Getting paid is one of the most important — and least glamorous — parts of running a law firm. Solicitors are often excellent at delivering legal services and poor at collecting payment for them. The result is a chronic industry-wide cashflow problem: the Law Society’s Financial Benchmarking Survey shows that the average UK firm takes 55–65 days to collect a paid invoice, with a significant tail of debts stretching to 90 days and beyond.

This guide sets out practical, actionable strategies for reducing debtor days, recovering aged debt, and building a credit control culture that prevents problems accumulating in the first place.

Understanding the Debtor Problem

Where the Money Goes

Unpaid invoices in legal practice fall into three categories:

Slow payers: clients who intend to pay but are in no hurry. They respond to reminders and usually pay within 60–90 days.
Disputed invoices: clients who believe the bill is too high, unclear, or inconsistent with the original estimate. They may not say so openly — they simply don’t pay.
Bad debt: clients who cannot or will not pay. These require formal recovery action or write-off.

The critical insight is that most unpaid invoices start as category 1 or 2 — they become bad debts through delay and neglect. An invoice that is chased at 30 days is recovered in the majority of cases. The same invoice, left uncontacted until 90 days, has a substantially lower recovery probability.

Research by the Chartered Institute of Credit Management shows that the average collection cost rises from £12 per invoice at 30 days to over £50 at 90 days, while recovery rates drop from around 90% to below 60%.

The Law Firm Reluctance Problem

Solicitors are professionally reluctant to chase clients. The fee earner who did the work worries about the relationship. The partner who brings in the client does not want to upset them. The accounts team lacks authority to escalate. The result is a culture of deferral that silently accumulates aged debt.

This is a structural problem that requires structural solutions — a defined credit control process that removes discretion and personal awkwardness from the chase.

Prevention: The Best Debt Recovery Strategy

Rigorous Client Inception

The cheapest debt recovery is the debt you never incur. Before taking on a new client, particularly for high-value matters:

Run a credit check on corporate clients (Companies House at minimum, commercial credit report for significant matters)
Take up references where appropriate
Require a payment on account that meaningfully covers early work
Ensure the client care letter specifies payment terms, billing frequency, and consequences of non-payment

For legal aid work, verify eligibility at the outset. Taking on a client who does not qualify, or who qualifies for a contribution you have not collected, is a structural debt.

Payment on Account

A payment on account (sometimes called a retainer) is the single most effective preventive measure. If a client who will not pay up front is unlikely to pay invoices later. The reverse is also generally true: clients who pay on account promptly are the best payers.

Under the SRA Accounts Rules, money paid on account of costs must be held in client account until earned. As the matter progresses and fees are billed, sums can be transferred to office account against invoices.

For property matters, employment cases, and business litigation, a payment on account covering the first month’s estimated fees is standard. For high-risk clients or large matters, requiring a payment on account covering full estimated fees is reasonable and defensible.

Clear, Prompt, Detailed Invoices

Invoices are disputed most often because:

The client had no idea costs had reached that level
The narrative is so vague the client cannot understand what they are paying for
The invoice arrives months after the work was done

Each of these is within the firm’s control. Update cost estimates throughout the matter. Write narratives that describe the work done and its value. Issue invoices promptly — within 14 days of the billing trigger where possible.

An invoice that surprises a client will be disputed. An invoice that is expected, clearly described, and arrives promptly will usually be paid.

The Credit Control Process

Setting Up the Framework

Every firm needs a defined credit control process with clear escalation points, responsible individuals at each stage, and a management reporting line. The process should not depend on the fee earner — they have a conflict of interest and insufficient time. A dedicated credit controller (in larger firms) or a practice manager with defined authority (in smaller firms) should own the process.

Document the process and train everyone who touches it. Inconsistency — where some partners chase and others do not — undermines the entire system.

A Standard Escalation Schedule

Here is a practical schedule that balances firmness with relationship management:

Day 1 (invoice date): Invoice issued with clear payment terms (e.g. 28 days from this date).

Day 28 (due date): Automated reminder sent if unpaid. Short, friendly, includes invoice reference and payment details.

Day 35 (7 days overdue): Personalised email from the accounts team. Notes the invoice is overdue, invites contact if there is a query.

Day 45 (17 days overdue): Telephone call from the fee earner or accounts team. The objective is to establish whether there is a dispute or a payment timeline.

Day 60 (32 days overdue): Formal letter before action. This is a legal notice, not just a reminder. It should set out the outstanding amount, interest accruing (see below), and a clear deadline (typically 7–14 days) before further action.

Day 75 (47 days overdue): Referral to debt recovery (internal or external). At this point, the debt should be escalated outside the normal credit control process.

Charging Interest

Under the Late Payment of Commercial Debts (Interest) Act 1998, B2B invoices automatically carry a right to claim statutory interest at 8% over the Bank of England base rate from the date payment is due. You must also be entitled to claim reasonable debt recovery costs (fixed sums of £40–£100 depending on debt size, plus reasonable costs beyond that).

In practice, many firms do not enforce interest — they fear damaging the relationship. But including a reference to the Late Payment Act in your engagement letter and on your invoices acts as a significant prompt for commercial clients to pay promptly.

For consumer clients, the position is different — interest charges need to be specifically agreed and disclosed.

Solicitors Act Provisions on Disputed Bills

Where a client disputes an invoice, they have a right under Section 70 of the Solicitors Act 1974 to apply to the court for a detailed assessment of the bill. As of right, this can happen within one month of delivery of the bill.

If a client raises a dispute, take it seriously. Investigate promptly. If the dispute has merit, negotiate a reduction rather than litigating. If it does not, respond clearly and maintain your position. Document everything.

A complaint to the Legal Ombudsman (LeO) does not preclude you from pursuing payment, but LeO may stay proceedings pending their investigation.

Recovering Aged Debt

The Internal Assessment

Before taking recovery action on aged debt, assess each debt:

Recoverability: can the debtor pay? Are they still in business? Are there assets?
Exposure: is there a costs dispute or complaint in the background that could reduce or extinguish the debt?
Relationship value: is this a client with significant ongoing instructions? (But note: ongoing instructions should not be a reason to write off the past debt indefinitely)
Cost of recovery: will the recovery cost more than the debt?

Debts under £500 will often cost more to recover through court than they are worth. Consider a final written offer to settle at a discount before writing off.

Letters Before Action

A properly drafted letter before action (LBA) serves two purposes: it gives the debtor a final opportunity to pay and it satisfies pre-action protocol requirements for court proceedings.

Your LBA should:

State the exact amount claimed, including any interest
Identify the invoice date and number
Refer to any previous correspondence
Set a deadline (14 days is standard)
State clearly what action will follow (issue of county court claim, instructing debt recovery agents, etc.)
Include your payment details

Send it by first-class post AND email and retain proof of delivery.

County Court Proceedings

For debts up to £10,000, the small claims track is usually appropriate. Claims can be issued online through Money Claim Online (MCOL) at gov.uk. The issue fee is a percentage of the claim (currently up to 5% for claims between £300 and £10,000, with a cap of £455 for claims up to £5,000 on the small claims track).

For straightforward undisputed debts, county court proceedings produce a default judgment within approximately four weeks of issue if the debtor does not respond. Enforcement is a separate step — a charging order on property, attachment of earnings, or a third-party debt order are the main options.

External Debt Recovery

Specialist debt recovery solicitors and debt collection agencies can be cost-effective for high volumes of small debts. Their costs are partially recoverable under the Late Payment Act. For law firms with substantial aged debt portfolios, an annual outsourcing arrangement can recover significant sums that would otherwise be written off.

Be mindful of the SRA Accounts Rules: any recovery of client account balances must follow the correct procedure.

Cultural Change: Building a Payment Culture

Set the Tone at Partner Level

Partners who routinely carry aged debt from their best clients set a tone for the whole firm. Managing partners need to make debtor management a partner appraisal metric, not just an accounts department concern.

Monthly debtors meetings — where each partner reviews their aged debt list against targets — create accountability without adversarial dynamics.

Train Fee Earners on Costs Conversations

Many billing disputes arise because fee earners find it uncomfortable to discuss money with clients. A short training session on costs conversations — how to introduce the topic, how to update estimates, how to respond to a client who queries a bill — pays for itself many times over.

Use Technology to Remove Friction

The biggest barrier to prompt payment is often friction in the payment process. Firms that offer online payment links on invoices (through payment providers like Stripe integrated into their practice management system) consistently collect faster than those that require bank transfers. Some firms report a 20–30% reduction in average payment time after implementing online payment.

Automated reminder sequences ensure no invoice is silently forgotten. The accounts team should never have to manually identify overdue invoices — the system should surface them.

Obiter helps eliminate billing friction by ensuring invoices go out promptly and accurately — automatically capturing time as it is recorded, flagging unbilled disbursements before the billing run, and surfacing matters where billing has been delayed. When invoices arrive on time with accurate narratives, clients pay faster and dispute less.

Summary

Effective debt recovery is not about chasing clients aggressively — it is about preventing problems before they arise, acting consistently and promptly when invoices are overdue, and building a firm-wide culture that treats payment as a normal, expected outcome of legal work. The firms that collect fastest are the ones who invoice clearly, remind early, and escalate quickly — long before a 30-day debt becomes a 90-day problem.

Debt Recovery at Law Firms: Getting Paid Faster