Nov 26, 2013 By declining payment plans, I remove a barrier between me and my clients
One day as I walked down a courthouse hallway towards one of my more favorite criminal defense colleagues, he pointed at me to another criminal defense lawyer saying: "That lawyer Jon Katz knows how to get paid up front."
How did he know this, unless one of my potential clients also visited him, saying that I said I would only accept payment up front? I first discussed payment plans online in this 2007 blog comment.
One of the very pleasurable aspects of my criminal defense practice is working without money being a barrier between me and my clients. Once they pay me — with my just about always requiring payment up front and in full, other than for those rare exceptions listed below — I can focus on my clients, rather than whether or not they are behind on payments, and only leaving third party and in- house expenses to discuss, which are a much smaller issue than assuring a client is current on payments.
The lure can be substantial for a criminal defense lawyer to accept a potential client’s payment plan request, lest the potential client hire another lawyer accepting such plans. Then again, the lure also is substantial for many criminal defense lawyers to reduce their quoted fee, or to quote a lower fee in the first place, in order to compete with lawyers charging lower fees. Some lawyers’ websites even advise that it is common for lawyers to take a down payment and follow-up payments from there, which can increase the expectations of potential clients that I will do the same, which I do not do.
A criminal defendant faces not only a risk to his or her liberty, but also the collateral consequences to his or her reputation, and sometimes to his or her livelihood, professional licensing, and immigration status. Defending just about any jailable criminal charge is an awesome responsibility for a criminal defense lawyer, and demands a full-frontal assault, well-prepared and well-executed battle plan, and excellent offense-defense. Even such non-jailable criminal charges as intoxicated in public in Virginia and drug paraphernalia possession (deportable) in Maryland and Virginia (one type of paraphernalia charge is non-jailable and the other is jailable up to one year in Virginia). I bill accordingly in terms of the fee I set and in terms of taking payment up front, to assure that I do not need to compete with my clients’ monthly mortgage and rent charges, and such unexpected client financial obligations as home plumbing disasters and other personal expenses that easily can go into the high thousands of dollars.
We see that profitable companies that take payment plans are very aggressive and skilled at running credit checks of customers, sometimes requiring collateral and personal signed guarantees from well-financed sources, and aggressively collecting through collection agencies and the courts. I do not feel comfortable doing any of those things, with the exception that I do sometimes request a personal guarantee that I will be paid for Circuit Court work if not replaced by another lawyer at the Circuit Court level when I defend a Virginia District Court preliminary hearing matter that gets indicted. Nevertheless, I have never sued a client for non-payment, in large part because taking payment up front makes that a non-issue, and that suits me better.
When I quote a fee to a potential client, s/he often asks if that is all due up front and when. That is a valid question, to which I answer that I will start work upon being paid in full, depositing the payment into my escrow bank account and moving funds from escrow to operating as those funds become earned. Few potential clients discuss the matter much further than that with me other than the occasional potential client who tells me how much s/he really wants me as his or her lawyer but can only get me the funds if by a payment plan. Some of them end up obtaining payment up front, and others hire another lawyer.
In an ideal world, criminal defendants who do not qualify for public defender and court-appointed lawyers would not face such financial hardships for exercising their Sixth Amendment right to effective assistance of counsel. I started out as a Maryland public defender lawyer for five years (1991-96) and loved that I was simultaneously defending individuals, criminal trials, and the side of the angels while also serving the cause of equal access to justice. At the same time, the bureaucracy of the public defender’s office did not thrill me in many ways, I liked the idea of earning a living without being paid through coercively collected tax dollars, and wanted to be my own boss, which became a reality in 1998.
A great thing about my prior experience as a public defender lawyer and as an employee lawyer at a law firm before and after my public defender work is that I learned at all three places to focus on becoming an effective lawyer and serving my clients, leaving the revenue generation and law office management to those running the law firms and those running the public defender office. Now my own boss for fifteen years, incorporating law firm administration and revenue generation to my weekly duties is more effortless than doing so while also learning how to serve my clients early in my career. If I become like a bank, which is what happens when a lawyer offers payment plans, my law practice becomes unnecessarily more complex.
Yes, some potential clients who would otherwise hire me if I quoted a lower fee (see California DWI lawyer Lawrence Taylor’s warning about hiring a criminal defense lawyer for the lowest fee) or agreed to a payment plan, will hire another lawyer who quotes a lower fee or offers a payment plan. My primary interest for criminal defendants is that they get an excellent defense from their lawyer and the best possible outcome in court, regardless of whom they hire as their lawyer. As it stands, by my ordinarily billing flat fees rather than billing hourly for criminal defendants whose matters are in trial courts, I sometimes learn that I have underbilled, for instance when the required trial preparation, investigation, motions practice and discovery review become much more time consuming than expected, or when the trial date keeps getting continued more than expected, which raises my opportunity cost of declining other matters for each time I have scheduled for a particular client for a particular court. Although I usually do not conclude that I have overbilled a client, my flat fee retainer agreements do include a formula for me to consider partially refunding my client’s payment when the matter concludes with less time and fewer court appearances than expected, and I gladly pay such refunds where merited. My billing practices, fine-tuned over fifteen years, work well for me. I do not need to muddy the waters by offering payment plans or reduced fees, except when I intentionally want to make a client a pro bono or low bono (but not Sonny Bono) candidate, and lawyers have a moral obligation, if not a legal obligation as well, to do pro bono work.