Your malpractice carrier tells you over and over that suing a client for unpaid fees is almost always a bad idea.
But showing is better than telling. So let’s look at a pair of cautionary lessons from recent headlines.
Churn That Bill, Baby
Mega-firm DLA Piper sued a former client over a disputed $675,000 in legal fees. The firm had assigned a squad of attorneys to the case, all of whom apparently billed with vigor and glee. In the discovery phase of the fee suit, a string of embarrassing intra-firm emails – “churn that bill, baby” and “that bill shall know no limits” – were made public.
The client called it a “sweeping practice of overbilling.” The firm apologized for what it called “an inexcusable effort at humor” but defended its billing standards as entirely appropriate. The fee suit settled for an undisclosed sum.
Anybody Can Practice Real Estate
A New York lawyer sued to collect an additional $6,000 in legal fees from a husband and wife that he had represented in a real-estate dispute.
Unfortunately for the lawyer, the Manhattan judge assigned to the case took a hard look at the invoices for “professional services rendered.” The judge found that the lawyer lacked real estate expertise but accepted the case anyway.
“After several months of work, with few results, the attorney had racked up legal fees in excess of $28,000,” according to Professional Liability Matters. “The clients paid the attorney $22,000, but refused an additional $6,200. In response, the lawyer fired the clients and filed a civil action. [The] aggressive collection strategy backfired. Rather than recovering the additional funds, he was ordered to refund his former clients over $21,000 for excessive billing practices.”
Getting paid is sometimes the hardest part of any case. And no professional should be expected to work for free.
But when fee disputes arise – as they inevitably will – you should carefully weigh the merits of filing a collection action against the risk of being countersued for malpractice.
Sit down and talk with the client instead. Perhaps a bargain can be struck.
And whatever you do, don’t send emails exhorting your colleagues to churn that bill.
Jay Reeves a/k/a The Risk Man is an attorney licensed in North Carolina and South Carolina. Formerly he was Legal Editor at Lawyers Weekly and Risk Manager at Lawyers Mutual. He sometimes sings to himself. Contact firstname.lastname@example.org, phone 919-619-2441.
- Professional Liability Matters http://professionalliabilitymatters.com/2013/07/18/ny-attorneys-attempt-to-recover-legal-fees-backfires/?goback=%2Egde_1780513_member_259077909
- ABA Journal http://www.abajournal.com/news/article/dla_piper_settles_fee-dispute_case_that_brought_churn_that_bill_baby_email_/ and http://www.abajournal.com/news/article/sued_by_dla_piper_for_675k_ex-client_discovers_lighthearted_churn_that_bill/