Locums – what to do if a business doesn’t pay
As an agency specialising in the introduction of locum solicitors to cover assignments at private practice law firms, we are well versed with the problem of consultants not getting paid (it happens to us as well from time to time!). Most solicitors firms pay promptly and well within the industry norm – this is 3 working days for locum assignments. The majority of our locums invoice firms directly and get paid as soon as their put their invoices in for payment. However occasionally, and this is very occasionally, we get employers who decide that it is not really necessary to pay the locum for their services and don’t bother paying.
This is our guide to making sure you have the best chance of being paid. There are 3 Golden Rules.
Rule 1 – not every solicitor or manager is honest
We get locums calling us after non-payment to say “the firm are struggling with their bills and money is really tight for them. I feel sorry for the practice – perhaps I need to give them some time to pay?”
The simple fact is that in the legal profession (as well as in life) there are all sorts of people practising as solicitors. Most are law abiding, decent and honest individuals who maintain the credibility the profession deserves through their behaviour.
Unfortunately there are also shysters.
Any law firm who try the above excuse for non-payment should be immediately pursued for payment. I don’t say this because I am some kind of evil megalomaniac, it is because you need to look after yourself and not worry about the firm’s income or cashflow. They have used your service knowing the state of their affairs and as a result it is their problem not yours if they do not have the money to pay. Are they bothered about your income or cashflow? No. A very small minority of law firms seem to have a rule for suppliers – never pay them. You never pay because there are a number of suppliers who will not chase you for payment again. They simply can’t be bothered. It is quite a good tactic and probably works on a certain percentage of occasions. You need to make sure it does not happen to you.
Rule 2 – look after yourself
So many locums are worried about the effect their demand for payment will have on the solicitors firm they are billing. What if it sends them under and they can’t pay the wages of their staff anymore? What if the partners go bankrupt and end up on the streets with their families living off welfare benefits?
Forget it. You need to look after yourself first and the law firm second. They asked for your help at a time of need and you helped them out. Why should they not pay? Their cashflow is their problem and not yours. If they didn’t have the money to use your service in the first place – who’s fault is that? It is certainly nothing to do with you.
Rule 3 – follow through with any threatened action
Do not contact a law firm and ask for payment within three days, and then agree to a delay for a further two days and then say to yourself – I’ll give them a few extra days – it hasn’t been that long and I need to give them the chance to make arrangements. If you threaten to take court action on a certain day, make sure you do. It is only by doing this that the firm will take you seriously.
Swift action and a credit control process is our technique for making sure we get paid. It is described below. Please feel free to use it! It seems to work well for us.
The Ten Percent Technique for making sure you get paid by Law Firms
- Contact the law firm by email and send them a copy of your invoice, even though you probably have already submitted it to them. Explain that you haven’t yet been paid and ask them to sort this out asap. Include your bank details.
- 24 hours later, email again. Indicate the time it has now been since you submitted your invoice and explain that payment should have been made within 3 working days.
- Write to the firm and indicate that you are going to be left with no choice but to issue legal proceedings against them. Make sure you do this by recorded delivery if you can. Our template for writing a 7 day letter before action is below. Specify a time and date you expect to be paid by. Include your bank details and a copy of the invoice. Indicate the costs and interest that you plan to add to the outstanding amount. The best way of doing this we think is to use the Late Payment of Commercial Debts (Interest) Act 1998 – search online for the payontime.co.uk website which contains the relevant figures.
- On the day after the deadline you have given make sure you take action against the law firm – go to the Money Claims service – moneyclaim.gov.uk and get going. You only have to fill out a brief particulars of claim and pay a fee – it is fairly painless. At this stage we think the majority of debtors pay up, some fairly quickly. This is partly why we think some businesses have a policy of not paying unless they have to as there are certain companies who will get to this stage quite regularly.
- Be prepared for a defence. One of the tactics used by professional debtors is to highlight all the problems they have experienced with your service. For example “you’ve cost us £000s and as a result of your faulty work we have had to spend £000s rectifying the situation. As a result we are going to counterclaim against you for our losses”. Be strong – this threat rarely materialises. It is usually simply a tactic to scare you away from continuing with your action. Obviously if you staggered into work drunk, set fire to the filing cabinet and punched the senior partner in the head chances are the firm may well stick to their guns with the counterclaim..
Seven Day Letter before Action Template
Feel free to use our template – we use something similar ourselves in our debt recovery process.
]YOUR NAME] V ANT AND DEC SOLICITORS
I write further to my recent assignment with your law firm which took place from the 23rd February to the 3rd March inclusive.
Unfortunately, despite contacting you on numerous occasions and providing my invoice for services rendered, I have not been paid. Please find attached a copy of my invoice number XXXX dated 3rd March.
I write to give you notice that if payment is not received within 7 days of the date of this letter I will have no option but to issue proceedings against you in the County Court. For the avoidance of doubt I confirm that this action will be taken if payment is not received by the 24th March at 5pm. Interest and costs will be added to the outstanding amount.
I very much hope we can avoid progressing further with this matter and look forward to your payment as quickly as possible.
You must send this by post – I know from experience that the letter before action is considered very important by the courts (not entirely sure why really) and the dates it has been sent, received and processed have been looked into closely in some of the cases I have been involved in.
Further Work for a Firm who haven’t Paid
Some locums get invited back to firms where they haven’t been paid – I have known locums return on the basis that if they are at the office they can try to sort it out there and then.
We strongly recommend avoiding this – it is bad idea. If you are owed money, do not do anymore work for a firm until you have been paid for the last assignment.
Get Money = work. Get No Money = no work.
This is important. If you do more work without being paid chances are the law firm think you are a total wimp and are seeking to bully you. They probably think they can get away without paying you at all – ever.
The key to getting paid is to take no prisoners and be tough. If you delay there is the chance the company will close down or the partner moves away and you get nothing. It happens rarely, but it does happen.
Issue proceedings as quickly as you can. Do not delay. If a law firm are refusing to pay a typical locum bill, which tends to be quite a low amount compared with other overheads, are they in serious financial trouble?
There is of course the option to go down the bankruptcy route, and I have done this once on a particularly large bill, but I am not sure I would be keen to do this unless I had good reason to – one of the reasons is that I think it is more expensive and complicated to actually follow through with your threat to take action.
Please note – this article is not intended to be legal advice. It is simply a description of the method we use to recover money. We are sharing this with others in case it is of interest to them and we do not advocate acting on any of the suggestions here without taking independent legal advice.
Jonathan Fagan is the MD of Ten Percent (TP) Legal Recruitment and a very reluctant litigator. He infrequently takes cases of unpaid debt by clients to the County Court and sighs a lot at the terrible excuses and defences some people come up with for not coughing up the dough. By far the best to date has been – “I should not pay the debt because I am a qualified lawyer. Furthermore I am too busy to attend the hearing for this matter because I have much more important cases to deal with on that date.” You couldn’t make it up.
For comment or assistance please contact Jonathan at firstname.lastname@example.org