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Professional Service Providers: Are You Charging Enough?


Cartoon of man falling as he is trying to juggle papers and books

We talked with Allison C. Shields, a lawyer, owner of Legal Ease Consulting Inc. in New York, author, and consultant who works with professional service firms to help them better manage their cash flow. She says she finds too many lawyers and other professional service providers are stumbling when it comes to charging and collecting fees.

Most businesses operate in a simple format. The customer pays for an item or service up front and then receives said product or service. No follow-up is required.

But when it comes to professional services firms—such as accountants and lawyers—the cash flow process gets complicated.

Here are some of the most frequent issues Shields identified regarding fees and billing:

  1. Failure to have in-depth discussions with clients about billing and fees at the start of the relationship. Doing this can ensure that the client understands the value of the lawyer’s services and how that relates to fees, she says.
  2. Failure to bill timely. “This lack of consistency sends a message to clients that the lawyer’s bills are not important,” Shields says. “If the lawyer doesn’t think it’s important to send the bill on time, why should the client pay on time? It also causes problems because delayed billing often means the client gets hit with larger bills.”
  3. Failure to create systems for billing and collections that would help them to get paid more consistently and quickly.
  4. Not taking large enough retainers or not billing clients upfront.
  5. Giving away time, undervaluing work and discounting fees. This devalues the services the lawyer provides to the client and creates the wrong kind of expectations.
  6. Handling too many non-attorney tasks and not delegating appropriately.
  7. Billing by the hour. “(This) creates an inherent conflict between the lawyer and their client. If the lawyer works quickly and efficiently, the lawyer gets paid less than if they work slowly and inefficiently,” Shields says.

By way of an example, Shields share how she has been able to build a successful business:

“I don’t bill by the hour, since I don’t believe my clients are buying my time instead, they’re buying my expertise and the results they want to see in their practice,” Shields says. “My work is all done on a fixed-fee basis which is established with the client up front. Fees are charged either on a per-project basis or on a monthly retainer for consulting services and are usually paid in advance.”

“I have frank discussions with clients about fees, terms, and conditions before we begin our work together, and I rarely discount my fees. When I do, it is usually not because the client asked for a discount, but because I wanted to reward a good client.”

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