The $140,000 Your Law Firm Billed But Never Collected

Let me describe a pattern I see in almost every small law firm I consult with. The attorney does the work. The attorney records the time (eventually). The invoice is generated in Clio or PracticePanther. The invoice is emailed to the client.

And then… nothing. No follow-up. No reminder. No systematic tracking of whether the client actually paid.

Two months later, the attorney notices the accounts receivable balance is climbing. They send a somewhat apologetic email: “Just checking in on the outstanding balance.” The client responds that they never received the invoice (11% of clients report this, and it’s often true — the email went to spam). A new invoice is sent. Another month passes. The attorney feels uncomfortable sending another reminder because they don’t want to damage the relationship. The receivable ages further.

By the time the firm writes off the balance six months later, nobody remembers the specific work or has the energy to pursue it. The revenue simply evaporates.

The Math Is Worse Than It Sounds

This isn’t revenue that was never earned. It’s revenue from work that was done, time that was recorded, invoices that were sent. The work product was delivered. The client benefited. The firm paid the attorney’s salary, the office rent, the malpractice insurance premiums. And then the firm absorbed a 9-14% haircut on the revenue because nobody systematically followed up on payment.

For a solo attorney billing $400,000 per year, that’s $36,000-$56,000. For a three-person firm billing $1.2 million, it’s $108,000-$168,000. That’s not a rounding error. That’s a paralegal’s salary. That’s the technology budget the firm says it can’t afford.

Why Lawyers Are Terrible at Collections

I say this with respect: most attorneys are structurally terrible at accounts receivable management. There are specific reasons for this:

The relationship conflict. Your clients aren’t anonymous customers. They’re people you’re advocating for — often during the worst moments of their lives. Sending a payment reminder to someone going through a custody battle feels crass, even when the invoice is perfectly legitimate.

The time allocation problem. Every minute spent on collections is a minute not spent on billable work. If you bill at $300/hour, spending an hour chasing a $500 invoice is a net loss. So the smaller invoices pile up.

The inconsistency problem. Without a system, follow-up is random. Some clients get reminded; others don’t. Some get an email after two weeks; others don’t hear anything for three months. Inconsistency breeds both bad client experiences and uncollected revenue.

The emotional labor problem. Asking for money is uncomfortable. It requires a mental shift from advocate to creditor that most attorneys would rather avoid. So they procrastinate, and the invoice ages past the point where collection feels feasible.

The Automated Collections Cadence

The system that works for small firms isn’t aggressive. It’s consistent. The key insight is that most unpaid invoices aren’t malicious non-payment — they’re oversight, cash flow timing, or administrative confusion. A professional, systematic reminder sequence resolves the majority of cases without any awkward conversations.

Day 0: Invoice sent. Confirm delivery. If no email open is detected within 48 hours, resend with a “wanted to make sure this arrived” note.

Day 7: Gentle reminder. “I’m writing to follow up on the invoice sent on [date] for $[amount]. Payment can be made via [online payment link]. Please let me know if you have any questions about the charges.”

Day 21: Second notice. Slightly more direct: “I haven’t received payment for the invoice below. If you’re experiencing difficulty with the amount, I’m happy to discuss a payment arrangement. Otherwise, I’d appreciate payment at your earliest convenience.”

Day 45: Escalation. “This invoice is now 45 days past due. I want to resolve this before it affects our working relationship. Please respond to this email or call me to discuss.”

Day 60: Partner notification. The managing partner receives an alert with all invoices over 60 days. At this point, a personal call or letter is warranted — but only for the small percentage of clients who didn’t respond to the automated sequence.

The Payment Plan Option

Here’s something many small firms miss: offering payment plans proactively — before the invoice is overdue — actually improves total collection rates. Clients who are struggling with a $3,000 invoice will often ignore it entirely, but they’ll pay $500/month reliably if given the option.

The automation can detect when a client hasn’t engaged with an invoice by day 7 and include a payment plan option in the first reminder: “If you’d prefer to spread this over three monthly payments, just reply to this email and we’ll set that up.”

This isn’t capitulation — it’s good business. Collecting $3,000 over three months is infinitely better than writing off $3,000 six months from now.

What This Means for Cash Flow

For most small firms, the cash flow impact of consistent AR follow-up is immediate and significant. The firms I’ve worked with that implemented automated reminder sequences typically see their collection rate improve by 5-8 percentage points within the first quarter. On a $500,000 annual billing base, that’s $25,000-$40,000 in additional collected revenue — money that was already earned but was leaking through inconsistent follow-up.

That recovered revenue doesn’t require new clients, additional marketing spend, or more billable hours. It’s the simplest form of growth: collecting what you’ve already earned.

The reluctance to automate collections usually comes from a fear of seeming pushy. But here’s the reality: professional, consistent reminders don’t damage client relationships. Ghosting clients for months and then sending a surprise collections letter does. The automated approach is actually more respectful — it treats payment as a normal, expected part of the professional relationship rather than an awkward afterthought.