsidizing those who don’t during the year.

When attorneys are not paid for their services, it is natural to prefer clients who do pay and to prefer work which results in larger fees. This isn’t how attorneys should ideally operate and law societies often have rules and guidelines that discourage attorneys from suspending or ceasing work for defaulting clients. The unfortunate reality is that attorneys rely on those fees to keep their businesses going and to earn a living. An attorney’s work is not easy work and involves long hours, high stress levels and tremendous responsibility. Consider that in order to be permitted to practice as an attorney in South Africa, that attorney must be covered by professional indemnity insurance aimed at protecting trust accounts and guarding against professional negligence. Legal practice is a high stakes endeavour.

This isn’t to say that all legal fees charged are fair fees and clients should negotiate with their attorneys if they feel they are not being charged a fair fee. At the same time clients often find that attorneys’ trading terms become tighter and more onerous as more clients default. We have adopted a fairly strict policy of taking deposits in direct response to clients not paying our fees on time or at all, for example. This policy may deter some clients and we regret that. At the same time this measure and similar measures other attorneys adopt are designed to ensure these practices remain afloat and capable of servicing clients well.

Pay the people behind the scenes

Something else to bear in mind is that attorneys’ invoices frequently include 3rd party disbursements like advocates’ fees, messengers’ fees and other service providers’ fees. When clients don’t pay their fees or pay late, this has an impact on those 3rd party providers who may find they will have to wait longer for payment for their services. This is unreasonable and something I feel quite strongly about. I know what it is like not to be paid on time and one of my values is ensuring that my service providers and staff are paid when payment is due. I often think that clients forget that when they are faced with a solo practitioner or a partner in a small firm, that there is a whole infrastructure behind that lawyer and real people who depend on their income.

So when you are next presented with an invoice for legal services (or just about any professional service, really), pay it when it is due. You are doing not just your attorney and the people behind the scenes a disservice but also yourself.

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