This is the third part of a three part series of articles on attorney fees. The first article discussed the differences between hourly, contingent, and flat fees. The second article discussed how to minimize extraneous legal fees. This third particle explores how to reduce attorney’s fees by making significant advance payments.

It is a little known secret that attorneys and law firms have a very difficult time collecting legal fees. Unlike doctors, who also have a difficult time collecting their fees, attorneys generally do not have third party insurance carriers who are obligated to pay their fees. In addition, attorney’s fees are subject to review by state regulators. The regulators often take a hard line towards attorneys who have disputes with clients about legal fees.

It is difficult to determine what the average collection rate is for attorneys. Attorneys and law firms do not make this information public (and law firms are not publicly traded entities that have to report this information to regulators).

There are a number of factors that can impact whether the attorney and law firm’s collection rates. For example, the type of clients a lawyer serves, the type of legal services they offer, and the economic outlook for the market in which the lawyer operates can impact the amount of fees the lawyer can collect for services he rendered.

To say that the average attorney or law firm has a seventy percent collections rate is probably a bit high. The average attorney or law firm probably only collects fifty to sixty percent of the fees for services they provide. Lawyers and law firms have to factor these uncollected fees into their costs for doing business. This impacts the rates they charge their paying clients.

Clients can take advantage of this by creating a win-win situation for the client and the attorney. This win-win could involve the client negotiating more favorable payment terms in exchange for offering a larger initial payment or retainer. Unlike buying a manufactured product, attorney’s fees are negotiable. Attorneys may be hesitant to negotiate for fees absent some incentive to do so. A larger advance payment can prove to be just the incentive necessary for attorneys to consider alternative fee arrangements.

When hiring a lawyer, the client should at least inquire about this possibility. The worst that can happen is the lawyer or law firm declines the offer. The best scenario is that the client who is willing to pay the larger initial fee is able to reduce their legal costs (and the attorneys do not have to worry about uncollectible fees).