The goal in law firm marketing is to get as much business in the door as the firm can handle. Sometimes in attempting to achieve this objective the real, underlying goal gets lost in the shuffle. That underlying goal is to collect cash from the client for the work you do. I prefer, as do most of my clients, to collect this cash in advance of performing the actual services.
There is constant pushback from lawyers when I press them to change their business model and focus on cash in advance. They tell me they cannot be competitive if they operate in this fashion. They tell me this is not an industry norm. They tell me the clients will call them every five minutes for status updates if the money is paid in advance. They tell me lots of things, all negative, related to getting paid in advance. The trouble with these arguments is that they just are not true.
Ultimately, clients will work with you in any way you want them to. You simply need to set the expectations upfront and spell out what will be done and when it will happen. Then you need to deliver. And you need to have a track record of delivering. If you have positioned yourself and your firm properly, getting payment from your clients at the outset of the engagement is never a problem.
Here are three ways to structure an engagement so you get paid in advance.
Offer a Discounted Price for Paying the Engagement Fee Upfront: This strategy is similar to the strategy retail businesses use when they have a sale. They call it a markdown. The upfront price you offer to the client is what you would typically charge to complete the work. The fee if they pay over time should be at a significant premium compared to the upfront price. Since you are basically financing the legal work for the client, you are entitled to charge a premium for doing so.
Contingency Pricing with Anticipated Costs Paid Upfront: I hate the word retainer. Change that word to investment in your vocabulary. The client should make an investment upfront that will cover your costs in a contingency case (non personal injury). You can anticipate the costs by looking at past history of similar cases. You are still taking a risk when it comes to these cases, as you will have some time invested in them, but you will not be invested beyond that. This works well in collection or litigation cases where a settlement is the ultimate goal.
Success Fee in Return for Reduced Rate: If you spend any time reading my articles, you know I despise hourly billing. One way to combat the amorphous nature of some cases is to receive a monthly investment from the client which covers all work to be done during the 30 days that follow. Each monthly installment is equal and the work is spelled out in a bullet point format. You then compare this fee model to a standard hourly model to demonstrate the savings. As a reward for providing this discount to the client, the lawyer receives a success fee when the objective or objectives are ultimately achieved.
These are just three ways for you to improve the cash flow of your law firm. There are dozens more. Explore creative billing options that will improve your cash flow and leave a favorable impression with the client. This is not just a good law firm marketing strategy, it is good business.