Redeploy your credit controller for success in private paying family work after 1 April

In most legal business models the credit controller is operating several steps after the horse has bolted. The fee earner has to bill the client (often late and when pressed by accounts for evidence of performance!), a month or so passes, the fee earner asks that the client is not chased as they are important to the firm, eventually polite chases are allowed and at some date more aggressive action is undertaken by which time the client has moved/died/bankrupted etc.

There is a definite satisfaction curve in professional services. At the start of any case the Client believes their lawyer is the best thing since sliced bread, especially if they achieve a successful result. However, the more weeks that pass from conclusion, the less the Client values the service until eventually, usually when they receive the bill, they are convinced they could have handled the whole case themselves and achieved a far better result!

Now that Public Funding has all but been removed from standard family law proceedings, the fee earners undertaking this rewarding area of work must adopt a new set of working methods. They must take a leaf out of the more successful commercial litigation practices and change their mind-set when it comes to setting Client expectations, and billing.

There will be a need for firms to offer a fixed-price offering for standard work in order to compete with Co-op Legal Services and the other legal businesses who are going to start competing on price and service. However, they must be very careful that they have their credit control systems adjusted to suit the new market conditions. The credit control process must now be very much more ‘front-end-loaded’. Although technically even LSC funded family lawyers should have been transparent about future costs with their Clients, this was more often honoured in the breach than the observance.
For the future it is vital that the Clients are told as clearly and accurately as possible what their case is likely to cost them, both best case and worst case. Each file needs to be broken down into stages and each stage costed for the Client. The fee earner must obtain payment on account from their Clients to the next stage in their case plan, and promptly bill the client at the conclusion of each stage and obtain a further payment prior to commencing each subsequent stage. Remember the ‘satisfaction curve’ mentioned above. At the beginning of the case and of each subsequent stage of its progress, the Client will be at the highest point in the curve and will find a way of paying their costs. If they are allowed to travel down that curve before payment is requested, they will become more and more reluctant to find the money and will have more and more excuses as to why they cannot afford their lawyer.

This is where the redeployment of the credit controller is so important. Instead of monitoring and working on bills delivered, for this new market place, they must be analysing Work in Progress and Client account balances. They must be checking that WIP does not exceed payments on account made by the Client, and as the two figures get within 80% or so, they need to be ‘nagging’ the fee earner to bill the WIP and request further payments on account from the Client.

If the fee earner finds that they must accept regular payments by standing order from the Client (and I would urge that this is resisted as much as possible), then they must make two calculations: how long will the case take to conclude (or to reach the next decision making point of the case plan); how much will the costs be at the end of that period. They then divide the one figure by the other to work out how much the Client should be paying each month. Law firms are not charities! They must not work for Clients who are offering £50 per month for the next five years because, ‘that is all they can afford’. They must become hard-nosed business men and refuse to be busy fools.

If the Client truly can’t afford the fees (and most in reality will be able to beg/steal/borrow if forced), look for inventive ways of letting them act in person leaning on you as necessary for a reduced monthly retainer.

If you would like this message delivered to your family lawyers (or indeed the civil litigation department) in a forceful way, contact chris@cannconsultancy.co.uk for more information.