The matter and the money

Talking confidently and concurrently about matter and money

In the Proctor July edition, we reproduced a piece called Getting paid: Start with file opening. This is a reprint from the same journal 10 years earlier. Some things just stay important.

The essence of that article was that responsibility for slow or poor payment by clients rests mainly with producers and principals. In fact, we reckoned that only 2 out of 16 causes were down to the client. We then proposed some simple steps that should always lead to improvement.

And yet – even in firms that work hard on building structure and rules around credit control, we continually run into producers who are really challenged by talking with clients about money.

While there are signs of improvement, many firms still don’t quite get the balance right – putting effort into rules, policies and follow up, but little into training and coaching in better conversations. Which is the lead in to this article…

We think that we’ve pretty much nailed why many producers don’t do money conversations well.

 Money conversations aren’t what I’m here for

Firstly, they avoid them. They do this because they see matter conversations as normal. It’s what they are trained in. And mostly, if they are reasonably confident / competent with the particular law, there is little to fear. But money conversations are different. They can involve higher risks and greater potential for conflict. They aren’t seen as normal. They aren’t seen as a key part of what I’m here for. And if producers hold out for long enough, they can actually make these conversations the Credit Controller’s problem rather than their own. And that’s the problem. So our first challenge is to coach / train our producers to see money and matter as important parts of the one conversation – that is, treating both as normal.

Interestingly, clients have much the same feelings. Mostly, they like talking with their responsible lawyer about their matter. That’s normal. But when they get phone calls from a stranger whom they’ve never met demanding payment for outstanding invoices, that’s not normal and often uncomfortable.

So if we can train our producers AND our clients that talking about matter and money concurrently is normal, then we can kill two birds with one stone. Everyone just accepts it as the way things are. And remember – who is a client most likely to be guided by about money? The person who they trust to run their matter. It’s not only the best approach – it’s the easiest approach.

Exactly how am I supposed to do this?

The second reason for underperformance in money conversations is the lack of a robust framework that producers can rely on to help them get the job done. As mediators are wont to say – if all else fails, trust the process.

PRELACS

We recommend an approach called PRELACS. It’s a standard process to follow when looking to extract commitment from clients regarding payment. It doesn’t matter whether you’re talking about unpaid past accounts, or payments in anticipation of future costs – it’s all the same using PRELACS.

We are also presuming here that these guidelines are directed at the Lawyer Responsible but working with agreed money management delegation from the Partner.

P = plan

Firstly, if you are working on a matter regularly, you should be right across the essence of the fees agreement…. Particularly if you weren’t’ the person who did the deal. Before ringing your client about the matter, go through their accounting information in your PMS and know what is going on. At a minimum, you should be across unpaid invoices, current WIP, the likely next steps on the matter, and any additional money due in trust. Ideally, you should also be across the whole of client financial relationship – in other words, do the payment issues relate to more than one matter? If so, talk with a Partner and develop an agreed plan of attack.

Important: detail is king. If you are going to talk about money, you need to be highly specific about invoice numbers, actual amounts, dates issued, and even be able to email copies through instantly if required. Being very specific means you mean business. Being vague gives your client excuses to avoid doing anything.

R = ring

Yes – ring. Don’t email. Don’t text. Email and texts are too easily ignored. The good thing about ringing is that you can engage with your client on a two way basis. Moreover, you have them captive unless they are rude enough to hang up. It is very hard for people to stonewall in a phone conversation – provided you have planned well. Remember also that if you have planned your conversation well, you will start positively about the matter and then seamlessly slide into ‘Now Geoff, while I’ve got you on the phone, we need to work out how we can tidy up a couple of your unpaid invoices…. I’ll just take you through them…’

Different people adopt slightly different styles. You can email in advance and say that you are going to ring at a specific time to talk about matter and accounts – to put the client on notice. Or, you can simply ring and move more subtly from matter into money, but with a follow up email on what has been agreed. I generally prefer the latter. But no matter what – the primary communication must be oral.

E = explain

Yes – clients usually are contractually obliged to pay you anyway – but their enthusiasm about payment can be greatly increased if contextualised around the matter, what’s happened, what has changed, where it’s going, and so on. So rather than just talk figures, consider saying ‘Invoice 1234 for $5,500 covered our <insert here> as we agreed and invoice 5678 for $7,700 was for the < insert here> as we agreed as well. We really do need to get those tidied up so that we can confidently move to <insert here> and get to where you need to be.’ Explain confidently.

L = listen

Your clients will have all manner of reasons why they haven’t paid. These may involve progress on the matter, didn’t receive the invoices, wasn’t what we agreed, I’m worried about where this is going, and so on. It is essential that you listen intently and make notes. Treat every reason as an opportunity to be reframed as a solution. It nearly always works.

I’m worried about the matter                        Response: OK – lets work through your options going forward from here, but in the meantime, we still need to deal with payment for the work we have already done.

I haven’t received the invoices           Response: OK – are you at your desktop now? I can shoot across copies as we speak and you’ll have them in a few seconds

And so on…

A = acknowledge, alternatives, agree

Acknowledging client issues and concerns isn’t mumbo jumbo or touchy feely. It is sensible, practical, courteous, and outcome (payment) directed. Enemies pay slower.

Once the issues around payment have been canvassed, work through the practical payment alternatives like how, when, how much, how often. Be scrupulously detailed. I’ll try to pay this week isn’t good enough.

Agree on the specifics of current payment – viz, $4,400 into our account XYZ through B-Pay by COB this Thursday… I’ll send a note to our accounts people so they can keep an eye out for it.  AND take the opportunity to re-settle payment terms needed for all future invoices. Remember – these conversations aren’t just about collections – they are a form of training for future behaviour.

C = confirm

This is normal practice in any ‘negotiation’ – that is, when you have worked through and agreed what is happening, read it back to the client and ask for affirmation…  Geoff – I appreciate that – I’m just going to read back my understanding of where we are at so you can confirm that’s what we’ve agreed. If you follow the process, people will nearly always agree. Moreover, because the agreement is so specific, there is a high chance they will actually deliver. Generally, I would send through a very brief confirmatory email outlining the specific agreement.

S = shift

This is the essence of matter and money conversations. You settle the money. You shift back to the matter. You positively say ‘So when we have all that tidied up, the next step (on your matter) is…. You end on a positive note. BUT, you link continuation with the agreed payment.

Conclusion

The profession is about two things – the practice of law and the business of law. To perform well on the business side, our practitioners need training and coaching to become confident. Some are naturals – most aren’t. The goal is to coach capabilities so that our producers come to see matter and money conversations as normal, AND for them to also train their clients to see things similarly.

Some readers will say ‘Hell – I haven’t the time for all this carry on.’ Our responses to that are (1) once the routine becomes a habit, it involves hardly any discernible additional time or effort (2) without an agreed process, your credit management is little more than a lucky dip, (3) your clients will be happier (fewer unwanted end-of-matter surprises) and (4) if you don’t have a process something like what we have suggested, your cash flow is almost certainly weaker than it ought to be.

Published: Queensland Law Society – Proctor – October, 2016

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