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Volume 19, Number 3
April/May 2002

How to Weed Out Deadbeats

By Linda J. Ravdin

If you are feeling frustrated about fee collection, you are not alone. One of the biggest headaches for lawyers is collecting fees from reluctant clients after work already has been delivered. Collecting fees from deadbeats means the lawyer has to earn the fee twice, once by doing the work and the second time by doing collection work. Even if the lawyer ultimately collects the full fee, the value is diminished by the delay in payment and the additional work. There has to be a better way.

The majority of fee collection problems can be averted by not taking deadbeat clients to begin with. During both the first telephone call and the first meeting, the lawyer has opportunities to select out those who are likely to be problem payers and send them on their way. Eliminating deadbeats frees a lawyer to spend time attracting more good clients.
The keys to weeding out almost all deadbeats before they become clients involve giving deadbeats an opportunity to reveal themselves and recognizing the signs when they come up. To do this, you need a clear definition of what a deadbeat is: someone who expects to get something for nothing. Certainly there are many people who are not looking for a free ride, who can and will pay something but simply cannot afford to pay your usual fee. They are not deadbeats. Whether and how to structure your fees for such clients is a different problem. (See "How to Get Paid,".)

The Telephone Screen
During the first telephone call and consultation, the lawyer can assess the client's willingness to pay the fees by asking a number of questions and paying attention to how the prospect answers or dodges them. Spending five or ten minutes on the phone may be the most important use of your time, eliminating those who are obviously wrong for you and instead letting you concentrate on cultivating the good clients. Investing this small amount of time at the outset also can avoid a much larger outlay of uncompensated time pursuing your fee.
Do not delegate this task to a staff person. You are in the best position to make the preliminary judgment about the client. Moreover, you need to hear the answers yourself; the way the client responds often reveals as much about deadbeat propensities as the actual answers.
Screening questions. The best way to screen clients is to listen carefully and read between the lines. Asking questions at the outset could elicit confidential information that would preclude the lawyer from representing another party in the matter. My firm prefers the risk of being conflicted out of a case over the risk of taking the wrong client and not getting paid.

Appropriate questions depend on the lawyer's practice specialty. Our family law firm might ask the following basic questions during initial assessments:

o Names and addresses of parties.
o Parties' current employment.
o Length of the marriage.
o Number and ages of minor children or adult children still in school.
o Who referred the client?
o Do the parties still live in the same house?
o Have the parties already discussed separation; are they in agreement to separate, or will the client's plan come as a complete surprise?
o If the parties are already separated, where do the children live?
o Have the parties discussed custody issues?
o Is a dispute about custody likely?
o Have the parties discussed financial issues?
o Does the client have a sense of what is likely to be in dispute?
o Does the spouse know about the client's plans to see a lawyer?
o Does the client already have a lawyer he or she would like to replace?
o Who is the spouse's lawyer?
o Is a case pending at the present time?
o Are court hearings scheduled or court filings due at the present time?
o Does anything about the situation require immediate attention?

Although the questions will be tailored to the practice area, the important thing is to ask enough of them. Do not immediately make an appointment for every potential client who calls after doing nothing more than checking for conflicts. Find out more upfront.

Give potentially troublesome clients an opportunity to talk; they often reveal themselves by how they respond to innocuous questions and by volunteering additional facts. Danger signs should go off with clients who do the following:

o As their first question, ask, "How much do you charge?" The client is certainly entitled to this information, but the client who wants to know that before she asks you anything else may be trouble.
o Has already switched lawyers several times. Chances are this client has unreasonable expectations and will find fault with your representation as well.
o Tells you the lawyer down the street will do the job for $150 per hour when you say you charge $200 per hour. Why didn't he hire the lawyer down the street?
o Insists on telling you her whole story in the initial phone call or insists on getting legal advice before agreeing to an appointment. This person may be looking for something for nothing.
o Is switching lawyers, owes the other lawyer money, and does not want to pay. The reluctance to pay may or may not be justified, but it warrants caution.
o Acts overly demanding but evinces insufficient willingness to pay for the privilege.
o Refuses to answer innocuous questions or demands to know the reason for each question.
o Was served with suit papers a month ago and just got around to hiring a lawyer.
o Has been acting pro se, has made a big mess, and wants you to get him out of it-and a contempt hearing is scheduled for tomorrow.
o Created the emergency situation to begin with but refuses to accept the urgency of the situation-and is not prepared to pay the cost of resolving it.
o Fired the meanest lawyer in town because he was not mean enough.
o Hired the most aggressive bomber in town, who promised her the moon, took all her money, and did not deliver-and, by the way, you'd have to handle the appeal on credit.
o Gets angry when you tell him you charge for the initial consultation.
o Gets angry when you tell her to expect a fee advance.
o Has a million excuses for the trouble he got himself into but will not recognize his own responsibility for the mess. He will not recognize his responsibility for paying you to get him out of it.

The best thing you can do is get rid of potential troublemakers fast. The second best thing is to take a chance but make sure you get plenty of money upfront, have a frank discussion about the client's payment schedule, and hold the client to that commitment.

Discussing fees. Discussing your fees in the first telephone call gives you an additional opportunity to weed out problem clients. Explain your hourly rate, flat fee, or other basis on which you charge. Some clients will be looking for lower rates and will go elsewhere without wasting your time. Others do not balk at your rate, but a short discussion indicates the fee will be out of proportion to what is at stake. In that event, tell the client frankly about the disparity and offer to refer him to several other attorneys who might be able to handle the matter at a lower cost.
Setting a fee advance during the first telephone call generally is not advised because you do not have sufficient information to make the determination at this point. However, if you sense from the conversation that the client's expectations may be very different from yours, tell the client the fee advance will not be less than a specified amount. If the client is not prepared to pay that amount, you can save her the cost of the initial consultation and yourself valuable time that could be used to land a better client.

Another helpful tactic is to charge for initial consultations and expect payment at the time of the consultation. I make a standard speech to potential clients during the first telephone conversation. I let them know they are under no obligation to hire me to do anything beyond the consultation, that I charge for the consultation at my regular hourly rate, and that the only obligation they have is to pay for the consultation at the conclusion of our meeting. Their reaction provides a further opportunity to screen out unsuitable clients. Clients who counter that lawyers give free consultations or argue about your terms are potential deadbeats. Resist the temptation to argue back.

Getting off the phone. Once you have determined you do not want a caller as a client, end the call quickly. Be polite unless the caller is so belligerent it is impossible. What you say will vary according to your reason for declining the representation. Here are some possibilities:

o From what you've told me, I am not able to take your case. I would like to refer you to several other lawyers who may be able to help you [give names and telephone numbers]. Good luck with your case.
o I do not believe I can handle your case for a cost that would make sense in light of what you have told me is at stake. Let me give you some names of several other lawyers who may be more affordable.
o From what you have told me, I would not take your case for less than [name an exorbitant amount of money], and it could be much higher after I learn more. [Long pause.] Would you like to think about it and call me back if you still want to come in?
o I am unable to take your case, but thank you for calling. You need to keep shopping around until you find the right lawyer to handle your case.
o I'm sorry, but I am not able to help you. Goodbye.

The Initial Consultation
The initial consultation gives the lawyer another opportunity to weed out deadbeats who got past the first telephone call. While you discuss the client's problem and how you might solve it, pay attention to the clues the client reveals.
Homework. In our family law practice we have a lengthy personal information worksheet that we ask potential clients to fill out ahead of time (either just before the consult or at home by accessing it online), which we use at the initial consultation. We also request certain documents, such as recent account statements for assets and recent tax returns. Good clients appreciate the effort to save them money by allowing them to collect relevant information ahead of time. Deadbeats will ask why they have to do all that work or will insist you do not need the information.
The office meeting. You should be able to get a fuller sense of your potential client during your face-to-face meeting. Problem clients reveal themselves in a variety of ways; watch out for someone who:

o Shows up in your office with her documents haphazardly thrown in a shopping bag, expecting you or your staff to sort them out.
o Shows up for his appointment without any of the documents you requested and no believable explanation.
o Refuses to provide the documents you requested because you do not really need them to answer his question-and insists on an answer nevertheless.
o Puts the blame for all her problems on everyone but herself; sooner or later, you will be the target.
o Will never be satisfied, no matter how good a job you do.
o Is angry out of proportion to the wrong committed.
o Seeks primarily revenge.
o Wants a miracle-she is in the wrong place.
o Is unprepared for a realistic appraisal of his prospects.
o Tries to pin you down to a specific outcome or cost, when such predictions cannot safely be made.
o Responds with "Let's keep it simple. You lawyers always want to solve problems that don't exist" when told her matter is complicated and, likely, costly to resolve. A variation on this is wanting you to do half the job for half the price.
o Wants a Cadillac for the price of a Chevy.
o Vows "It's not the money, it's the principle of the thing." Few clients are willing to pay fees that are out of line with the financial stakes. Beware of people who say they are.
o Simply is not likable. If you do not like the client, he will sense it and will come to resent you-just as you will come to resent him. The next step is an unpaid bill.
Lawyers are taught to make judgments based on concrete facts. In deciding whom to accept as clients, lawyers should pay more attention to their instincts. Sometimes it is not possible to articulate why you have a bad feeling about a particular client after the first telephone call or meeting, but the uneasy feeling persists. Act on that instinct-do not take the client.

Dealing with Problems at the Outset
Many potential collection problems can be averted by having a frank discussion with the client at the first meeting. The client often will ask a question that leads right into such a discussion; if not, initiate it under the guise of educating them about your expectations. Most people try to live up to expectations if they know what they are.
Credit. Some people, for example, think it is customary for lawyers to accept monthly payments of a fixed amount or to wait until the case is over to collect-even for noncontingency cases. You must let the client know the rules.
If the client's ability to pay your fee going forward is not evident, it is appropriate to ask about this. For example, you might say, "I see that you have $50,000 in credit card debt. How do you plan to pay my fees?" The client's answer could reveal a great deal. She could say she has applied for a credit union loan, or her parents have agreed to pay your fees, or she is in the process of selling the stock she just inherited from her grandmother. Such answers suggest she (1) recognizes that figuring out how to fund her legal matter is her responsibility, not yours; and (2) has a plan for doing so. On the other hand, if the client says in a dismissive tone, "Well, we'll just have to work something out," you have a potential deadbeat on your hands. This response suggests that the client thinks figuring out how to pay his legal bills is your problem. If you take this person as a client, how he pays his fees will become your problem.
Accepting credit cards can be an important weapon in the lawyer's arsenal. This often makes it easy to incorporate the following messages: We do not finance litigation; we do expect the client to keep his account current; and he can borrow from Visa, MasterCard, or American Express but not from us. Given the ready availability of credit, few people have an excuse for not paying the required advance or not keeping their account with you current.
Some clients ask directly whether they are expected to pay every month; others indirectly indicate that they may not understand fee expectations. An explanation something like the following can help put the matter in proper perspective: We are not in the business of lending money-all we do is practice law-but we do accept credit cards from people who find it more convenient to finance their legal fees. We expect you to keep your account current, but it is entirely your decision whether to charge the bill.

Installment plans. If monthly payment plans are acceptable to you, by all means use such arrangements. Just be sure to establish the terms in the beginning and in writing. Then follow up with the client to make sure she honors the payment terms. In addition, be sure your agreement permits you to require the client to increase the monthly payment if the case is more complex than first anticipated.

Turn away people who cannot or will not meet your terms. If a client cannot or will not pay your set fee advance, decline the representation and give the client a referral to someone who might be more affordable. A belligerent or demanding client usually means big trouble. That is the time to end the conversation.

Be wary of the potential client who, when told your fee advance, launches into a lament. After all, what is the message when the client says she does not want to cash in an IRA and pay the penalty or cannot ask her parents for money? Why is this person unable to go to her parents for a loan but able to ask you, a total stranger, for one? She may well be looking for something for nothing.

Even New Lawyers Should Be Selective
Some lawyers, especially those new in practice, will say they cannot afford to be so selective and believe they might as well take a chance. As Jay Foonberg, author of How to Start and Build a Law Practice: Millennium, 4th ed. (ABA 1999), says, "It's better not to do the work and not get paid than to do the work and not get paid."
And what if fate pays you back by never sending you another client? Oh, come on. Fate does not send clients-marketing does. Go out and market!

Linda J. Ravdin is a shareholder in Ravdin & Wofford, which specializes in family law and estate planning and administration in the District of Columbia, Maryland, and Virginia. She is a former member of the ABA Standing Committee on Solo and Small Firm Practitioners and is chair of the ABA Law Practice Management Section's Publishing Board. She can be reached via e-mail at ljravdin@ravdin-wofford.com.