Can you bill clients for initial consultations?

Of course you can.

Abraham Lincoln once said, "A Lawyer's Time and Advice is His Stock and Trade.” While it’s true that an initial consultation has that word “initial” tacked in front of it, it’s still a “consultation.” And that means it’s a period of time in which a lawyer dispenses advice. If Lincoln thinks it’s OK, it’s probably OK.

But you already knew that. The bigger questions are really, should you charge for initial consultations? And, how to charge for initial consultations?

Note: In early 2021, I joined Law Firm Mentor's Allison Williams and Maddy Martin from Smith.ai for a webinar about whether and how to charge for initial consultations. You can find the reply and some other resources here.

Many lawyers have questions about paid consultations. Here are just a few I often hear:

• Do they work for all practice areas?
• How do I price them? 
• How do I use them as a sales tool?
• Should I (and when should I) attribute the consult fee to the larger representation fee if I'm ultimately retained? 

We cover all these topics in the webinar I referenced above, but I thought it would be helpful to hit a few of the points here in greater depth.

How do I get paid for them? 

An initial challenge of paid consults is the process of actually getting paid for them. While some firms notably charge as much as $750 for these meetings, my very informal survey suggests that lawyers likely charge half of that or even less.

Again, while these initial consults can and should be used as marketing and sales exercises with a total prospective value of a few hundred dollars, firms need to build a process to efficiently handle and get paid for these consultations.

On the scheduling front, there are lots of scheduling technologies out there to make these processes easier. Some are sector agnostic like Acuity, Calendly, and X.Ai. Others are broader customer relationship management products that include scheduling features, like HubSpot and Salesforce. And, of course, there are legal-specific scheduling tools such as ClientRock aimed specifically at lawyers and law firms.

These can help with the scheduling but what about getting paid part? Here are two ways to ease the administrative burden of charging for initial consults.

• Use a standing payment link: With Confido Legal you can create a standing link of a  fixed amount which can be shared with initial consult clients. This link can be used over and over again and can be easily integrated with Acuity, Calendly, or other scheduling programs.
• Use the Confido Legal/Smith.ai integration via Zapier: With Confido Legal, your Smith.ai intake team can accept payment for initial consults or have automated payment requests sent out when a new appointment is booked. You can read more about the integration here.

Sure I can charge for them, but where does the money go?

So, you’re comfortable charging for them and you’ve got a system in place, but you wonder “Where should I put the money?” “Does it go into my trust or operating account?” The answer to the question is going to depend upon your state and the timing.

If you live in a state that allows for retainers or advance payments to be considered “earned-upon-receipt” that money can go straight into the firm’s operating account. Other states allow such an arrangement but only with client consent and/or if the provision is written into the fee agreement. (We’ll get to fee agreements below.) If you live in any of the following states, here is a selection of ethics opinions that address the question of "earned-upon-receipt" retainers:

• California:  Earned-upon-receipt retainers are permissible in California but the rules around how to implement them revolve around the amount of the retainer, client consent, and ensuring client access to a refund. This helpful article from the California Lawyers Association lays out the details. 
• Virginia: Virginia came down firmly against retainers earned upon receipt in Legal Ethics Opinion 1606 (LEO 1606).
• Texas: Non-refundable retainers are not impermissible but Opinion 431 urges that lawyers use them with caution.
• And in New York Opinion 816 effectively says that retainers earned-upon-receipt are permissible so long as unearned fees are returned to the client.
• Of course, each state has its own rules, so be sure to check whether and how you might be able to institute earned-upon-receipt retainers in your practice.

So, what about timing? Well, if the client is paying for the consult at the time of the consult or, better yet, after it’s been delivered, then the money can be considered earned and deposited directly into the operating account.  Of course, this does introduce the risk of collections for these relatively modest payments. Unless you're really strict, there's a decent possibility that a consultee shows up for an appointment and isn't prepared to pay. In that case, you either have to decide not to meet with them or assume the risk of collecting that money later. This collections risk can ultimately defeat the purpose of  charging for an initial consult. After all, if you charge for initial consults but can’t collect you’re back to giving free initial consultations.

If you’re in a state that doesn’t allow the retainer to be earned upon receipt or it’s not clear, the safe path is to put the money into the law firm trust account. That does increase the trust accounting burden but it will help you feel comfortable that you’re on the right side of the rules in the event of a trust account audit.

What else should I be thinking about?

What else should you be thinking about? There’s a fair bit and you should definitely tune into the webinar to hear the full story but here are a couple of things.

First, if you are charging and you are undertaking to represent the consultee, even if only for the duration of the consultation, then you should think about conflicts. This initial consultation representation could limit your ability to represent someone adverse to the person that’s paying you for a consultation. Similarly, you probably shouldn’t be taking paid consults for two parties that are currently adverse to each other.

The other thing you should be thinking about is the nature of the representation with the paid consultee. Nearly every state now has on its books court rules, rules of professional conduct, or some other mechanism to allow lawyers to offer limited scope representations.* This means that lawyers can offer a paid consultation and limit the scope of that representation to the consultation without some of the downstream effects and complications of full representation e.g. conflicts, malpractice, etc. This type of limited scope representation is always done with the client’s express consent and usually formally accomplished in the fee agreement. Again, your mileage may vary and it's incredibly important to check your local rules to understand the contours of this type of an arrangement in your jurisdiction. But it is absolutely true that offering someone a paid consultation doesn’t have to mean you are their lawyer either for the matter discussed in the consultation or forever.

Paid consultations can be a really powerful way to level up your practice. I’ve sketched out a bit about how to do them, but I’m far less of an expert than Allison or Maddy. So if you're looking for more, check out our webinar recording here. 

*The ABA has collected most of those rules here, as a part of the Unbundling Resource Center.