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. Mega-firm DLA Piper sued a former client over a disputed $675,000 in legal fees.
Although most attorney-client relationships are concluded without fee disputes, controversies do periodically occur regarding an attorney's professional fee. The dispute may be between the lawyer and his or her client or it may be between lawyers who have been involved in a case.
Since no two legal cases are identical, the attorney's fee in each case will depend upon a variety of factors, such as the nature of the case, the fee agreement between the attorney and client, and the guidelines set forth in the Rules of Professional Conduct.
The fee suit settled for an undisclosed sum. 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.”
Although the “American Rule” generally prevents parties from recovering their legal fees, there are exceptions. Two of the most common exceptions are attorney-fee statutes and attorney-fee provisions in contracts. Certain federal and state laws allow you to recover attorney fees if you win your lawsuit.
The rules of legal ethics in most states require attorneys to be honest and to be able to do their job at a certain level of competence. If you feel that your legal representative has lied or misled you, or is performing their duties at a level below that of a competent attorney, you may want to file a lawsuit.
How To Avoid Legal Representation ScamsPayment needs to happen quickly. You can't ask questions or get clarification.It's an emergency. Someone may threaten you or your loved ones.Requests for money usually happen over text, email or phone.The person contacting you is not someone you recognize.
If you lose your case, the lawyer does not receive any payment from you. However, whether you win or lose your case, you will have to pay some or all of the court costs and other expenses, which can be quite high.
Attorney misconduct may include: conflict of interest, overbilling, refusing to represent a client for political or professional motives, false or misleading statements, knowingly accepting worthless lawsuits, hiding evidence, abandoning a client, failing to disclose all relevant facts, arguing a position while ...
Perhaps the most common kinds of complaints against lawyers involve delay or neglect. This doesn't mean that occasionally you've had to wait for a phone call to be returned. It means there has been a pattern of the lawyer's failing to respond or to take action over a period of months.
Yes, some lawyers lie, cheat and deceive their clients. But they are the exception, and an embarrassment to most lawyers.
Legal malpractice is a type of negligence in which a lawyer does harm to his or her client. Typically, this concerns lawyers acting in their own interests, lawyers breaching their contract with the client, and, one of the most common cases of legal malpractice, is when lawyers fail to act on time for clients.
If your attorney is not experienced or efficient, they may have missed a deadline or made another mistake and aren't willing to confess their error. There could also be some bad news that is entirely outside of the attorney's control.
A contingency agreement is an arrangement between a plaintiff and a lawyer, stating that the lawyer will represent the plaintiff without money to pay up front. In these situations, the plaintiff pays the lawyer only if the lawyer wins the case.
A lawyer cannot claim the retainer fee until they have completed work and provided an invoice to the client. The retainer is still the possession of the client until used for legitimate expenses as detailed in the retainer agreement. The amount in the trust account will not expire.
If the attorney loses the case, the client is still responsible for legal fees as stipulated in the original retainer contract. Some attorneys may agree to withhold billing until the end of a case, but they will still expect payment regardless of how the case ends.
Often disputes occur because you and your lawyer have a different understanding about what the attorney fees will be in your case. Written fee agreements are strongly encouraged to avoid misunderstandings.
There are four primary forms of attorney's fees -- they are:
Fee arbitration is a relatively fast and simple way of resolving fee disputes. Most fee disputes between lawyers and clients are the result of misunderstandings or a lack of communication. If you have a problem with your lawyer, it is very important to discuss your concerns with your lawyer.
Since rich people can afford to hire any attorney and since poor people have access to free attorneys, a long time ago, our society determined that contingent fee agreements provide a fair and just system in which middle Americans are able to hire competent attorneys to represent their interests in difficult legal matters. Contingent fees insure that all Americans have equal access to our Justice System. Contingent fees are advantageous to people who have a valid case but do not have the funds to hire an attorney. Also, contingent fees are especially beneficial if there is no recovery.
It is unfortunate that many people in need of legal advice are reluctant to hire a lawyer because they believe that legal services are expensive. Actually, most legal fees are reasonable (some may even be small), when compared to the benefits clients receive and the client rights that are protected and preserved in the legal process. Good lawyers want satisfied clients. A major component in client satisfaction is the client's belief that the fee was reasonable. A good attorney will be receptive to your concerns regarding the fees in your case.
Like the tip of an iceberg, a 30-minute consultation or a contract drafted on a client's behalf is the result of much work done by the lawyer or staff when the client was not present.
In addition, hourly rates may be different depending on the legal specialty involved in a case. Hourly rates can vary from $100 per hour to more than $300 per hour.
The judge found that the lawyer lacked real estate expertise but accepted the case anyway.
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.
Lawyers generally can choose how much to charge clients. The vast majority of states simply require an attorney’s rates to be reasonable, with no explicit maximum dollar amount. Many factors affect how an attorney sets his or her rates, such as: 1 The lawyer’s experience or specialization in the area of law 2 The complexity of the case 3 The number of hours the lawyer expects to work on the case 4 The number of additional lawyers or support staff that the lawyer will need to adequately represent the client
A lawyer may charge an hourly rate, work on contingency, or charge a fixed fee.
Under a fixed fee agreement, the client pays a set amount regardless of how many hours the attorney works on the case and regardless of the outcome. This type of agreement is often the most affordable and usually used for standard, simple legal issues, such as expunging a criminal record or drafting a will.
Contingent fees are attorney fees based on results. Generally, the client will not have to pay the lawyer unless the client wins the case. A typical contingency agreement will allow the lawyer to keep one-third of the money damages a client receives upon winning the case. If the lawyer loses the case, the client would not have to pay the lawyer anything. Most states do not allow contingency fee agreements for certain cases, such as criminal cases or divorces.
Many factors affect how an attorney sets his or her rates, such as: The number of additional lawyers or support staff that the lawyer will need to adequately represent the client.
Like many other professionals ranging from auto mechanics to personal trainers, lawyers often will charge an hourly rate for the work they perform. This hourly rate may change depending on the task; for example, a lawyer may charge less for conducting legal research but charge more for interviewing witnesses. Additionally, lawyers charging by the hour may ask their clients for a retainer, where the client pays for a certain number of hours in advance.
Lawyers working on contingency or providing free legal services may still ask for reimbursement for additional costs and expenses, since these charges would otherwise come out of the attorney’s pocket.
Overview of how lawyers' fees typically are tabulated, which types of fees are charged, and common fee agreements for various types of cases (such as criminal, personal injury, etc.).
Some factors that will affect an attorney's rates are the complexity of a particular case, the area of law, the lawyer's experience, and the hours and staff that will be necessary to competently handle the case. An attorney's rates could be negotiable depending on the case. There are also ways for a client to help reduce legal costs.
Overview of legal malpractice claims, which may at times involve a dispute over fees and expenses, with summaries of the various types of disagreements that may prompt you to file suit.
Suggestions for how to get the most out of your attorney by cultivating a positive and efficient working relationship, such as sharing pertinent information and responding to your lawyer quickly.
Pretty much all lawyers will have a client sign a fee agreement at the start of the attorney-client relationship. Such an agreement allows the attorney to lay out how the attorney's fees will be calculated and how the attorney expects the client to pay the fees. Generally, there are three types of attorney fee arrangements: hourly, contingency, ...
There are also ways for a client to help reduce legal costs. Being prepared for your meetings and phone calls with your attorney by organizing all of the information and documents pertinent to your case. In addition, be sure to be efficient in all communications with the attorney since attorneys often charge by the hour.
In addition, be sure to be efficient in all communications with the attorney since attorneys often charge by the hour. Finally, be sure to examine your bills to make sure you're being charged for the work and rate you previously agreed upon. Fee Arrangements.
According to the American Bar Association, an estimated 2/3 of all legal malpractice claims come about as counterclaims to suits for fees. Suddenly, the case is no longer about how much time you spent on the case multiplied by your hourly rate.
If you have not followed the proper protocol, the court denying your application may be the least of your problems. It could also sanction you for your noncompliance, or require you to disgorge the fees you’ve already been paid. Tips for Fee Disputes.
Third, regardless of the merits of a malpractice claim, the fact that you have been sued for malpractice will likely have to be disclosed on your next malpractice insurance application. Guess what effect that could have on your rates?
The best way to avoid the risks inherent in fee disputes is to plan ahead. Always put your fee agreement in writing. Consider placing a provision in your fee agreement that requires any fee dispute to be submitted to binding arbitration. (See our previous post concerning the enforceability of an arbitration clause in a fee agreement.) Clearly communicate your expectations of timely payment to your client. Request that your client deposit funds in your trust account to cover anticipated costs and fees. And request that your client replenish your trust account when the balance gets low. (As a practical matter, an inability to afford a retainer at the outset of the representation may foreshadow an inability to pay down the line.) Bill your services at regular intervals to avoid sticker shock.
In sum, pursuing a former client for unpaid fees could affect your LPL insurance coverage in one of two ways: (1) an exclusion of a counterclaim for malpractice, and (2) an increase in your premium after you report a counterclaim or potential claim for malpractice.
An estimated 40-60% of malpractice claims have their genesis as counterclaims in suits for unpaid fees. The best defense is a good offense, right? Your fee suit can quickly become less about your hours or rates and more about your actions in the underlying case, which your former client and his attorney will place under a microscope and scrutinize. That might not be the full extent, either. A grievance, a negative online review, or an unsavory social-media post isn’t outside the realm of possibilities.
In short, you should wait to bring a claim for unpaid fees until the statute of limitations for any potential counterclaim expires. Even then, though, you should be mindful that you may still be forced to incur costs and fees associated with defending a counterclaim for malpractice. And to add insult to injury, you may be looking at increased premiums for malpractice insurance.
Before you consider suing a former client for unpaid fees, you should review your malpractice insurance policy. As noted, a claim for unpaid fees is frequently met with a counterclaim for malpractice. Some carriers include provisions in LPL policies that exclude or limit coverage if a claim for unpaid fees results in a counterclaim for malpractice. So a claim for unpaid fees not only puts you at risk of being subjected to a counterclaim for malpractice, but also puts you at risk of having to defend a counterclaim for malpractice without the insurance coverage that you paid for.
In other words, you wouldn’t be able to rely on the statute of limitations as a defense, and your former client wouldn’t be able to recover damages in excess of the amount of your claim for unpaid fees.
While the incurrence of costs and fees in defending a counterclaim for malpractice may be enough to deter you, consider another drawback. You’ll have to disclose a malpractice claim to your malpractice carrier, which may increase your premiums for malpractice insurance the following renewal period.