Payment Pitfalls Endured by the Expert Who Will be Paid for Services

By Jess E. Dines, BSEE, FACFEI, DABFE

Experts are paid for their services in one of two ways: those who are paid in advance and those who are paid within or around 30 days after the service is completed.

Consider the second way. Most attorneys and their clients are honest and will pay if the charges are reasonable. However, some will try to take advantage of the expert’s trust. In addition, even honest attorneys make honest mistakes, such as incorrectly billing clients, which ultimately results in experts’ being short-changed.
Collecting money due for work done and expenses incurred should be a high priority. Diplomacy definitely works here. An expert can easily lose a client’s future work by being too demanding or strict, and sometimes the expert may need to settle for a slow payment. An expert needs to be paid a retainer immediately upon accepting a case regardless of how he or she will be paid.

In any case, experts should not let multiple small invoices accumulate because they may add up to a large amount of money, decreasing the probability of full payment. Billing for expenses on a weekly or even daily basis makes it easier for the client-attorney to pay on time. It might also be wise to suspend work done until past due payments are current. Requests should be made using certified mail with a return receipt. Fed-Ex, UPS, or Registered Mail will all provide proof of delivery. Faxing or mailing an invoice is a good alternative as long as you maintain a printed record showing the date (and fax number) for each transmission.

Tactful reminder letters are also advised. They should be sent out on a regular basis. If your fee schedule indicates interest accrued due for an unpaid bill, add these letters to your invoice.

Generally, good clients consist of those in lending institutions and large, reputable insurance, business, and real estate firms. You should always get paid when working with a Federal, State, County, or City agency such as the District Attorney, Public Defender, or Legal Aid Society. Presiding judges and attorneys designated by a government agency also fit into this category. Ordinarily, such agencies will not give you a retainer; instead, a “Letter of Intent” is given. It might be constructed as follows:

            “Please examine copies of the business checks purportedly signed, as maker, by our client without authorization. I am initially requesting document examination and your verbal opinion and have authorized $500 for that service, a 2-hour minimum at $250 an hour.
            “If needed, a full written report may later be requested from you for the additional payment of $700 to $900 net, after credit for the initial $500 is paid.
            “Also, if needed, your fee for testimony in court is $1,000 for up to a half day, plus an additional $300 for travel and expenses. Please sign and return a copy of this letter before commencing your work.”

To expedite payment from a government agency, request an IRS W-9 form to list your Federal I.D. or social security number. Sometimes this can be done via telephone. Some agencies require that you first become an approved vendor. In this case, you must fill out a form (this can be done directly through the Internet). It is a good idea to find out who handles the accounts payable and make periodic contact with this person at least every 30 days.

Advance Payment
The most suggested payment method is payment  in advance, which is the only way to ensure that you will be paid for expert work. Your client-attorney or client may balk at this, especially if you have never worked for him before. In this case, you need to convince the client that he will receive reputable work. You can give references or testimonials, which can be listed on your Web site.

Your client-attorney may want his client to pay you directly. Although this is not unusual, it can be dangerous because there is a possibility that you may not be paid at all. Be especially wary of non-attorney clients who retain you directly and pay by cash or a cashier’s check but have no checking account. You are always free to decline an engagement of course, but if you do accept one in which the attorney’s client is responsible for paying you, check the client’s credit and his ability to pay. Collect as much as you can in fees and anticipated expenses up-front. It is always easier to write a check to refund money left over than it is to collect from a recalcitrant client.

Also, be wary in the case that your client-attorney wants to pay you only after his client first pays him. This is understandable—after all, attorneys are not banks—but it is not acceptable. The best way to avoid this is to insist on a sizable advance payment, one that will cover all the time you expect to spend on the case as well as the anticipated expenses. In any event, your letter of agreement should include a statement to the effect that “the client-attorney is solely responsible for payment of all invoices.”

If your attorney is out of town and you expect to incur reimbursable expenses, payment should be received in advance (and also be specifically stated in your letter of agreement that the refund is due regardless of the outcome of the case). If your case is taken over by another attorney, make sure all past due fees are cleared up before starting work with your new client-attorney, and explain to the new counsel your method of fee collection.

Beware also of attorneys who represent people involved in illegal drugs, especially those who have only a post office number as an address. If a written report is involved, you can ensure receiving your money by withholding a portion of your report, such as charts or diagrams, showing that you have put in pertinent significant time doing it. This will also provide a “comfort zone” for your client so he knows you do reputable work and he will not receive second-hand material.

You can also include references of your past clients. After being paid, the expert should send the report promptly to the client. When feasible, suggest that the client pick up the report in order to explain its contents and be seen for its merits before receiving payment.

The following are some additional suggestions:

Make a copy of all checks received for your files. Besides having a record of payment received, it also serves to give you the bank and account number if a collection action is necessary.
Be wary of accepting a last-minute call to produce a report and/or testifying. Because you will have very little time to review the case, you are prone to making mistakes in the analysis. Also, there will be no time to determine the validity of an advance payment check.
Be wary when you are offered a lower payment amount than what you requested. When at the courthouse, the client hopes that you will accept the reduced payment because you are already there. Worse yet, you may not even receive a check.

Non-Payment or “Insufficient Funds” or “Stop Payment” Checks
It is likely that sooner or later the expert will experience one or several of these events. There are several recourses that you can take. The best is to work with your client in a diplomatic and amicable way to resolve the issue.

Consider a reasonable negotiation. In the case of bogus checks, contact the district attorney. In some states, bad checks are treated as a felony. A “bad check complaint” form is available and must be submitted with copies of all pertinent documents. The chances are good that your client will soon replace this with a cashier’s check or postal order.

For non-payment or other invalidated checks, you should file a claim with the Small Claims court, although you will be limited by an amount. A hearing date will be set. The most important fact in winning your case is the validity of the evidence you supply, such as bank notices, cancelled checks, related letters, and other correspondence. Devise a simple one- or two-sentence answer to explain why the defendant owes you money.

If your client is an attorney, you can contact the American Bar Association (ABA) and ask how the ABA can help you collect the money. Attorneys do not want such a negative mark on their record.

Finally, you can employ a collection agency. If you do, make sure it’s reputable and licensed. They normally work on the percentage of the money collected. It is possible that the agency may pocket all or most of the money collected and never contact you.