This is probably happening to you right now.
One of our team members places a call to a referral partner to request an update about a referred case. Our firm referred the client to our referral partner about 2 years ago and we just wanted an update. Then, we get the shocking news.
Our referral partner reports that “This case settled 6 months ago. We didn’t know you wanted a referral fee.” Surprising to say the least, in view of our written agreement concerning the division of the legal fee with our referral partner. We discovered that the case settled for $2 million and our referral partner obviously had no intention of paying our referral fee.
After a few weeks of crying poverty and attempting to avoid paying the referral fee, our referral partner eventually acknowledged our rights to a referral fee (I had to threaten litigation). Crazy, that it was this difficult getting our referral partner to honor our written agreement. The non-payment of the referral fee would have cost our firm $200k.
This happens way too often. Having a written agreement concerning the division of the legal fee is not enough. Your referral partner might keep you in the dark about the referred case and hope you don’t ask any questions. So, what can you do to prevent this from happening?
Take an Inventory of Your Referred Cases
Begin by taking an inventory of every client that you’ve referred to another law firm. How many clients has your firm referred to other law firms? Next, ask these 3 questions:
- Do you have a written agreement concerning the division of the legal fee?
- What is the status of the referred case?
- When was the last time that you checked with your referral partner about the status of the referred case?
If you are not checking the status of the cases that you refer to other lawyers, you might not get paid your referral fee. You are probably leaving money on the table.
3 Steps to Verify that Your Referral Partners Are Doing Their Job
Did you refer your client to the right law firm? Do something radical to find out: ASK YOUR CLIENT. The follow-up shows that you care about the relationship with your client and provide updates about their happiness (or lack of happiness) with your referral partner.
You might find out that the client is miserable and that it was a mistake to refer the case to your referral partner. Just as bad, you might discover that the client’s case settled 6 months ago and your referral partner failed to pay your referral fee.
Follow Up #1: Automate Follow Up via Email
First, you should automate the follow-up process with your clients. At least once every 6 months, send an automated email using your intake software that asks the following questions to your clients:
“We referred you to the law firm of Smith & Wollensky and have a few quick questions for you. We want to make sure that you are happy with your experience with Smith & Wollensky.”
- Are they calling you back? YES__ NO__
- Are you happy with their communication? YES__ NO__
- Overall, are you happy with this law firm? YES__ NO__
- Are you glad that we referred this law firm to you? YES__ NO__
- Has your case settled? YES__ NO__
- On a scale of 1 to 5, how would you rate your experience with this law firm? (1 is horrible and 5 is extremely happy) 1—2—3—4—5
“Please feel free to call our intake team at 845-303-1000 if you’d like to discuss any specific concerns.”
“Thank you for the opportunity to serve you.”
You should repeat the automated emails to your clients once 7 days after the initial referral and then periodically at least once every 6 months until the case concludes. If the client responds with anything less than 4’s or 5’s on the scaled question, tell your intake team that you want to be notified.
Follow Up #2: Give a Shit Call
Next, call your client to find out if they are happy with the law firm. Have your intake team ask the same questions that are posed in the automated email and just touch base to see how your client is doing (this is known as a “Give a Shit” call by How to Manage a Small Law Firm). You should create a point system for every time a team member speaks with a client who was referred to another law firm and shares the results on a whiteboard in your conference room.
Your client will appreciate the follow-up from you and you might discover complaints that your client did not want to write via email.
Follow Up #3: Write a Letter to Your Client
On customized stationary, write a letter to your client. Your letter can be short, “Just want to touch base to make sure everything is going well with your case. Please don’t hesitate to call my cell, 518-265-9131, if there is anything I can do. We always like hearing from you, especially if you have any concerns or complaints about your case.”
Keep a Scoreboard of the Communication with Clients
The automated emails, Give a Shit (“GAS”) calls and letters should be done by your intake team. Keep a record of the number of times every week that a team member communicated with a client who was referred to another law firm. Gamify the process. Keep a scoreboard in your conference room and keep track of the number of times that your team members have communicated with your clients.
- # of updates received via automated emails to clients.
- # of Give a Shit phone calls to clients.
- # of letters sent to clients.
Tell your team members that you want a report from them at the end of every week with these numbers. There is no such thing as over-communicating with clients. If a client does not want to hear from you, they will tell you. More than anything else, your clients want to know that you care about them. Nothing conveys this more than a Give a Shit phone call to your client.
Rules of Engagement for Referred Out Cases
There is one golden rule: if you don’t have a written acknowledgment of your right to a referral fee, you likely won’t receive a referral fee. Every referral must be documented in writing and must specify the division of the legal fee and be signed by your referral partner.
On every occasion that you refer a new client to another lawyer, you should confirm the referral with “Rules of Engagement”. The Rules of Engagement specify that you are referring the client on a referral basis and lay out your expectations for communication from your referral partner. The Rules of Engagement specify that you expect a referral fee if there is a monetary recovery as well as the division of the legal fee.
Follow Up #1: Automate Follow Up with Email
Send a series of automated emails using your case management software to your referral partner.
- Have you spoken with our client? YES__ NO__
- Have you decided whether you will accept the referral? YES__ NO__ NOT YET__
- If the answer is “NO”, then ask: Have you confirmed your decision to decline the case in writing? YES__ NO__
- If the answer is “YES”, then ask: Has the client signed a retainer agreement? YES__ NO__
- If the answer is “NOT YET”, then ask: “What will you do to determine if you will accept the referral?”
Next, send this email to your referral partner once every 30 days until your referral partner has decided to reject or accept the referral.
Follow Up #2: Automate Email Requests for Updates for Litigated Cases
If the case has been accepted for litigation by your referral partner, send automated email requests using your case management software to get updates about the case.
- Have our client signed a retainer agreement? YES__ NO__
- Have you filed the lawsuit? YES__ NO__
- What is the next step in the lawsuit?
- Do you have a trial date?
- When is the last time that you’ve communicated with our client?
- Is there anything we can do to help you?
If there is no response, the same email should be resent once a week. If there is no response from your referral partner after 3 weeks, you should send a strong message via letter to your referral partner. Your letter should be sent via certified mail:
“We’ve attempted to contact you about the status of Mr. Jones’s case. After multiple attempts, we ask that you respond to this letter via email (intake@fishermalpracticelaw.com).” [Then, in your letter, repeat the same questions that are set forth in your automated emails].
“We know that you are very busy and we respect your time. However, if you do not respond to this letter within five (5) business days, we will assume that you do not value the referral relationship with our law firm. In that event, we will no longer refer clients to your law firm in the future. We trust that will not be necessary.”
Follow Up #3: Call Your Referral Partner for Updates
Once every 4 months, an intake specialist should call your referral partner to ask for an update about the status of a referral case.
Your intake specialist should ask the same questions set forth in the automated email requests. The update should be documented in your case management software and the lead litigation lawyer should be informed via email of the update.
If your referral partner does not respond to your emails and ignores your phone calls, you’ve got a problem. Your referral partner is essentially sending a message that they do not care about you and they have no intention of honoring your referral rights.
Your Secret Weapon: Director of Referral Relationships
Steven Fleschner, Esq., a highly successful disability/injury lawyer in Indiana, created a remote position at his law firm called the “Director of Referral Relationships”. This team member’s sole responsibility is to keep track of the status of referred cases and ensure that their law firm receives a referral fee. This is brilliant!
On Indeed.com, you can hire a remote/foreign worker for $7/hour for this position. Ask the remote worker to provide updates about the status of referred cases at the end of every week. With a Director of Referral Relationships, you will never hear from your referral partner, “I didn’t know you wanted a referral fee.” And that, my friend, is how you avoid losing money from your referrals.
