Throughout 2012, Wayne Risoli, managing shareholder in Chamberlain, Hrdlicka, White, Williams & Aughtry, worked with a handful of shareholders in the Houston-based firm who were having trouble getting clients to promptly pay their bills.
The firm's executive director, Bob Waters, trained another group of shareholders as part of a concerted effort to improve the firm's collections.
As a result, the shareholder collection rate at the firm improved to 96.2 percent in 2012 from 92.5 percent in 2011, which exceeded Risoli's expectations. He was shooting for a 94.5 percent collection rate in 2012.
"Everyone took it to heart ... . They turned it around," Risoli says of the efforts by the 14 shareholders who received "client relations" training during the year. They were coached during 2012 because their collection rates in 2011 ranged from 78 to 83 percent, Risoli says.
Because of the improved collections and also because of better use of associates' time, Chamberlain Hrdlicka's gross revenue improved by 12.9 percent in 2012, increasing to $73.3 million, compared to $64.9 million in 2011, Risoli says.
Chamberlain Hrdlicka isn't alone in working with its lawyers to improve its collections rate in an effort to bring in more revenue and profits. Other Texas firms are paying attention to collection rates, also called realization rates.
Firm consultant William C. Cobb of Houston says it's smart for firms to train lawyers on how to collect from clients.
"Usually they don't attack that problem very well, and these guys take on business, and they bill the clients, and the clients don't pay," he says.
Cobb says firms should strive for a 98 percent collection rate on bills sent to clients. However, he notes that a realistic rate depends on the firm's mix of clients.
"The divorce practice would probably be ahead of the curve, and they would be collecting before they incur the expenses. A PI law firm, of course, they would have to wait. But if it's a general practice commercial firm ... they may put their clients on notice that they: one, pay by credit card; two, pay cash and you will get a 10 percent discount; or, three, we are not going to tolerate it and if you want to late pay, then we are out of your picture," he says.