Would you stiff this guy if you owed him money?

There is a great scene in The Dark Knight when the Joker makes his first extended appearance before an assembled gathering of Gotham's organized crime figures. He offers to rid the cabal of their arch-enemy, Batman. When the hoodlums ask if it's so easy to get rid of Batman why hasn't he already done it, the Joker replies, "if you're good at something, never do it for free."

While it is admittedly disconcerting that I draw law practice management inspiration from movie villains, there is a lesson here for lawyers: be exactly like the Joker. No, wait, that doesn't sound right.

The lesson is: don't work for free.

In my job I get to meet with lots of dedicated, talented lawyers working in a variety of practice areas, firm sizes, and geographic locations. With astounding regularity, these smart, hard-working lawyers have accounts receivables ranging anywhere from "enough to care about it" to "these dead beats better start paying me fast." These lawyers have done strong, creditable work in representing their clients and yet somehow have closed a file in the red.

It's understandable.

Billing is not most lawyers' favorite part of practicing law - it's no fun asking clients for money. Most lawyers would rather hone their craft than pore over financial details like trust account balances. Yet, paying insufficient attention to billing in private law practice is like trying to sail a boat without hauling in the anchor. At least I think it's like that. I really don't know anything about sailing boats. Whatever it is, it's not good.

But I digress.

Ideally, when a case closes you want have a little bit of unearned money in your trust account to return to the client. Few things in law practice buy you as much good will as returning money to a client and telling them you were able to finish their case under budget. It doesn't cost you anything but a little planning and most clients will be delighted to get a check back from their lawyer instead of always sending money in the other direction. Failing that, the next best thing is to finish a case at the same time the last dollar in the trust account from that client has been earned.

All of which brings us to Project A/R Zero.

Project A/R Zero is a challenge to whittle your accounts receivable down to zero and maintain that. Not some time in the undefined future, not when the economic picture gets better, now. Right now. Depending on how, umm, robust your A/R is, this might sound like an impossible task, but it's not only possible, it is essential to running an efficient practice while not running yourself ragged at the same time.

Practicing law can be a rewarding profession and running a law firm can be an engrossing and satisfying way to make a living. These things are not so rewarding, engrossing and satisfying, though, that they ought to be done for free. It really is this simple: if you are not going to be paid for your work, don't work. Go read a book or hang out with your family or just sit and relax. Any of these things will be infinitely better for your long term law practice than working for clients who are not paying you.

A common justification is that failing to collect A/R is a service to clients, particularly in a down economy. I'm all for public service and charity, but uncollected revenues are not the same as pro bono. Clients who can pay for your services but for whatever reason do not value them enough to do so are not the same as clients who can not afford to pay for your services. The latter is worthy of your pro bono efforts; the former is worthy of promptly becoming an ex-client.

So, assuming you are now convinced that achieving A/R Zero is important and the right thing to do, hHere are the steps to get you there in 120 days:

• Establish a written collection strategy for your current A/R. I would suggest
  • send a letter when the fee is due
  • send a follow up letter and courtesy call 30 days out
  • send a follow up letter and courtesy call 60 days out
  • send a stronger follow up letter and courtesy call 90 days out
  • close the file 120 days out
• Establish a dashboard (think of a "low fuel" indicator light on your car's dashboard) to alert you when trust account funds need to be replenished -- BEFORE the funds run to zero.
• Replenish trust account funds when your dashboard indicates that funds are running low in a given case.
• Before hearings and other lengthy litigation events, replenish with 50% more than you think you need.
• Stop working on files until trust account funds have been replenished; if the client delays and the file is in litigation with hearings or other sizable events pending, file a motion to withdraw.
• Bill in pre-paid, fixed fees whenever possible.

Follow these steps and in 120 days your case load will be lighter, your A/R will be zero, you will be receiving payment for every hour of client work you do and you will have more free time.

You might even have enough time to rent The Dark Knight.