Make More Money by Being More Ethical
Make More Money by Being More Ethical | American Bar Association — Family Advocate
By Chaim Steinberger | Fall 2010
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Many of us believe that the rules of ethics governing our profession encumber us, make us less efficient, and prevent us from making more money. Actually, quite the opposite is true. ’Turns out that good ethics, in addition to keeping you out of trouble, is also good business. By following ethics’ best practices, you will also be running your “law business” in a manner most likely to provide you with more repeat business, more referrals and a greater percentage of your invoices being paid. Follow these philosophical and technical rules and you will likely have more work, more clients, and be left with more money in your pocket.
Be client-centric. Like successful dieting, it’s not just one single thing that has to be done, but rather a way of life, an attitude, a frame of mind. Consider how everything you do will look and feel to the client. Being client-centric should affect every aspect of your practice. Here are some of the ways it can help you make more money:
Show your care and concern for your clients, over and over again. Surprisingly, many of us do not realize what studies reveal are truly most important to our clients. Many of us believe that our clients are most concerned with the amount of our fees and the results we obtain for them. We believe that winning their cases and the amount we charge them are their two most important (or only important) considerations. In a well publicized study, however, not a single client listed the amount the lawyer charged or the lawyer’s winning of the case as reasons why the client would hire that lawyer again, nor did a single client list either the fees or the loss of a prior case as reasons why the client decided never to hire that same lawyer again. J. Harris Morgan & Jay G. Foonberg, How to Draft Bills Clients Rush to Pay 77-78 (2d ed. 2003) citing the Missouri Bar Prentice-Hall Survey: A Motivational Study of Public Attitudes and Law Office Management 67 (The Missouri Bar 1963) (the “Missouri Study”). Instead, clients reported that the care and concern their attorneys had for them was the single most important factor in deciding whether to re-hire that lawyer ever again.
The wise lawyer, therefore, will demonstrate genuine care and concern for clients at every opportunity. This includes simple courtesies like not permitting clients to wait when arriving at your office, personally escorting them into and out of your office, and not allowing yourself to be interrupted or distracted by phone calls, emails or other office pressures while with the client. Giving a client your complete, undivided attention demonstrates powerfully how important the client is to you.
Analogously, it is widely reported that doctors with good bedside manner are less likely to be sued for malpractice, than doctors with poor bedside manner. Patients are more understanding and forgiving of the mistakes their “caring” doctors make. Our clients too, are more likely to pay us for the work we do and less likely to file grievances against us, if they feel that we are dedicated to them. Indeed, grievance committees report that the single most important thing attorneys can do to prevent grievance complaints against them is to return clients’ phone calls promptly. Obviously, this is good business practice too.
Draft your time entries and invoices so that they convey the extent of your efforts and devotion to your clients. Instead of limp, lifeless, passive time entries, draft powerful, active, present-tense verbs that give life and vibrancy to the time you devote to your clients’ matters. For example an entry like “Review every reported decision involving a parent whose income exceeds the CSSA cap to determine client’s maximum child support exposure” is likely to be more meaningful to the client than the vague “legal research – 15 hours” entry most of us are accustomed to seeing. It is more likely to be appreciated and paid for, too.
Avoid time entries that would cause a reasonable person to raise questioning eyebrows. Do not, for example, have two separate time entries that look identical. Distinguish them so that it is obvious that you are not asking the client to pay twice for the same work. When charging for a phone call, specify who you spoke to and what was accomplished, or attempted to be accomplished, on the phone call. Show the value the client is receiving for the money you are asking for.
Always treat the client the way you wish to be treated. That’s the Golden Rule. Even better is the “Platinum” rule: Treat each client in the way that client wishes to be treated. Here’s how:
Never surprise a client. We all hate surprises, unless they’re of the good kind. Lawyers’ bills rarely are. We don’t ever want to be surprised when we pick up our cars from the car mechanic. Our clients shouldn’t be surprised when they get our bills either. Anytime a client is surprised, it means that we dropped the ball.
Surprises can be avoided by calling clients ahead of time. Yes, I know it’s uncomfortable. No one ever wants to be the bearer of bad news. It’s still better to call clients ahead of time to personally explain why a bill is higher than expected. Even better, call the client before you do the extra work and explain what happened and why you need to do the additional work, and what it will likely cost. The client will feel more in control and the work you do will more likely be appreciated and paid for. As one of our colleagues recently posted on the Family Law Section’s listserve, “As between doing the work and not getting paid and not doing the work and not getting paid, I’d prefer the latter.” A client should never be surprised by a bill, or anything else in the lawsuit, for that matter.
Avoid surprising clients by also establishing a mechanism within your office (law practices management or “LPM”) that ensures that clients are always kept informed of each development in their cases. By forwarding copies of each letter, e-mail and motion to them, they see the work you are doing as you’re doing it. They can, therefore, better appreciate the time you are devoting to their matters. Then, at the end of the month when they receive your bill, the entries remind them of all the work they already know you’ve done, and they’ll appreciate it more and pay for it more easily. Of course, this also cuts down on clients complaining that they don’t know what’s going on in their cases, too.
Avoiding client surprises requires you to spell out early and clearly what the client will have to pay for, approximately how much it will cost, and when and how they will have to pay it. Do all this in your initial retainer agreement. Every potential client is concerned about costs, and likely feels uncomfortable raising the issue. By raising the issue early, you demonstrate your integrity, alleviate your client’s anxiety, and build trust and respect. By having a clear understanding, you avoid misunderstandings and reduce challenges to your bills or grievance complaints against you.
Bill “early and often.” It too eliminates client surprises. Moreover, clients are more apt to pay bills immediately before or after the work is done. Conversely, the more time that passes after the work’s been completed, the less likely the client will recognize its value or pay for it. Like the old saw warns, “The value of a service decreases dramatically after it’s been rendered.”
An added benefit to frequent billing is that the client stays informed about the status of the case and the cost of your services. The more work you do for a client, therefore, the more often you should bill that client. It will help your cash flow as it keeps your clients happier.
As if these weren’t reasons enough, there is yet another benefit to frequent billing. Studies report that lawyers who bill more frequently get more referrals from their existing clients. So by billing more frequently you’ll have more clients, happier existing clients, better cash flow, greater realization on your billings, and fewer complaints!
In order to bill early and often, you must track your time religiously and contemporaneously, as you do your work. Your time records will be more reliable to both you and your client, will generate less challenges to your bills, and your records will better protect you in the event of any dispute. They will also, however, help you make more money. Lawyers who have a system in place for recording and billing their time earn 40% more money than lawyers who do not. Morgan & Foonberg, supra, at 67.
Invoices must look and be reasonable under the circumstances, and must look, as well as be, accurate. Do not issue any invoice that, if you received it, would leave you offended or even with only raised eyebrows.
Maintain, and project, ethics and integrity in everything you do, to others as well as to your clients. According to the Missouri Bar study, the second most important thing clients value is the attorneys’ integrity. Morgan and Foonberg, supra, at 2. If you show that you treat opposing counsel, the courts or others deceitfully, your clients won’t be able to trust you either. By maintaining and demonstrating the highest ethical standards, you will earn and keep your client’s trust, confidence, and respect. This will lead to more business and more referrals. Ensure that all of your bills and time entries are correct and appear, both objectively and subjectively, reasonable. If they do not, then provide greater detail on the bills showing why the time devoted was necessary.
Run your business competently like the business that it is. That means:
Do not let any client get [too far] ahead of their payments. Because the value of a service diminishes rapidly after it is performed, every day that passes after you do work dramatically decreases the likelihood that you will ever be paid for it. No matter how genuinely a client assures you that he will pay, after you have done your work his urge, desire, and willingness to pay diminishes rapidly. The more time that goes by, the stronger the diminution.
You expose yourself to additional risks, moreover, when you allow a client to owe you a lot of money. The easiest way a client has to avoid paying your bill is by claiming that you did something wrong. Thus, the more you allow a client to owe you, the greater the
incentive for him to file a grievance or malpractice action against you. The “nicer” you are to clients and the longer you “carry” them, the more incentive you give them to betray you. At some point, the temptation may be too great for mere mortals to resist.
Get out of a bad situation sooner rather than later. About the only thing worse than a client stiffing you for your fee, is the client stiffing you for twice that amount and filing a grievance against you to boot.
Although it’s hard to walk away from work, particularly in troubled times, if a client is having trouble paying, consider withdrawing from the case (with leave of court, where leave is required, of course). Cut your losses and devote your time to productive matters.
Remaining in a case in which a client is not paying you is problematic for another reason too. When a client owes you a significant amount of money, your ability to collect will likely hinge on your success in the action. You have now, therefore, been converted from a dispassionate advocate on behalf of another, to an unnamed de facto silent party in the suit. You may feel pressured now that your own interests are at stake in the litigation and it may affect your judgment, impinge your objectivity and detachment, and increase the likelihood that you will commit a sanctionable error. Don’t let yourself get caught between a rock and this hard place.
Use clients’ challenges as marketing opportunities rather than attacks against you. Whenever a client questions or challenges your bill, try not to become defensive. Instead try to use this as an opportunity to forge an even stronger relationship with the client.
Treat each complaint as if it were an honest, good faith request for additional information. View it as an opportunity to explain your billing practices, the quality of the work you do and your dedication to clients.
Begin by trying to find some common ground, principles regarding payment that you can both agree to. This might be something like, “I don’t want any money from you that I am not legitimately entitled to, and I assume that you want to pay me the money you agree I am legitimately entitled to. Is that right?” Articulating such principles converts the negotiations from “positional bargaining,” to what Fisher, Ury and Patton, in Getting to Yes, Negotiating Agreement Without Giving In, calls “principled negotiations.” You can then discuss whether you are “legitimately entitled” to the money you seek without getting angry, threatening or demeaning one another. This allows you to argue your claims without harming the underlying relationship with your client.
Next, ask the client open-ended, probing questions that elicit how and why the client is unhappy and feels the charges are not legitimate. Even if you already know why or believe you do, giving the client an opportunity to explain it directly to you will feel good to the client and help dissipate his dissatisfaction. Of course, try not to take any attacks personally, and respond in a measured fashion, not aggressively or defensively. Find out why the client feels the money you’re asking for is not fair and what, in the client’s view, would be fair under the circumstances and why.
Listen “actively” or “reflectively” to the client by repeating back, in your own words, what you hear the client saying. This will show the client that you “get” it. After reflecting back, ask if you understood it correctly or if you’re missing any part of it. Then allow the client to speak again. Reflect back to the client what he told you this go ‘round. Wash, rinse and repeat, over and over again, until the client feels completely heard and understood. Use this active or reflective listening technique any time you want to establish a powerful, deep connection with another human being.
When reflecting back the client’s position and when stating your own, use clear, but non-judgmental, non-accusatory language. For example, you might fairly recharacterize a client’s statement like “You stole our money from the escrow account,” to “If I understand you correctly, you’re saying that you think we withdrew money we were holding for you in our escrow account without being entitled to it. Is that correct? Did I understand you correctly?” Using non-judgmental language will help keep passions and tensions down, and allow each of you to hear the other without erecting mental barriers that makes further conversation pointless.
Empathize freely and easily with the client’s emotions, even if you disagree with the substance of the claims. It will make the client feel heard and understood, without your conceding your own position. “I understand that this lawsuit cost you a lot more than you intended to spend,” can go a long way in making a client feel understood and allowing his negative feelings to dissipate.
Recognize that there’s a difference between responsibility and blame. Try to accept responsibility freely and easily for your role in the matter, without feeling blamed or defensive about it. This will allow you to apologize for the way your client felt, with everyone recognizing that such an apology (like “I’m sorry you felt neglected”) is not an admission of guilt, fault or failure, and goes a long way toward dissipating hard feelings.
Next review the issue from your own point of view. Again, use only non-judgmental, non-accusatory language. In addition to the facts that dispel the client’s claim, review the value the client received from your work. Be sure to address the client’s feelings, as well as the logic of her arguments.
As the authors recommend in Getting to Yes, “be hard on the problem, but soft on the people.” Be free to see, hear, and feel what the client is complaining about and try to assuage the client’s hurt feelings. Be empathetic and understanding. Oftentimes, that will get you more money than fighting will give you.
In one fee dispute in which I served as a mediator, the client, a doctor, was outraged that his lawyers kept him waiting for more than an hour when he came for a scheduled meeting. He passionately explained how he would never permit his own patients to wait that long, and how as another professional, he knew and respected the value of time. He also complained that the lawyers did not keep him apprised of what they were doing and did not return his phone calls. He also received some information that cast doubt on all of the “law” the lawyers had told him throughout the case and said he didn’t trust anything they said or did anymore.
Although he had already paid ninety percent of the lawyers’ bill, he was disputing the last ten percent. I was convinced that if the lawyer only apologized, the doctor would have paid the entire fee. I asked the lawyer if, before addressing the substance of the claims, he had anything to say about how the doctor felt. The lawyer, unfortunately, felt threatened or attacked and needed to deny the doctor’s claims and justify his own actions. He could not “hear” what the doctor was saying and, because he was too intent on denying the “waiting incident,” despite my prodding, could not bring himself to concede that it might have happened. He could not empathize with his client’s hurt feelings. The result was that the parties became entrenched. Although the amount in dispute was reduced to a negligible sum, as “a matter of principle” neither party accepted the terms of the other. As the negotiations broke down, the client promised to sue, not only to avoid paying the ten percent claimed owed, but also for the return of a substantial portion of the money he had already paid.
Had the lawyer only acknowledged that the doctor may have once been kept waiting and apologized for it, had he empathized with his client and, perhaps, offered to implement procedures that would ensure that clients would never again have to wait, he would have likely been paid his entire fee and ended up with a happy client and more money in his pocket. Instead, he now has a fee battle with a disgruntled client.
Good ethics and good business practice are not at odds with each other. They both help you work smarter rather than harder, and help you keep more money, keep more clients, have less worries, spend less time chasing bad money and defending grievances, and leave you with a healthier practice but more importantly, a healthier, happier lifestyle.
Chaim Steinberger is a divorce lawyer, mediator, and collaborative lawyer in NYC, and a member of the executive committees of the ABA FLS and the NYSBA FLS.
Reprinted with permission from the Fall 2010 edition of the Family Advocate © 2010 American Bar Association. All rights reserved.
Further duplication without permission is prohibited.
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