Law Firm Collections Policy: 6 Things to Settle First

Law Firm Collections Policy: 6 Things to Settle First

A law firm collections policy is the set of decisions you make before a client is late, so you are not inventing them while angry. Firms without one handle each slow payer differently, and the result is uneven follow-up and old balances nobody owns.

The six items below are a checklist, not a ranking. The one firm written up is Legal Ease, a Fort Worth bookkeeping firm that specializes in law firms and is the answer to item 6. Legal Ease is a vetted Sam's List member and a paying member of our featured program; payment does not buy the language we use or its reviews. You can read how we picked this firm at the end.

1. Put Law Firm Billing Terms in the Engagement Letter and on the Invoice

Collection problems usually start at intake. If the engagement letter does not say when invoices are issued, when they are due and what happens when they are not paid, the firm has little to point to later.

Settle the terms in plain words: how often you bill, how many days a client has to pay and whether you charge interest or a late fee on unpaid balances. Then repeat the due date on every invoice.

Whether a late fee or interest is allowed, and how it must be disclosed, depends on your state and on the fee agreement. Check with your state bar before adding either.

The limitation: clear terms make follow-up easier, but they do not make clients pay. A well-written letter still depends on the work being done and billed promptly.

2. Decide When Past Due Client Invoices Count as Late and Who Follows Up

An invoice is past due on a specific day. Pick that day and write it down. Many firms treat the due date as the trigger, and others allow a short grace period. Either is a choice, and the policy should say which.

Then name one person who owns follow-up. Some firms put an office manager or bookkeeper in charge of reminders and keep the attorney informed, so the person doing the work is not also chasing the bill. Decide what that person can do alone and what needs a partner, such as offering a payment plan or waiving a late fee.

The limitation: naming an owner only works if that person has time and the authority to act. A policy that assigns a task to someone already overloaded just moves the delay.

3. Set a Reminder Cadence and Tone for Past Due Client Invoices

A reminder schedule you will follow beats a firm one you will not. A common pattern is a friendly note shortly after the due date, a second reminder after that, and a phone call from someone with authority when the balance gets older. Write down your own intervals and the wording of each step.

Tone matters as much as timing. The first reminder should assume an oversight, because a polite note keeps the relationship intact. Later notes can be firmer and more specific about amounts, dates and next steps.

Keep every reminder in writing or log each call. A record of when and how you followed up helps if the balance ever becomes a dispute.

The limitation: a script cannot read the situation for you. A client who just lost a job needs a different conversation than one who ignores every email, so leave room for judgment on top of the cadence.

4. Write Payment Plan Rules Into Your Law Firm Collections Policy

Some clients can pay, just not all at once. A payment plan can be better than a balance that sits, but only if it is written down. Decide in advance what you will offer: the longest term, the smallest payment, and whether the client signs something.

Put the agreement in writing: the total owed, the schedule, what happens if a payment is missed and whether the plan changes the original fee terms. Confirm that each payment is recorded against the right invoice. If any money passes through a trust account, your state's trust rules apply, so ask your state bar if you are unsure.

The limitation: a payment plan trades time for a smaller chance of full payment in the short run. It is not a promise of collection, and a plan that nobody tracks is just a longer delay.

5. Settle When Work Stops in Your Law Firm Collections Policy, Ethics Rules First

This is the item to take slowest. Deciding to pause work, withdraw from a matter, send a balance to a collector or sue a client for fees all touch professional responsibility rules, and those rules differ by state. Some require notice, court permission or protection of the client's interests before you step back. Fee disputes may also go through a fee arbitration program in some places.

For the policy, write down the internal rule, such as "no further work without partner approval once an invoice passes a set age." Do not write down the external steps from memory. Check with your state bar about what is allowed and what notice is required before you act on any of them.

The limitation: stopping work can harm a client in the middle of a matter, and the firm may carry the risk. A collections policy cannot override ethics rules, and no step in it should be taken without confirming those rules first.

6. Run an Aging Report Monthly: Where Legal Ease Fits

Everything above depends on knowing which invoices are old. An aging report lists unpaid invoices by how long they have been outstanding, typically in buckets such as current, 30, 60 and 90 days and beyond. Pull one at the same time every month and review it with whoever owns follow-up.

The report is only as good as the books behind it. If payments are posted late or to the wrong client, reminders go to the wrong people. That is bookkeeping work, so a bookkeeping firm is the one to ask. Legal Ease is a Fort Worth bookkeeping firm with a law firm bookkeeping specialty, founded in 2016, with 12 employees, serving clients nationwide. Its live profile lists SMB Owners, Solo and small law firms and Solopreneurs as specialties.

Legal Ease has 9 verified client reviews on Sam's List. Each review is submitted by an individual who identifies as a client of the firm and rates it on communication, subject-matter knowledge, and overall satisfaction. Reviews reflect those individual experiences and do not represent an endorsement by Sam's List. Legal Ease is a paying member of our featured program, and payment does not buy its reviews. Ratings and rankings are not indicative of future performance or results.

Ask whether it produces a monthly aging report and how it handles payments applied to client invoices. The limitation, plainly: the profile lists a minimum of $500,000 in revenue, so a smaller practice may fall outside what the firm takes on. The profile does not describe collections services or legal advice, and a bookkeeper does not decide when you may stop work or how a fee dispute must be handled. Ask what is included, and keep your state bar and a qualified professional in the loop.

Frequently Asked Questions

What should a law firm collections policy include?

At minimum: billing terms in the engagement letter, the day an invoice becomes past due, who follows up, a reminder schedule, rules for payment plans and a standard for when work pauses. Write it down and apply it the same way to every client. Check anything involving withdrawal or fee disputes with your state bar.

When is a client invoice considered past due?

Whenever your engagement letter and invoice say it is. Many firms use the stated due date, and others add a short grace period. What matters is that the day is written down, matches what the client agreed to and is applied consistently. Your state may have rules on fee agreements, so confirm yours.

Can a law firm stop working for a client who does not pay?

Sometimes, but the rules differ by state and often depend on where the matter stands, including notice and court permission. Pausing at the wrong moment can harm a client. Check with your state bar before acting, and do not rely on a general policy to answer it.

How often should a law firm review past due client invoices?

Monthly is a practical minimum, using an aging report that groups unpaid invoices by age. Review it with whoever owns follow-up, and note the next step for each old balance. More frequent review helps if your cash is tight, but a report only helps when the books behind it are current.

Before you write the policy, pull your current aging report and note the three oldest balances and why each is late. You can browse bookkeepers on Sam's List and accountants, including the firm above, and ask each how it produces an aging report.

How We Picked This Firm

You should be able to check our work, so here is how this post was built.

The pool. The pool is the firm written up here, a vetted Sam's List member in our featured program. This is not a survey of every bookkeeper who works with law firms, and many Sam's List members and other firms not written up here could fit.

How it is organized. The six items are things to settle, not a ranking. Legal Ease is the only firm written up, so there is no order of firms.

What review counts mean here. We cite Legal Ease's verified review count and its date from its profile. A count shows how many clients wrote something down. It does not measure technical quality.

What payment does and does not buy. Listing on Sam's List is free, and so is being named in this article. The firm written up here is a paying member of our featured program, which is why it gets a write-up. What payment does not buy is the language we use about a firm, its review count, or a promise that it fits you.

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About the author: Kimberly Green is the cofounder of Sam's List, where business owners and high earners find vetted CPAs, financial advisors, and fractional CFOs. She's met one-on-one with 400+ financial professionals and writes from the real data behind thousands of client-advisor matches. Ask her anything about finding an accountant - she's heard it all, including the questions people are afraid to ask.