Problem Clients?

Not all new business is good.

Undesirable clients usually fall into the categories of (i) nutters, or (ii) no money or credit.

You can deal with the latter by having clear retainer policies and applying them. Capacity to pay is always an issue, but particularly so in litigation.

So when you ask for $15,000 in Trust against the first month’s work, you have an opportunity to filter out non-payers.

The client can then (i) say they will pay and actually do it, (ii) say they will pay but never quite get around to it, or (iii) say that they aren’t prepared to pay as requested.

In the case of (iii), commercially sane lawyers will decline the business. In the case of (ii), sensible firms will have a no money / no start rule.

The moment you start work, you’ve lost authority. It’s very simple.

If your terms are reasonable, a similarly reasonable client with the capacity and intention to pay will sign up. And remember, for every $20,000 debt you write off, you have to bill another $60,000 in fees just to get back to where you started.

I am constantly amazed by the times I see otherwise very capable Partners simply not having the courage or judgement to front up on creditworthiness.

The excuse is always the same – ‘didn’t want to risk missing the business’. And right on script, a really ugly one will slip through.

And the nutters?? Well, that’s another story….

 

Published: Queensland Law Society – Proctor, July 2014 (p.59)

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