So the Client Didn’t Pay–Now What?
Despite utilizing our best efforts to avoid it, we have all been there at one time or another. You represent a client on an hourly rate matter. Maybe you’ve billed them regularly as to your time, maybe you haven’t and wished you had. Maybe you’ve burned through the retainer, accounted for your time and requested additional funds. Regardless, you feel you have professionally handled the case throughout.
Now the case is set for trial in two weeks and the client either owes you money already, or has just become current on your fees. They take this propitious moment to advise you they have no more funds to pay you. Upon hearing this, you swell with anger. Your first instinct is to draft and file an immediate motion to withdraw from the case. Three expletives later, you realize that you’re too far into the case, and because of the imminent trial setting, the Judge will not let you out barring a personal calamity of life-threatening proportions.
Seeing nothing promising on the horizon, you spend hours preparing for and conducting the trial. The outcome, like so many others, is in the eye of the beholder. Given your client’s history of manifold personal and business shortcomings, their propensity to omit crucial information until the day of trial, and their inability to string three sentences together on the stand, you think it went surprisingly well.
Always the optimist, your client’s initial thought is that both the Judge and the system nefariously conspired to screw them. Based upon the law of diminishing rate of return, they ultimately conclude that it was at least 50% your fault as well. If only you had somehow commanded the presence of those twelve out-of-state witnesses to testify that the opposition was indeed “a bunch of filthy rotten liars.”
You send them a bill detailing your time and the outstanding attorney’s fees due and owing. You leave multiple telephone and e-mail messages to no avail, each one escalating in intensity as to the repercussions should you not hear from the client about immediate payment. You send third and fourth notices. You insert language saying you will “turn the bill over to collections” even though you have absolutely no intention of ever doing so. Your bill remains unpaid. Even though it gnaws on you, you begrudgingly stick it in a file drawer where your “accounts payable” go to die.
After all, although you can’t seem to remember where you learned it, you can’t sue a client for unpaid fees, right? Was that taught in law school? Or did you half hear it while doodling a semi-offensive cartoon in your course materials at the last dreaded ethics seminar? For the first time ever, you scour the Rules of Professional Conduct. There is no direct reference to suing your own client. Rule 4-1.5(f) says “[W]hen a fee dispute arises between a lawyer and client, the lawyer shall conscientiously consider participating in the appropriate fee dispute resolution program…”. Okay. But what if the client won’t “conscientiously” respond to your repeated bills, telephone messages and e-mails?
Isn’t this counter-intuitive? You do run a business don’t you – or a reasonable facsimile thereof? When was the last time any of your creditors allowed you to slide on an unpaid bill? “Never” comes to mind. Why should attorneys’ unpaid bills be treated any differently?
You may or may not be surprised to hear that in my opinion, they shouldn’t be – at least not the vast majority of them. So I humbly submit this simple checklist to determine the advisability of turning a particular unpaid bill over to a collections attorney, for your consideration. There are two broad categories and items attendant to each, as follows:
I. COLLECTION POTENTIAL
- Did I use a fee contract with an expressed hourly rate? If so, does it provide for the imposition of attorney’s fees and costs of collection in the event of the client’s default?
- If not, do I have accurate, complete and comprehensive records accounting for mytime expended and costs advanced?
- Did I send regular billing statements to the client?
- Do I have the client’s personal information?
- Social security number?
- Date of birth?
- Place of Employment?
- Reliable home address?
- Bank account information?
- Other asset information?
II. COUNTERCLAIM POTENTIAL
- Did the client acknowledge the validity of the bill at any time?
- Did the client and I part on bad terms in general?
- Did I represent the client competently as that term is defined under Rule 4-1.1? Did the client claim otherwise – did they express dissatisfaction with the outcome?
- Did the client claim I failed to perform acts within the agreed-upon scope of representation under Rule 4-1.2?
- Did I represent the client diligently and adequately communicate with the client during representation as those terms are defined under Rules 4-1.3 and 4-1.4? Did the client claim otherwise?
- Was the hourly rate and total fee I charged the client reasonable under all the facts and circumstances as referenced in Rule 4-1.5? Did the client claim otherwise?
- Did the client accuse me of any other obvious violations under the Rules of Professional Conduct? Attorney-Client privilege under Rule 4-1.8? Misusing client’s funds under Rule 4-1.15?
If you are unable to provide a satisfactory answer to one or more of these questions, you should probably avoid turning that particular bill over to collections. However, even if this is the case, consider an intermediate step. You can turn the bill over to a collections attorney for the purpose of simply send a demand letter. If you do not receive payment, direct the attorney to close the file and refrain from filing litigation. This way, you are not committed to filing litigation with the possibility that a legal malpractice counterclaim could result.
In conclusion, the vast majority of unpaid bills that attorneys possess are worthy of turning over to collection. You performed a valuable service to your client. You exercised diligence and competence in rendering your services. Your charges were reasonable. The outcome was favorable. Why then is your bill to be treated any different from that of the dog groomer, house-cleaner, lawn service, or cable provider? The answer is, it shouldn’t.
Learn more from Devin Sauer at: email@example.com or (314) 721-5224.