How to Handle Big Clients That Don't Want to Pay Your Bill
Just about every lawyer, at some point in their career, will be faced with a client that either doesn't want to pay a bill, or won't approve a budget or "not-to-exceed" estimate.
When it's a regular client, pursuing the regular dispute resolution procedures, or maybe letting the client slide on small portion of the bill, might be financially tenable. But, when it's your biggest client, or a client that accounts for a significant portion of your firm's book of business, the regular course of action might not be the best course of action.
Don't Lose Your Cool, Keep Your Client Interested
When it's a major client giving you grief over a bill, you know that you can't just balk at them. If they're questioning your billings or projected costs estimates, an in-depth review of each line item, while time consuming, can go a long way in helping a client understand where the money is going. Sometimes this is enough to get the client to pay up, sometimes the reason the bill's being questioned at all is that the client is strapped for cash.
Offering a discount or cutting your bill could be setting a dangerous precedent with a client; however, providing a financing arrangement with a low interest rate, while complicated, can actually work out to be mutually beneficial. You get more money, your client gets good financing. With most business clients, doing so will generally be ethical, though checking your state's guidelines should not be neglected (it's likely inexcusable), and don't charge excessive rates.
The Cost of Zealous Representation
Sometimes, before you began work, clients will want to approve your budget. Big institutional clients, such as counties and other government entities, frequently require board approval before committing significant funds to a law firm. As one law firm recently learned, getting a budget approved is not without hiccups. Their $290K proposal was cut to $60K after a county board of supervisors meeting.
Invariably, when budgets change, so must the strategies. Explaining to a client up front that their budget is insufficient can risk losing the client. However, leading a client down a path they cannot afford is a minefield of exposure, especially if you knew the client had an insufficient budget. As such, when strategies must change due to a decreased budget, it's best to make sure you have written client approval.
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