AEP Ohio issued a $31,000 overbilling correction for my client in Columbus but instead of a check they applied it as a bill credit spread over 6 months. My client says he doesn't have cash to pay my contingency fee right now because he didn't receive cash — just reduced bills going forward. He wants to pay me in installments as the credits appear on his bills. Is that reasonable?
Getting paid when the recovery is a bill credit not a cash refund
This is very common. Most utilities issue credits rather than checks, especially for larger amounts. I handle it two ways depending on the client. Option 1: client pays my full fee upfront since the recovery is verified and the credits will come — this works for clients with cash flow. Option 2: client pays me monthly as the credits appear, but at a slightly higher effective rate to compensate for the delayed payment. Something like 45% on installments versus 40% if paid in full within 30 days. Either way, define this in your engagement agreement before you start.
Yuri's two-option approach is practical. The key principle is that a bill credit has the same economic value as a cash refund — the client is paying less money to the utility, which means more cash stays in their account. Your fee is earned when the recovery is verified, regardless of the form it takes. My engagement agreement says: the auditor's fee is due within 30 days of the utility confirming the recovery, whether issued as a refund, credit, rate adjustment, or billing correction. This removes the form-of-payment objection entirely.
Showed the client Randy's language about credits having the same value as refunds. He agreed to pay 50% of my fee immediately and the other 50% in 3 monthly installments as the credits post. Not perfect but I got the bulk of my fee quickly and maintained the relationship. Updated my agreement with the language about recovery form.