Law firms typically handle cases in one of three different ways: (1) take them as they come; (2) standard retainer; and (3) accept a select group of clients based on their ability to pay the firm’s fee. Each method has its benefits and drawbacks, but we’ll focus here on how your law firm should handle new cases. Some lawyers argue that you should get all your active files out of review or mediation before accepting new matters; others feel you are better off giving yourself a break from the emotional drain of active casework by keeping one or two files in review at all times.
● Take Them as They Come
Law firms that take cases have tremendous flexibility to respond to the ebb and flow of work. When times are slow, these firms can devote fewer resources to clients because they are not paying for them anyway. And when the phone rings off the hook, firms with a bring-’em-on approach can afford to hire more attorneys and support staff, build a client base quickly, and serve the client relationship all the way through. Unfortunately, this flexibility comes at a price: New work is unpredictable. Some clients will not wait for a new attorney to come on board before taking their business elsewhere.
● Standard Retainer
In contrast to the bring-’em-on approach, a standard retainer takes business away from the unpredictability of the bring-’em-on model by marrying clients’ needs for predictability with a law firm’s need to maintain a predictable stream of revenue. A law firm with a standard retainer typically charges a fixed retainer fee, say $4,000 per month for each attorney. Clients are required to pay the full retainer before any legal case search begins. Of course, an attorney can file a complaint against a client who refuses to pay the entire fee when the law firm delivers its services, but that is another matter entirely.
With this system in place, clients know that they can pick up the phone at any time to request legal services without having to worry about whether the firm will be able to provide them. Attorneys are never caught flatfooted wondering if they have enough work to pay their bills. And law firm personnel know exactly how much revenue they can expect over a particular period.
However, one potential drawback of a standard retainer is that it may be too costly for some clients. For example, a small company on the verge of bankruptcy may not have the cash to pay a $4,000 per month retainer unless it is already embroiled in litigation with one or more parties. It may be better to accept these clients on a case-by-case basis in such cases.
● Based on Availability to Pay the Fee
The third option is the selective retainer, which is similar to the standard retainer model in that it requires written agreements with each client and an advance payment of fees before work begins. But unlike its sibling, the selective retainer does not require a client to pay in full and instead allows the client to pay the firm for services rendered during the month. This model may be particularly suited for clients from impoverished economic backgrounds or limited resources for legal fees.
With this system in place, these clients will never know what work their attorney was doing on their behalf because they will not be required to pay a retainer fee in advance. However, the attorney can send a monthly invoice for the work done that month and request payment by the client before continuing with further work on their case. For example, say an attorney is working on a debtor-creditor relationship case with a client who doesn’t have the cash to pay in full. Under the selective retainer, the attorney would allow this client to make payments for services rendered each month (e.g., $500/month). If the attorney spent 10 hours working on the case that month but was only paid $400 by her client, she could send an invoice asking for another $100 for the hours she worked.
If you consider taking on new cases, knowing how your firm will handle them is essential. One approach may be better than another for the clients that come into your office, but it may not be best for your practice. You need to carefully evaluate different models before committing to one and weighing the pros and cons of each model.
