Cash Flow or Cash Woe: An LNC Financial Infrastructure That Has Worked For Me

Disclaimer

The information provided in this article is based on my education, professional knowledge, and clinical experience. I am not an attorney, and this content is for informational purposes only. It should not be construed as legal or financial advice.

The Chatter

As Legal Nurse Consultants, we excel at analyzing medical records and providing critical insights for attorneys. Yet many of us struggle with the business aspect of our practice—particularly when it comes to getting paid consistently and on time. After numerous conversations with colleagues facing financial challenges, I wanted to share the financial infrastructure that has kept my business stable and allowed me to focus on what I do best.

Start With Clear Terms 

The foundation of a solid financial infrastructure begins before you even accept a case. Establishing clear terms of service prevents misunderstandings and sets professional expectations from the outset. 

My terms of service include a detailed fee structure that goes beyond basic hourly rates. I differentiate pricing for various services like medical record review, chronology development, summaries, expert witness location, and deposition preparation. Each service requires unique skills and time commitments that should be reflected in your pricing. I also clearly define how I bill time, whether in 15-minute increments or hourly with specific rounding rules. 

I review and update my fee schedule annually, allowing me to gradually increase rates as my expertise grows without surprising long-term clients. This approach has helped me establish fair compensation while maintaining client relationships. 

Beyond fee structures, my terms also include minimum retainer amounts, payment timelines, late fee policies, scope of work definitions, and cancellation policies. Having attorneys sign these terms before beginning work creates a binding agreement that you can reference if payment issues arise. This document should be reviewed by your own attorney to ensure it's legally sound in your jurisdiction. 

Require Retainers 

One of the most important lessons I've learned is the value of retainers. I require a minimum retainer for all new clients, with no exceptions. This approach accomplishes several crucial objectives. 

First, it establishes commitment from the attorney. Law firms that readily pay retainers are demonstrating their seriousness about working with you. Those that balk or request exceptions often become payment problems later.

Second, retainers provide immediate working capital. This creates financial stability while you complete the work, rather than waiting weeks or months after completion to receive payment. 

Third, retainers allow you to bill against funds you already hold. This dramatically reduces the risk of non-payment and eliminates the awkwardness of pursuing past-due invoices. 

Set Up a Dedicated Retainer Account 

Working with a retainer system requires proper financial management. I maintain a separate retainer account specifically for client retainers. This account segregates client funds from my operating expenses until I've earned those fees through completed work. This approach offers several advantages. 

It demonstrates professionalism and ethical handling of client funds. Many attorneys appreciate this level of financial organization as it mirrors their own practice requirements. 

It simplifies accounting and tax preparation. You can clearly track unearned versus earned income, making financial reporting more accurate. 

It provides legal protection by ensuring client funds remain separate until earned. This distinction becomes important if payment disputes arise. 

Implement a Professional Billing System 

Manual invoicing creates unnecessary complications and delays payment. I've found that investing in proper accounting software specifically designed for service-based businesses provides a significant return on investment.

An effective billing system should: 

• Generate professional, detailed invoices

• Track time with easy start/stop functions

• Allow for regular billing cycles

• Send automated payment reminders

• Accept multiple payment methods

• Integrate with your retainer accounting

Many options exist depending on your specific needs and budget. The key is choosing a system that can grow with your practice and automate as much of the billing process as possible. 

Understanding Retainer Models and Replenishment 

There are several retainer models used in the LNC industry, and understanding the differences can help you create a financial structure that works best for your practice and clients. 

Evergreen Retainers

My preferred approach is the evergreen retainer model. Under this system, clients maintain a minimum balance that is replenished whenever it falls below a specified threshold. For example, I might require a $2,500 initial retainer with a minimum balance of $1,000. When the balance drops below $1,000, I automatically invoice the client to restore the retainer to the original $2,500. 

This model offers several advantages: 

• Continuous workflow without payment interruptions

• Reduced administrative time spent on billing

• Improved cash flow predictability

• Fewer awkward payment conversations

When implementing an evergreen retainer, your services agreement should include clear language authorizing automatic replenishment and specifying the trigger balance and replenishment amount. 

Single-Case Retainers 

Some LNCs use case-specific retainers that cover anticipated hours for a single matter. This works well for projects with clearly defined scope, such as a limited record review or specific report creation. When the retainer is exhausted, you either: 

1. Request an additional retainer to continue work or 

2. Bill hourly for any excess time beyond the initial retainer 

This model works best for short-term engagements or when working with new attorney relationships where an evergreen commitment might be premature.

Managing Hourly Billing Against Retainers 

Regardless of which retainer model you choose, tracking and communicating about hourly work against the retainer is essential. My process includes: 

1. Detailed time tracking for all billable activities, documented daily 

2. Weekly internal reviews of hours accumulated against retainers 

3. Proactive communication when approaching 75% of the retainer's depletion

4. Clear billing statements showing: 

   1. Hours worked with detailed descriptions

   2. Hourly rate applied

   3. Amount deducted from retainer

   4. Remaining retainer balance

   5. Replenishment amount (if applicable)

This transparency builds trust and reduces payment friction. Attorneys appreciate knowing exactly where their retainer stands and what work has been performed. 

Handling Retainer Excesses and Refunds 

Occasionally, matters conclude with unused retainer funds. Your service agreement should clearly specify how these funds are handled. My policy includes immediately notifying the client of their remaining retainer at the conclusion of the work and asking how they would like the excess handled.

In most cases, I write a check and mail it to the client promptly to maintain clear financial boundaries. Interestingly, I've had multiple instances where attorneys have instructed me to keep the remaining retainer as a bonus for exceptional work—a pleasant surprise that reflects the value of building strong professional relationships.

This transparent and professional approach to handling client funds enhances your reputation and encourages repeat business.  

Create a Clear Billing Schedule 

Consistency in billing helps both you and your clients establish expectations. While many LNCs send invoices on a fixed monthly schedule, I've developed a different approach that works exceptionally well for my practice. 

I bill on the same day that I hold my post-review consultation with the attorney. During our meeting, I inform them to expect my billing statement that evening. This immediate billing approach creates a direct connection between the delivered work and the associated costs while the value is fresh in the attorney's mind.

My process includes a 7-day dispute window. If the client hasn't contested any charges within 7 days of receiving the statement, I transfer the appropriate amount from my retainer account into my operating account. This creates a clear, documented process for both dispute resolution and fund management. 

I also make an important distinction between invoices and billing statements. An invoice requires the client to submit payment, while a billing statement simply informs them of charges being deducted from their existing r etainer. This distinction helps clients easily identify whether the document should be forwarded to their financial department for payment or simply retained for their records. Regardless of which document type I send, I always ensure the client is aware of their remaining retainer balance. 

For clients who require a more traditional billing cycle, my schedule includes: 

• Payment terms of net 15 days

• Automatic reminders at 7 days past due

• Late fees applied at 30 days

• Work pause notifications at 45 days

• Final collection notices at 60 days

This predictable structure reduces confusion and provides clear escalation steps when payments are delayed. 

I rarely perform work for which I do not have the money retained. Retainers protect me from nonpayment and allow me to focus on delivering value rather than chasing compensation. This practice has been fundamental to maintaining a stable cash flow and sustainable business. 

Diversify Payment Methods 

Making it easy for clients to pay dramatically improves collection rates. I offer multiple payment options: 

• Check

• ACH/bank transfer

• Credit card

• Online payment portal

While some payment methods incur processing fees, I've found that the cost is significantly outweighed by improved cash flow and reduced collection efforts. Many attorneys appreciate the convenience of immediate electronic payment options. 

Address Non-Payment Proactively 

Despite your best efforts, payment issues may still arise. Having an established process for handling these situations maintains professionalism while protecting your business.

My escalation process includes: 

1. A friendly email reminder at 7 days past due 

2. A phone call to the billing contact at 15 days past due 

3. A formal past due notice at 30 days 

4. Work pause notification to the attorney at 45 days 

5. Final notice with intent to terminate the relationship at 60 days

   
   

This graduated approach maintains the client relationship while clearly communicating the seriousness of timely payment. 

If these steps fail to resolve the issue, you have several formal recourse options, each with its own considerations. 

Small Claims Court 

Filing in small claims court can be effective for smaller amounts, typically under jurisdiction-specific limits (often $5,000-$10,000). While this process is designed to be navigated without an attorney, consider whether the amount owed justifies the time investment. Court filing fees, service costs, and time away from billable work must be weighed against the outstanding amount. 

Civil Litigation 

For larger amounts, formal litigation may be necessary, though this almost always requires retaining your own counsel. The expense of hiring an attorney can sometimes exceed the amount owed, making this option practical only for substantial unpaid balances. Before pursuing this route, obtain a consultation with an attorney to evaluate the cost-benefit analysis. 

Bar Complaints 

Attorneys have ethical obligations regarding business dealings. Non-payment for professional services may constitute unprofessional conduct in some jurisdictions. Filing a complaint with the appropriate bar association can create leverage, though this is a serious step that permanently affects your relationship with that attorney and potentially others in their network. 

Remember that any formal action comes with potential consequences beyond the immediate payment issue. Pursuing an attorney for non-payment, while sometimes necessary, can impact your professional reputation within legal circles. Legal communities are often closely connected, and word travels quickly about payment disputes. 

The most effective approach balances assertiveness with professionalism. Document all communication thoroughly, maintain a respectful tone even in difficult situations, and consider whether the financial recovery justifies potential reputational impacts in your market.

Document Everything 

Throughout any payment dispute, comprehensive documentation becomes your strongest ally. Maintain detailed records of: 

• All communications regarding billing

• Timely submission of invoices

• Payment reminders sent

• Conversations about payment issues

• Any agreements regarding payment plans

This documentation serves two purposes: it strengthens your position if formal collection becomes necessary, and it provides clear evidence if you need to decline future work from problematic clients. 

Conclusion: Financial Infrastructure as Professional Foundation 

The financial systems you establish do more than ensure payment—they position you as a professional business rather than a casual consultant. Attorneys respect clear boundaries and organized processes, which often translate to more consistent work and referrals. 

By implementing these financial infrastructure elements, you create a sustainable practice that allows you to focus on providing exceptional LNC services rather than chasing payments. While these systems require initial setup time, they ultimately save countless hours and reduce financial stress. 

Remember that your expertise as an LNC is valuable, and your financial infrastructure should reflect that value. Professional financial practices attract professional clients who respect your time and compensate you appropriately. 

If you're struggling with the financial aspects of your LNC practice or would like additional guidance on building sustainable business systems, visit my website at www.garveyces.com or contact me directly at matthew.garvey@garveyces.com. I'm passionate about helping fellow LNCs create thriving, financially stable practices.