Risk and Practice Management
Screening
Effective client screening is important; be aware of negative characteristics to be alert to in a prospective clients, including one who:
- has unreasonable motives or a hidden agenda
- resists paying the required consultation fee or signing a retainer
- has unreasonable expectations about the outcome, cost or time involved
- wants you to guarantee a particular outcome
- has a negative attitude towards lawyers
- take responsibility for his or her own actions and arrives at your door at the last minute and expects immediate attention
- want to accept an objective evaluation of the case
- wants to eliminate necessary steps in the presentation of the case to reduce costs.
This type of client is generally high maintenance and crisis producing. He or she consumes a lot of your time and energy and may be slow in paying if they pay at all. Ask yourself, if they can't or won't pay a retainer at the outset, what confidence can you have that they will pay for your services as your bills are rendered? Claims against lawyers are frequently filed by this type of client. Some clients and some client matters are not the right ones for you. Recognize and listen to that negative gut feeling you get when you first interview a potential client.
At the intake stage conduct an in depth interview to determine if this is a client and a matter that you want to accept. Listen carefully to what the client is saying, and not saying. Ask probing questions to learn more about the client and the matter. Determine the potential client’s expectations and assess the reasonableness of those expectations.
When screening matters, resist the temptation to dabble in practice areas that are not familiar to you. It is very risky to do and the likelihood you will make a mistake is high. If you are considering branching out to a new practice area, consider partnering with experienced co-counsel until you are familiar enough with the practice area to be able to practice competently and efficiently.
Explain the legal process in detail including the range of possible outcomes, time lines, fees, retainers and ongoing payment schedules. Before accepting a new matter, evaluate the cost and the risk to you of this client and this matter. Also evaluate if:
- you are qualified to handle the matter
- you have the time and resources to handle the matter, given your current case load and your other professional and personal responsibilities
- the client’s expectations are attainable
- the client is willing and able to pay for your services
- the client is someone you want to work with and for.
Do not be reluctant to discuss fees during your initial interview. Be clear that you expect to be paid for your services on a timely basis. Discuss with your client at the outset the best time of the month to be billed. This assists the client in budgeting and reinforces the message that payment of your account should be a priority. Of course, follow through and bill regularly and at the agreed time.
If you choose to represent this type of client, use appropriate safeguards to reduce your risk. Be extra vigilant in documenting all meetings and conversations. As with all clients, write detailed letters confirming advice given (including possible outcomes) and instructions received.
Once you have agreed to represent a client, reduce that agreement to writing. Sign a new retainer agreement for each matter you accept, even with the same clients.
This is done in your retainer agreement/engagement letter. A retainer agreement that clearly sets out the services to be provided, your policies and procedures, as well as the legal process is a valuable risk management, financial management and communication tool.
Your retainer agreement should clearly set out billing options, payment methods, payment schedules, interest rate charges, disbursements and HST. Consequences of nonpayment of accounts should also be set out clearly. This conveys the message that you value the work you do. Clients who understand your billing process, up front and agree to retain you on the terms you set out are more likely to pay on time, thereby resulting in fewer unpaid accounts and better cash flow.
Make sure that the retainer you require is sufficient to cover your initial work and that your agreement requires that the retainer be replenished once the initial retainer has been reduced to a certain amount. Set out the consequences if the top off is not received. Do not begin work on a file until you have the retainer. Be clear and firm about this and your requirement for ongoing “top ups” of your retainer
If you choose not to represent a potential client make this very clear, and do so in writing. Declination letters are crucial to effective risk management. Return any documentation received from the client at the end of the interview or with your declination letter. If there is a relevant limitation period advise the client of it and advise them to immediately contact another lawyer if they wish to pursue the matter. Keep the contact information, declination letter and interview notes. A sample declination letter is attached here. As always, these precedents should be adapted for your particular situation.