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Credit Management in Legal Professional Services – Back To Basics

Written by Julie Redding, Credit Control Manager for Kennedys Law LLP

Get the basics right – how often have we all heard that? Having worked in Credit Management in the legal services environment for more than 30 years, I’ve watched and been part of all sorts of methods, initiatives, and processes for managing and evaluating risk in collections management.

There have been many times when I have sung Adele’s song in my head – “Should I Give Up or Should I Just Keep Chasing Payments.” Yes, I know it’s Pavements – but it fits nicely with my profession and – here I am still hard at it – chasing payments – after all these years.

Clients use professional service companies and expect a high level of service. Part of this is billing; they know they will have to pay for the work.

In the current climate, I firmly believe that a back to basics approach is the way forward. The basic Credit Control function of calling clients simply does work and funnily enough, I have never lost a client for a firm because I have chased them for payment. Clients expect to be chased and often won’t pay until they are!

Legal Credit Managers should have structured processes and systems in place for collecting payment. These should be disciplined, logical, polite and not overly complicated.

Similarly, the fundamentals for fee earners and partners alike should be – knowing the client, having a sensible discussion about fees at the outset of the work, billing monthly, then stepping away, and leaving the rest to their Credit Control team.

So why does this so often not happen?

There are a few key reasons – Over protectiveness of client relationships, shying away from sometimes difficult conversations about money and lack of tenacity in resolving queries quickly.

Without turning bills into cash quickly, a firm cannot financially function properly, and in extreme cases will not survive this much-overlooked fact.

Client relationships are fundamental to the legal profession and so what better way to retain and maximise those relationships – aside from providing excellent service – than to have open and frank discussions about how much to charge and when to expect payment. In addition, to trust your Credit Controllers to do as I said above and chase slow payers sensitively and professionally. Equally, if a lawyer is not comfortable with discussing money, let the Credit Controllers do their job.

Finally, I have so often seen queries raised for the sake of it as a way to avoiding paying promptly – clients know that lawyers often do not like discussing billing and payments, so it makes it easy for them to think up query after query solely to delay payment. I like to deal with the query and bat it back to where it came from as if handling a red-hot brick.

If all professional service companies followed this approach, I guarantee they would see a significant improvement in cash flow as well as maintaining and even enhancing client relationships.

Of course, there are always the renegades of the client world – those who, for whatever reason need escalating before they will pay: this is where STA International comes into its own. Saying you will take ‘further action’ must mean just that. Rather than seeing referring the debt to a third party, see it as the end of a process to bring about a successful conclusion.

It’s just basic!

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