Retainer Retention: How To Keep Cash Flowing
Attorneys need to get paid for their work, preferably without lengthy collection proceedings. For simple flat fee cases, a practice might require full payment up front before any work is done. In more complicated matters where the final fee isn’t easily predictable, attorneys ask for a retainer from the client. This amount verifies that the client has the resources to afford the attorney and ensures the attorney will get paid.
It’s not enough to just collect the initial deposit. Legal practices must have retainer management policies in place to handle ongoing retainer needs as cases go on. Today’s billing software for attorneys include retainer management features to simplify this process.
The most obvious aspect of retainer management is making sure that any fees billed come from the retainer rather than being billed to the client. Law office billing software will not only track all the fees and expenses associated with a case but will tie those charges to a case retainer, reducing it as needed.
Too many legal practices don’t pay enough attention to what happens when the retainer runs out. They know the office needs to contact the client for an additional payment, but the mistake they make is to wait until the money is gone and only then ask for more. Until the client pays up, the practice is using their own money to fund the case.
Retainer agreements should include a minimum deposit. This financial cushion gives the practice time to contact the client and receive payment before the funds are depleted. However monitoring the retainer balances of multiple clients by hand when each matter might have different retainer requirements is tedious and prone to error.
Rather than manual oversight, most modern practices use law billing software that reminds them when to ask for more money. They enter the minimum value for each client’s retainer and the legal software reminds the user when the balance is getting low so the client can be contacted for an additional deposit.
Don’t trust something as important as your practice’s cash flow to the good faith of your clients. Implement smart retainer management using legal billing and accounting software to maintain the financial health of your practice.