Shop Talk: Clients Who Don’t Pay Piss Me Off

By Stephen Furnari - October 31, 2013
Shop Talk: Clients Who Don’t Pay Piss Me Off

Law Firm Suites’ founder and corporate attorney, Stephen Furnari, spouts off about deadbeat clients and questions why lawyers do not pursue collections more aggressively.

The number of clients who just don’t pay their legal bills never ceases to amaze me. Frankly, it pisses me off.

You’d think that clients would think twice about stiffing a professional who is in the lawsuit business, but they do not.

It used to happen to my firm more frequently, but over the years I’ve modified our billing practices to eliminate many sources of collection problems.  Yet, despite our best efforts, problems still come up, as it did last month.

Should attorneys pursue collections against their clients who do not pay?

Every effort should be made by the lawyer to not get into a situation where the client refuses to pay their bill. However, sometimes best practices are followed, the amounts invoiced were agreed to and are fair. In those cases, lawyers should aggressively pursue collections for non-payment.

My client blows up a deal.

I was representing a client who was planning to invest several hundred thousand dollars in a start up company.  He retained my firm to review the offering materials and the issuer’s LLC operating agreement.

Long story short, we did some of the work on a fixed fee basis that was paid up front.  We did the remainder of the work on an hourly basis, sending periodic invoices that were paid by the client in a timely fashion.

There was a flurry of legal activity as we got close to closing the deal, which is common in any corporate finance transaction. This time represented the balance of the client’s bill.

After months of difficult negotiations, the company had acquiesced to nearly all of the client’s requirements. Then it happened. At the 11th hour and seemingly out of nowhere, our client decided to “dial back” his investment by 50%.

The company went berserk, and who could blame them? They had run up their own substantial legal bill negotiating with the client in good faith. The negotiated terms that were palatable to management at the full investment were abhorrent at half that amount. My guy got greedy and took things too far.

Not surprisingly, the deal blew up.

The client refuses to pay.

I promptly sent a final bill to the client, but at that point knew collecting the balance of the fee was going to be an uphill battle.

The next day I received a voicemail from the client. He felt that I should dial back my bill by 50%.  He advised me that he wanted the bill to be where he, in his mind, thought it would be at the beginning of the project.

I got indignant.

Fuck you, I thought.

You signed an engagement agreement that specifically listed our economic arrangement.  You paid other hourly-rate invoices. You had the opportunity to negotiate a fixed fee deal for future services at any time before asking my firm to render them (it says so in the engagement agreement) and did not. You asked us to negotiate this deal and produce contracts on your behalf, and to do so promptly each time the deal heated up. But, I should take a 50% haircut? Yeah, right.

And if you suggested that we work for half our hourly rates before asking us to perform these services, we would have gladly returned your file and referred you to a less experienced, but more budget friendly attorney.

My time is valuable, and I have other projects that I can work on. But here we are.

As attorneys, the primary thing we have to sell is our time. The time that I spent on this client’s matter is now gone forever. The deal is dead, and I’m left with an outstanding bill without much leverage to collect.

Time spent on a client matter that is not paid for is gone forever #attorneybilling Click To Tweet

Traditional recommendations about collections don’t apply.

Of course, I can hear the legal billing pundits: “you should have had a retainer”; or “don’t get too far ahead of clients with your billing”. But in a corporate practice, it’s not so easy to require that an advance retainer be maintained throughout the course of a deal. You just won’t get the work.

This is particularly so when the client is referred by another client of the firm with a long-standing payment history, as was the case here.

And with transactional work, it’s possible to get ahead of your client, in terms of billing, in just a few days. But usually the deal closes, everyone is happy, and checks get written to the professionals.

But when a deal blows up, like it did here, collecting can be a challenge.

A reasonable offer is made…and rejected.

Because I’m a reasonable guy, I offered the client a 10% discount provided the bill was paid within the week; a generous offer in light of the circumstances.  We typically only offer this discount to clients who do repeat business with the firm and have demonstrated a reliable payment history. This was a one-off deal and we did not expect this client to do any repeat business with the firm.

When the deadline passed without receiving payment (or any other contact from the client) I took a scorched earth tack and started collection proceedings immediately.

Why lawyers are afraid to pursue deadbeat clients more aggressively.

Like many lawyers, I used to think twice about suing clients for unpaid bills. Clearly, you won’t be doing future business with that client, and it may jeopardize your relationship with the original referral source.

Plus, the deadbeat client will surely tell all their friends about what an asshole they think you are.

You’ll have to disclose the collection proceeding on your next PLI renewal form, and lawyers know that a common client defense to a collection proceeding is a spiteful malpractice counterclaim or bar complaint.

For many lawyers, they would rather walk away from the money then risk the fallout.

Not me.

There is a certain contingency of clients who seem to have figured out that lawyers won’t be aggressive about collections. I am sick of these clients.

Some clients know lawyers won’t be aggressive about collections. I’m sick of these clients Click To Tweet

Will the bank “dial back” my mortgage?

Can you imagine telling your firm’s landlord that, despite the lease that you negotiated, they should dial back the rent 50%, and then just not pay when you don’t get the answer you want? Or the bank that holds the mortgage to your home? Or Verizon Wireless, who will call you relentlessly when they don’t get their check on the exact billing due date?

These companies don’t put up with deadbeats, why do lawyers??

Why don’t lawyers pursue clients for unpaid bills more aggressively?

Many lawyers walk away from unpaid invoices because they fear being sued by the client for malpractice or having baseless ethics complaints filed against them, or for fear of angering the person who referred the business in the first place.  

The reasons lawyers don’t go after deadbeat clients are baseless.

The reality is, all the reasons why lawyers choose not to sue clients for unpaid invoices are generally non-events:

  • You shouldn’t do business with clients who do not respect the value of your services;
  • You shouldn’t do business with referral sources who may get angry when you sue their deadbeat friends.  The referral sources should be embarrassed that their friends don’t pay their bills;
  • When it comes to fee disputes, the ethics folks and courts are well aware of clients’ baseless counterclaims and complaints; and
  • Your PLI premium is going to go up a ridiculous amount next year regardless.

I choose to risk it.

And I wish more attorneys would do the same, because it just makes it harder for the rest of us to collect our fees.

Sometimes #solos have to go scorched earth on clients to collect #attorneycollections Click To Tweet

Sometimes a client just can’t pay.  I get that. And in those cases, I will work with a client to reach an amicable resolution to settle their account.

There have been times when I have messed up, not on a malpractice level, but by not setting realistic expectations with a client about their bill.  You can’t tell a client that something will cost $5,000, bill them $20,000, and not expect the client to be unhappy about it. In these cases, you have an obligation to work things out.

But when you have done a good job, and a client has the ability to pay and just won’t, I have no mercy.

Thankfully, I’ve only had to go scorched earth a few times to collect fees. More often than not, these matters don’t go further than submitting the Part 137 arbitration notice.

Only once did I actually have to buy an index number to file a complaint. But, if you go down this road, you have to be prepared to take your claim to a judge, which I am every time.

So far with this client, I’ve sent my Part 137 notice, which got the client’s attention.  The complaint is drafted and is ready to be served once the 30-day notice period runs.

Hopefully this ends amicably, and I will keep you posted on how it shakes out.

Update: About three weeks after publishing this post, I reached a resolution with the client on the bill. I wasn’t happy about the amount paid, neither was the client, and neither of us wasted any more time on this.

I’ve had conversations with other attorneys in Law Firm Suites’ shared law office space who are equally as annoyed at having to deal with deadbeat clients.

What about you?

Why do you think deadbeat clients are so prevalent? And why are lawyers so reluctant to deal with their own collection issues as aggressively as they would for a client?

I’d love to know your thoughts. Please leave a comment below.

Updated for 2021


7 Deadly Mistakes That Prevent Law Practice Success

About Stephen Furnari

Stephen Furnari is a self-employed corporate attorney and the founder of Law Firm Suites, the operator of coworking spaces for law firms. Through Law Firm Suites, Furnari has helped hundreds of attorneys launch and grow successful law practices. He is the author of several eBooks, including “7 Deadly Mistakes that Prevent Law Practice Success” and “An Insider’s Guide to Renting the Perfect Law Office”. Stephen has been featured in the ABA Journal, Entrepreneur, New York Daily News and Crain’s New York. Connect with Stephen on Twitter (@stephenfurnari).

49 thoughts on “Shop Talk: Clients Who Don’t Pay Piss Me Off

  1. Joe Costello
    on said:

    Stephen: Your article is no different that we are experiencing in my firm. I used to take the “I am not going to sue because I don’t want a baseless grievance, counterclaim (which would then require me to notify my carrier, thus risking my rates going up), so I used to just drop it. Over the years, I’ve learned to 1. Take a larger retainer than usual. If the client says “I cannot afford that’ I will work out a payment plan with the understanding that until I receive the full retainer, work will not begin on the file. I also bill every thirty days, so when I look at the billing records, before mailing, I notify them and say “Hey, you retainer has reached our agreed upon threshold level, please remit or else we will cease work on the file”. I have this clause in EVERY retainer I sign. Which leads to this point. My father is an old time attorney that worked on files on a “handshake”. When I joined the firm, I had that mentality until I got burned early in my career. We then sat down and said “from now on, NO FILE gets opened unless we have money, AND a signed retainer. Its worked. Now, I will not even open a file until both requirements are met. This has worked well for the firm and increases our cash flow on a monthly basis because once we do the work, we can draw against the retainer. Once the retainer reaches that threshold level, I send out a letter telling the client to replenish or risk work being stopped on the file, or moving to be relieved. Another point is that at the end of the case, if funds are left over, clients like to receive that refund. Obviously, we do not keep what we don’t use.

    Just my two cents.

  2. Stephen Furnari
    on said:

    Law Firm Suites client and commercial litigator, Frank Monteleone, mentions this article in his recent blog post about attorney collections.

    In his article, Frank recommends, among other things, that attorneys maintain an advance retainer and that attorneys not do work with clients who won’t. His approaches this topic from a litigator’s perspective and me from a transactional perspective.

    In my experience, transactional clients will not agree to maintain an advance retainer throughout the course of an engagement (i.e., one that replenishes monthly).

    It makes me wonder if litigators in all practice areas have a better ability to demand and receive advance retainers on account of market factors? Is the increased risk that litigators face with a non-paying client factored into their ability to demand and receive an ongoing retainer?

    Tomorrow I will be posting an article that discusses this further.

  3. Stephen Furnari
    on said:

    Law Firm Suites client and transactional attorney, Jason Huf, also mentioned this article in his recent blog post about “part-time in house counsel” arrangements as an alternative to the traditional hourly billing model. With this arrangement, a clients pays an outside law firm a proscribed monthly amount to handle certain predefined legal services.

    As Jason points out, law firms benefit from income stability. Plus, clients benefit because, if they are prepaying for services, they will more than likely to use them (as opposed to thinking twice about an hourly charge and risking it). By interacting with an attorney often, over time the client dramatically reduces litigation risk, which yields substantial cost savings.

    A number of my transactional practice colleagues have had success with these types of arrangements, particularly in regulatory practice areas (securities, broker-dealer, healthcare). Our firm has been less successful at selling these arrangements, but have instead done better with fixed fee billing arrangements.

    I would be curious to learn more from Jason about the best time in the client relationship to introduce the monthly retainer concept, and the type of client who is most likely to agree to take a risk on it.

    • I halve tried several times to work with clients on a fixed monthly fee basis.
      Making a parallel with the restaurant industry feels like a simple way to illustrate my findings i.e. this billing system tends to entice clients to adopt the attitude many people have when they choose the “buffet” option in a restaurant ( you pay fix amount allowing you to take as many helpings as you like ) : try to beat the system by eating as much as you can !
      In order to discourage this attitude I tilted the concept as follows: I agree with the client on the fixed amount for the first month. Nevertheless I keep a timesheet used, In accordance with a factor pre determined with the client, to calculate the fix amount of the following month (it can also be agreed to do this on a two months or three months rolling basis). Hence, if the client ” eats a lot this month” next month’s fixed fee will be higher and vice versa !

  4. Francisco A. Espinosa
    on said:

    Dear colleagues, this issue Is a worldwide problem. You should see how’s is it in my country now with this big crisis and so many companies filing bankrupcy. Also the discussions with the clients that Layers work almost for free as a public service, mostly genereal practice, as the majority of Lawyers in Spain.
    Even if you have a retainer fee is a problem to receive the payment for your services, and becomes worse if the client oppose to your invoice, then starts a proceess through the local Bar association, where an special commission has to reveiew the invoice and declares, after several months of delay, and declare if is correct or has to be reduced.

  5. I went solo after many years at large firms. I just explain to my clients that as a solo practitioner I cannot carry large receivables balances. I ask for small retainers as a sign that the client is committed to the relationship and bill frequently. Sometimes twice a month. I am not afraid to talk very candidly about fees with clients ahead of time and letting them know right away if the budget I gave them will not be kept and why. I keep detailed time sheets which I send with the bills. When people understand what you are charging for they are more likely to pay. If I get into a dispute (only happened once) I just tell them to pay what they think the work is worth and stop working for them. The main reason I went solo is to stop dealing with jerks, lawyers or clients.

    • I have lived the same problem in Switzerland .
      Now for some strange reason I tend to attract rather large clients i.e. In average my typical client Absorbs 80% of my time during one year.
      As a result I usually work very closely with the client and thus create strong bonds with him. Usually this type of client intends to pay of client intends to pay well during the first month and then, as he realizes that he has some leverage on you , he tends to negotiate it in order to drive prices down: after all the client still ends up paying rather steep fees.
      The other 20% of my time is usually taken by much smaller clients…. Who most of the time pay only partially my fees … When I’m lucky.
      Finally I realized that the said small clients we’re probably aware that going to justice to collect USD 2’000.- Worth of fees costed more to the attorney then the said fees!
      Irritated by this and realizing that not only I was not making any money on these Clients but that on top of it led me to neglect my large clients; I decided since January 2015 to no longer offer my services to this category of clients!!

  6. Jamshid
    on said:

    I am not an attorney. I am a client who hired a tax attorney to represent me in an IRS audit case. I visited three tax attorneys and took advantage of the intial free consultation to decide which attorney could best represent me. One of the attorneys, attorney X, seemed to be confident that my case could be resolved somewhere between my expectations and the IRS’s expectations, and it would cost me about $3000 in attorney fees. After carefully considering everything, I decided to choose attorney X to represent me.

    An so the battle with the IRS began and time passed. I paid attorney X all if his bills on time. after paying the first $3000, he kept insisting to sign me on a “contingency” basis, where he gets one third of the money I would save with the IRS. That would have been about $20,000. I asked myself why should I do that, when the job can be done with a few thousand dollars in hourly fees as originally estimated? Perhaps even a few thousand more.

    Then I paid him another several thousands, then another several thousands, for a total of $10,000. This is not twice, but more than three times above the the original estimate. His final bill was for another $6000, for a grand-total of $16,000.

    Now I ask you attorneys, why should I not be a deadbeat client? Attorney X robbed me of the opportunity to work with the other attorneys I consulted with by giving me a false estimate and a false sense of security, either due to his ineptness as an attorney, or due to his lack of ethics. I refused to pay his additional invoices. Now he is threatening to sue me for the remainder of his fees.

    My point here is that you should also consider the client’s side of the story before calling them deadbeats.

    • Hi Jamshid. Sorry to hear about your bad experience with Attorney X. Unlike many of my attorney peers, I am both a provider of legal services, and a frequent consumer of legal services through my company Law Firm Suites, so I definitely understand this issue from the client’s perspective. I, too, have engaged attorneys who have tried to change the bargained for financial arrangement (to their advantage) mid-representation. It’s definitely frustrating. In the article, I’m certainly not suggesting that every client is a deadbeat. In fact, there are times where clients have legitimate reasons for asking for a reduction in their bill. More often than not, something is worked out that both parties can live with. What I was referring to in the article are situations where there is a negotiated rate, the client asks for additional work outside the scope of the originally anticipated project and where the additional fees related to the expanded scope of representation are agreed to…and the client just doesn’t honor their end of the bargain. Very different from your situation – which sounds like to me that your attorney underestimated the amount of work to resolve your case, and didn’t adequately communicate that to you. In your case, California has a mandatory attorney client fee dispute arbitration program that would be the best way to resolve your problem with Attorney X, to the extent you can’t work something out amicably on your own. See: http://www.calbar.ca.gov/Attorneys/MemberServices/FeeArbitration.aspx

    • I agree with Stephen and Joe. I have a quick-turnover, high-volume practice, and routinely send out billing texts and emails, usually with a final email or text that states that the client’s lack of response or of payment constitutes an automatic assumption that the client has hired alternate counsel, or decided to go the pro se route. If they’re ever going to pay, I hear from them at the 11th hour, or never again. I’ve had enough 11th hour feedback to decide that it’s worth that last, extra communication.

      • but what if your attorney really does a bad job! Mine didn’t show up to a mediation. Cancelled with everybody but me–his CLIENT. I paid him 50,000 to date and he keeps sending me a 57,000 balance—-it goes up 2,000 a month. Plus I’m stuck with having to hire someone else. There is no way i would go further with him. just a divorce. He had so many clients sometimes he would talk to me about something else and I think he had his clients confused. Like a not funny joke! thanks ! I love to vent .

        • In this case, the appropriate thing to do is to have a conversation with your attorney and see what you can both work out. Most attorneys, including those at my firm, are very open to remedying legitimate complaints from clients about the services we render, but not necessarily the outcome of a case (which is often outside our control). Just because you are unhappy is not grounds to not pay. If your attorney sues you, he will likely get a judgment for all the hours worked on your behalf, plus interest and costs. If you have legitimate concerns that a conversation with the attorney does not remedy, you can file a grievance with your state bar, and you can dispute the charges in arbitration (or court). Good luck with your case.

    • Hi agree with you 100%. My situation involved a family lawyer who racked up my bill to $120,000. My file was not complicated, simple property split, but high conflict over our children. This went on almost 5 years. I am a middle class working woman who couldn’t believe what I was dealing with. Needless to say, after much stress and ineptness with my lawyer, my New lawyer closed my deal for $10,000. The basics were not even covered according to him and he didn’t feel they deserted $20,000. Needless to say, I walked away. Not because I am a deadbeat client, but because they tried to screw me. They saw a pot of equity money and racked up their bill when they knew it was running out. I don’t think so.

  7. Jamshid
    on said:

    Hi Stephen, I am a software engineer contactor and what you were referring to in you article regarding a client expanding the original scope , but not paying up for the additional work done, is something I completly understand, as I have experienced it many times. And I do agree with your assessments in the article in that regard.

    By the way, thank you very much for the link. I was not aware of the California’s mandatory attorney/client arbitration program. I will look into it.

  8. Attorney in Miami, Florida
    on said:

    Stephen, I am a family law practitioner and work in a jurisdiction infamous for having dead beat clients, who do not pay. I truly feel your pain, and wonder sometimes why clients prefer to spend their money on a weekend in the Keys than pay the money they owe you (Mind you they tell you to your face they are leaving on an expensive trip and cant afford to pay you as a result). They know they can do it, and they are familiar with how to make it happen. Whether its writing a nasty review or filing a bar complaint, they will stop at nothing to dodge their obligations. I work extremely hard for my money and from the clients perspective, they just assume I am well off and wont be impacted by their stiffing me. They all feel entitled to free legal work because it’s something they cant see and feel like a brand new iphone or an expensive meal. I don’t really believe in letting them get away with it. I go after every single one of them. I know its risky, but I figure if the bar wants to come after me for asserting my rights and wants to give weight to a baseless complaint, than I don’t want to practice anymore. They can keep the damn license and I will go do something more meaningful with my life. That hasn’t happened yet, and hopefully never will. Moral of the story, don’t be afraid to go after them. It’s your money and you have nothing to fear.

  9. I work for a company that is a consumer of legal services. We have specific guidelines that provide what items can and cannot be billed. When a law firm agrees to provide services, it agrees to the guidelines. What I have seen is that certain law firms try to milk my employer by billing several hours for a simple task, having multiple lawyers perform the exact same task (i.e. often many lawyers all reviewing the same materials), overbilling for very brief email communications, billing for expressly prohibited items, etc. I have worked in private practice and seen the bills from the firms that bill appropriately, so I know what good billing practices look like. As to firms that bill appropriately, what you stated above makes sense. The client should pay up. However, I can see the other side of the coin. Sometimes clients may not want to pay because they believe they have been overcharged and sometimes they are actually overcharged for the services provided.

    • Hi Anna:

      I agree with you about over-billing practices. A client should scrutinize and question an invoice in those circumstances. In our firm’s case, there are never multiple attorneys billing on a matter (there are just two of us and we have no billable hour requirements, so no billing to pad), most projects are done on a fixed rate basis with terms agreed to in advance, and when we bill hourly, we are sensitive to not over-bill for quick emails or calls. In this case, the client just felt that he shouldn’t pay. There was no dispute as to individual time entries, just that the end amount was more than he had in mind (whether justifiable or not) and since the deal was dead felt he had some leverage to negotiate a better rate. Not good clients, and we won’t do business with them again.

      –Steve

      • Steve,

        It sounds like you just have an awful client. Best of luck in getting them to pay. In a small firm environment, when you put in a bunch of hours, you simply need to get paid to keep your business going. And yes, the instances I mentioned above often involve large firms which probably have billables requirements.

        -Anna

  10. I think your article is right on. I’m in a situation right now. I did graphic design work for a client. I made him a logo and a website for one of his customers. He lost his customer and refused to pay for the website. He also refuses to pay for the logo which he is using everywhere because he says he could have had somebody else do it for cheaper. What works my nerves the most is he said I should have had him sign a contract. He is hoping I’ll just forget about the bill because he knows I left the state, but I can’t get over it. I have emails and text messages showing he agreed to the prices I proposed. He even praised my work at one point, but then turns around and puts it down once a bill is presented. The worse part is I’m a reservist and I gave him a deal because he is prior service army. He is a disgrace to the uniform!

    My question for you is can I at least blast this story online and at protect others from this horrible lying person? May I have somebody represent me in small claims court (in South Carolina) since I’m no longer in the state? Can I file a small claims court case in the state I reside against him (Texas)?

    Thank you for your time and I support you in collecting every dime from every cheap, lying client that has ever screwed you.

  11. What about the alternative of hiring a collection agency first, before taking the deadbeat to court? Our local bar association recommends one such agency and I have been considering making that call. Any thoughts?

    • Hi Becky. I suppose it’s one in the same really. At the end of the day, the teeth that the collection agency has is suing the client if they don’t pay. You are essentially hiring an agent/law firm to collect on your behalf.

      In NY, we have an obligation to give the client an offer to arbitrate any matter involving a fee dispute before we can sue. If I was to send a matter to collection I would likely offer the Notice first. Besides, that’s often all you have do do. The notice usually gets their attention enough to say you are serious about collection and some kind of settlement ensues shortly thereafter.

  12. What chaps my ass is law firms that stiff their vendors on invoices. We’ve been screwed by about 90% of the law firms that we have done work for. That doesn’t count the “slow pays” of 180+ days. Once we deliver our work product to the firm, they have zero incentive to pay. We’ve had to write off about $250K over the last decade, because what can we do; “Sue them?”. There is no cost to them to delay, delay, delay.

    And they all take umbrage when asked for payment in advance or even at time of delivery.

    Grrr, just had to expect to write off $5k this morning from a firm that I KNOW is not going to pay. We were asked to do a multi-part project for a firm that needed our work for a brief they were filing in support of a multi-million dollar case of theirs. We delivered about half, and asked about payment last week. Crickets. Today I receive an email that says “we were able to produce our brief with what you had sent.”

    A New York firm.

    • Not paying vendors is bad form all around. Let me know if you need a referral to a good collections attorney. We have someone in one of our offices who gladly sues deadbeat customers, including those that are law firms.

  13. Kerith Kentish
    on said:

    Stephen,

    This was a really great article. You have not spared how we truly feel about clients who receive full value and do not pay. I am reading this article near two years later and I can still see the relevance.

    I have been practicing for 3 years now. Family practice on a small island called Anguilla in the Caribbean. I have faced my share of debt collection horrors in the past particularly with clients that can afford to pay. I have focused more of my attention on tightening my Retainer Agreements and ensuring the clients understand what can be expected when the breach the fee arrangement terms: immediate halt on all work.

    I thought a lot recently, and engaged colleagues, on the issue of suing clients for fees. Anguilla is small. 35 square miles. One high school. Therefore, as a matter of reputation many of us here agree that we would not sue a client save for exceptional circumstances. Word spreads fast on a tiny island as you might imagine. When I think about it, there are at least three law firms on island that I know of that have sued, and actively sue, clients for fees. We have our own feelings as attorneys about these firms. So that reputation in a smaller jurisdiction carries greater import than it does for say, New York. I suppose one way to be aggressive about it is to have an arbitration clause on the retainer agreement where confidentiality of the proceedings is preserved.

    We have traditionally adopted passive aggressive ways of dealing with fee disputes with Clients. For instance, we would typically exercise solicitor’s liens over valued property of clients handed over to us during the course of the professional relationship and depending on the value of the item the client usually coughs up the money.

    • Anguilla is one of my favorite places. My wife and I honeymooned there 10 years ago this week! You raise an interesting issue for attorneys practicing in small towns. But ultimately, I think that what you describe is just a microcosm of what I was frustrated about when I wrote the article. What you and your colleagues are afraid of is developing a reputation in your small community for suing clients, which may result in you getting less business. I think this same fear, in some way, underlies the decision by lawyers in bigger communities to not be aggressive about collections. But think about it, if every lawyer was aggressive about collecting unpaid fees, whether they practice in big cities or small communities wouldn’t matter. Lawyers could eliminate this fear. For some reason, the practice has a culture for being soft on collections. Unfortunately, some clients know this and take advantage.

      I really like your idea of “passive-aggressive” collection practices though. I’d like to explore this a little bit more.

  14. I have an attorney who agreed I had valid reason to reopen my case but needed to procure his own documents from court records, for which I paid. Then he made a significant mistake on the pleading from information he pulled directly from court records. I immediately brought it to his attention saying I knew it would kill my case, but hoping he could change it. He instead had me withdraw. After having major red flags that he was not serving my interests with his counsel and not communicating back with me when I was holding him to documentation as to why, and even trying to discredit me in court, I pulled court records and found that he made the changes to the motion to re-open. As I made the discovery just as my case was about to close and it had been needlessly complicated by this mistake and cover-up and there were other issues involving my constitutional rights, I was able to bring this out in court myself to the degree that I was heard and the case has been delayed to resolved procedural questions which may be leading to mistrial. These questions could lead to a consideration of intent to harm on his part as it would have involved his negligence or intent to disfavor me. I have been a deadbeat client in the past 2 months since I discovered the attempt to defraud and suddenly I am being told, prior to reconvening, that he will be filing a lawsuit against me tomorrow–of course knowing that my concerns are now so complicated by his efforts that finding an attorney would be too expensive. Yes, I feel defrauded, but it seems like I am actually a hostage of the system.

    • Christy, my article covers a situation where no mistakes were made on the case, and the client refused to pay…just because. In your case, if legitimate errors were made and this resulted in financial damage, you can speak to a legal malpractice attorney in your jurisdiction (lawyers who sue lawyers who made mistakes) who often take cases on contingency. If in fact that your attorney did something fraudulently, you should file a grievance with the State bar.

  15. I am currently going through a divorce. I read your article and I feel the need to plug-in and say something. There is always two side to a dime. My current lawyer did total malpractice in my hearing for attorney fees on my ex-wife’s behalf. She was late to court. I had to step out the court room and call her. Then in the hearing she did not even show may “financial Affidavit” to show that I had no means to pay the amount they were requesting. My ex also already had a means to pay her own court cost which she had been doing up until that hearing. I was also told that the fees I was charged was excessive, according to my new attorney. Now, just so I can get all my documents I have to pay this horrible attorney I had. I am also going to pursue malpractice with the Bar because of her negligence. I wish there was a way to get her to have to pay half the fees I was issued due to her awful example of law practice. So, some clients do feel they have the justified right not to pay an attorney. If you were served spoiled food in a restaurant would you still pay for your meal?

    • Thanks for your comment Robert. I understand clients’ frustrations with counsel in some situations. In my article, the situation with the client was entirely different from yours. It would be like if my client decided to pursue a divorce, and 3/4 of the way through reconciled with his spouse, but only decided to pay 1/4 of the legal fees for the work completed to date, just because he felt like it.

      With respect to your situation, to use your analogies, there are two sides to a dime. Without knowing why your former attorney chose to make the decisions she did, it’s hard to say whether you have a legitimate complaint. For example, since you were out of the courtroom when the fee decision was made, perhaps there was nothing your attorney could do and your ire should be directed at the judge, not your lawyer.

      Certain clients do have an argument when they are served “spoiled food”, and nearly every jurisdiction has an arbitration process to deal with those situations. However, using your “spoiled food” analogy, sometimes legal services are like ordering a dish in a restaurant with ingredients that you never tasted before. Say something with sun dried tomatoes. You may have never eaten sun dried tomatoes, but after you get the dish find that you do not like them. There’s nothing wrong with the food, you just didn’t like one of the ingredients. That is not a situation where you have a right to not pay. Is your situation a case of spoiled food, or an ingredient you didn’t like? Hard to say without hearing from your former attorney.

      But in this regard, some words of caution: first, you do not pursue claims of negligence with the Bar, that’s something you pursue in court. You can file a complaint with the Bar, in which case the attorney could be sanctioned by the Bar. But it’s unlikely that the Bar would give you monetary damages. Finally, you should be very, very careful about suing your attorney or filing a Bar complaint. Speak to a malpractice attorney first and make sure you have a legitimate complaint. If your Bar complaint or negligence claim is found to be frivolous, in some jurisdictions your attorney could have a claim against you, and you can be held liable for the attorney’s damages and their legal fees.

  16. Hi. I higerd a laber attorney he told me that my final bill will probably end up at 5k I signed retainer paid the 5k, 3 months of work wract up a $17,000 bill which was due, I emailed him that I need a few more days to pay because it’s unexpected and a Bill like this will take me out of business, he withrowd council which I completely understood I called him to offer 3k a month in instelmant payments which he refused claiming he will get a judgment egainst me in 30 days and I have a date now for arbitration, now my question is he may win the judgment and I’ll either be able to pay it or not, does he have a moral obligation to work it out with me?

    • Moral obligations are unpersuasive in court or arbitration. This being said, he can’t collect on a judgment if you have no funds to collect from. Try to work out a payment plan at arbitration.

  17. Pingback: Either Way, It’s The Same Horns. My Take Away from a Lawyer’s Rant. | Linguistic World Blog

  18. Thank you Stephen Furnari,
    Totally sympathize as in customer swdev I don’t work with small companies for the same and even worse reasons. Probably some of those the same you experience.
    At this time, we are on the other side of the table. Keep writing $4k checks to the attorney but seeing almost nothing produced. I know its Management 201 to spot a black hole worker; but, thought I’d voice frustration anyways. First $4k produced a review of the contract with some of the review totally invalid to our case. They said they’d worked with this defendant and their contract before. Second $4k resulted in even less. (despite we having met with 3 attorneys before and some of them having reviewed the contract for free and we having written a two page synopsis of the case, which was only partially echoed in their review. Their review did contain some legal insights, to be honest.) Now they are asking for another $4k. Yes, we agreed a settlement letter needed to be produced in our first meeting. As well as some other letters and actions. As far as we can tell, none of this has been performed. The firm would not agree to send status reports. Long story short, this is frustrating because as a hard-working middle class person one wants to hope the firm is doing something; but, no evidence supports this conclusion.
    My point is it appears many firms just put the client on the payola and charge phantom hours. This is EXACTLY what india sys and their peers do in offshore contracting.
    Cheers! Thanks for the blog.

  19. This is my biggest frustration as a solo. I do good work. The same clients who say that I did a great job are the ones who refuse to pay the bill. Often, these clients have received a discount off of my full hourly rate. I often think, why do we lawyers bill like this? Unlike other service-based industries (doctor, dentist, mechanic, home repair, etc.), there is no tangible result and we can’t hold back (the repaired car, for example) the service without getting paid. I also wonder if it crosses the clients’ minds how they would feel if they did good work at their job and at the end of the pay period, the employer said, “Sorry. Not going to pay you today. Not sure if I’m ever going to pay you.” I’m sure the client would not appreciate it, so I don’t know why they think we as lawyers should not be timely paid for our good work on their behalves. If anyone has a good suggestion, I’d love to hear it, because I’ve been practicing for 29 years and a solo for 11 of those years and still face this problem every month.

  20. I have a comment. I had the best lawyer ever who helped me.
    I need to give a little backstory to this.
    Living in the third largest city in Pennsylvania and being married to a police officer with three children isolated from family and friends, an event Occured that prompted me to leave my marriage with my children. To surmise; the ex-husband threatened to kill one of the children who snuck out of the house and called the state police while I was forced to watch him put a gun to his head after he physically assaulted me.
    To add insult to injury State police did nothing; did not even file a report they just had a good laugh with each other in the garage as my children and I remained in the house terrified. Needless to say I fled with my children for three weeks as my best friend who was a therapist had stated that she was going to call OCY because I wasn’t protecting my children associated with the twenty-year abuse I had sustained . I was not going to choose this sick relationship over my children any longer.
    That being said I interviewed many attorneys who gave me excuses as to why they couldn’t help me. Ultimately I was told by one that there weren’t many that were willing to take on a police divorce case. The woman I did find was absolutely amazing highly expensive, but amazing. I was so scared of everything she would talk to me on the phone she would tell me that I could and I didn’t need to be afraid anymore. We never filed a PFA because doing so would have taken his ability to work as a police officer away. I should have taken her suggestions regarding psychological evaluations for custody but I was still so terrified at the time that I feel like I had to appease him so I agreed to a shared custody. She did everything regarding the pension. I honestly believe it wasn’t for her I wouldn’t be here today .
    Unfortunately my ex-husband since quit his police job has been engaging in drug abuse emotionally victimizes my children and has not paid child support in five months. I owe this amazing woman $1700 and I feel so guilty because she gave me my life back but I have a hard time feeding my three kids.
    To make matters worse, I called her because I need her again as things have become very dangerous but she will not see me until I pay the 1700+ another thousand dollar retainer. I feel So guilty about not being able to pay. I know I will sometime be able to, hopefully when the pos has to purge his arrears on this next hearing on 8/23 that he claims if he has to go to jail he will take on the swat team and I will have to explain to the kids why “their daddy is dead.”
    I also need to mention this ex officer killed a woman on duty, allowed his gf to beat my daughter up so bad that she sat in Erie county prison for two days as well as other hideous acts. That being said, his threats are credible but I have no one to report it to. (The thin blue line)

    Not all of us are deadbeats. I’m so grateful for her. I just wish in extreme cases some leeway could be given. I need her. I need special relief. I need her fearlessness. I need her to help me keep my kids safe, I just don’t have the cash.
    Please, all of you don’t forget that you have planted seeds in people’s lives that can help them forever, some of us just struggle with day to day expenses to survive. Even with a masters degree I have nothing. That’s ok. Because of her I’m stronger, a better mom and am awakened to the insidious nature of abuse behind the blue line.
    Thanks for listening

  21. And this is why I don’t have my own law firm anymore!! Drove me nuts!!! Bad checks, cancelled checks, no payment, calls after calls . . .

  22. Every divorce class is an extreme case. You’re asking your lawyer…not to be your volunteer, no. You are asking your lawyer to subsidize or pay you because she has overhead costs, liability, and opportunity costs if she helps you. That’s like going to a grocery store and asking the cashier to give you money for the groceries you picked out. One of the reasons legal services are so expensive is that people don’t pay their bills. Lawyers have to recoup their costs on the people they pay. For every legitimate gripe against a lawyers billing there are ten illegitimate ones. People will make excuses to justify their own dishonesty. It’s no wonder civil society is going down the tubes.

  23. During my years of practise, I have come across clients that promise to pay at the end of the matter, but fail to do so. Although a deposit is received from the client, generally it is not sufficient to cover the full costs of litigation. We have therefore adopted the strategy of “no pay, no work”. Clients are required to pay a deposit prior to taking of instructions, and further amounts once the deposit amount has been exhausted. However, keeping up with the “30-day” recon results in substantial administration.

  24. This article, and associated notes & comments, will be “evergreen” for a long time to come, Steve.

    While, in certain respects, that’s an unfortunate fact, thanks again for posting this article. It remains a good starting point for valuable discussion on the subject.

  25. I completely agree. I now aggressively pursue clients for collections, including suing them. Yes, I had one client retaliate with a malpractice claim. The insurance company convinced me to settle for cheap on pain of losing my policy. One client used litigation tactics to waste a year and get a discount. The rest pay pretty quickly unless they don’t have the means. And each of those experiences made actually be more aggressive because it hurts everyone for me to allow people to abuse their legal services providers that way. I’m sick of deadbeat clients.

  26. What does not make sense to me is that the client must be given the right to arbitrate a “fee dispute” even when they do not dispute the fee. In some cases, the client agrees that they owe the firm the money for their work on the case but, for one reason or another, cannot pay it. Allowing them the option to arbitrate a “fee dispute” welcomes them to actually dispute a fee they never disputed during the litigation and puts the attorney on the defensive having to justify their fees to an arbitration panel.

  27. I’d like to weigh in on this!
    I was on the client’s side.
    Both my husband and I have a situation where the defendant had damaged our property to the point that his insurance company stepped in. We had no attorney involved when we finally had a settlement from the insurance company for 88K. We reached out to our attorney, (mind you, the attorney we reached out to is a family member) to review the settlement before signing. The attorney/family member told us not to sign the settlement from the insurance company because the defendant wasn’t taking any responsibility of the actions that occurred. The x attorney/family said we will file for a list of complaints from damaged property, loss of value of property and recovery of attorney fees and told us they will pay.
    At the time we trusted our attorney/family member and gave him a retainer of 35k and signed an hourly contract with him. We received a statement from him on a monthly bases within 3 month the 35k was depleted. We spoke with the x Attorney/family member telling him we do not have any more money to invest and would take the original offer from the insurance company, he told us the offer from the insurance company is no longer on the table and not to worry about the billing. The following month we received a bill with new charges of 78k for one month. We immediately contacted his office regarding the charges, again telling us not to worry about the charges but if we can agree on the small monthly fee of 1,500, we agreed verbally, but ask if we should sign a new agreement and he said it wasn’t necessary. Almost a year later our first mediation comes. Mediator immediately told us we cannot recoup our attorney fees in the state of California, at that time the defendant counter an offer of 30k to settle. Our attorney/family member told us no on the offer. We asked our attorney about the attorney fees and he told us we are now responsible to pay it. We told him we don’t have the money then he preceded to tell us to refinance our house, which we can’t because both my husband and I are retired and have a fixed income. We at this time cried for days and now are really worried about the unpaid balance. We did reach out to the state bar that assigned a case attorney. Their advice was to finish us the case with our attorney because the case was so far in that no attorney would take it and it would cost more and with a court date in the forecast. 3 years later with a settlement of only 35k and other obligation that the defendant had to uphold we signed with the advice from the X attorney. Now, we are out of money. We are now in a worse position. The defendant breaching his contract but we can’t afford to pursue the breach of contract for obvious reasons. We are now getting threatening letters from the x attorney/family member stating we owe him an unpaid balance of 270k. X attorney/family member reminded us that these charges are on a family discount at 40%. To date the attorney/family member has received 70k from us. We don’t sleep well at nights.
    Over all we went from a settlement from the insurance company of 88K to 340k of debt. from the x attorney/family member. We are in a worse position now than when we came to him. Mind you he quit on us for questioning his bills. We stopped paying him completely, but dread the worst with the possibility of losing our house.
    So you tell me how this can be completely fair?

  28. I hired an attorney to simply write a letter to the insurance company on his letterhead
    since they had already offered the settlement but a smaller amount. He agreed to $300 and took a retainer in the same amount. He was asked to specifically write a demand letter (one paragraph) and send me a reply from the insurance company.
    The company settled for the amount I asked, which took 2 days, however the attorney started billing me for the calls and correspondence that never took place.
    I placed a complaint about him with the proper authority.
    He then sued me for the amount of the bill which was $700 (after his 50% discount) in the small claims court.
    The judge was his friend and awarded him twice the amount plus the court costs.
    She completely ignored the bills I was showing to her but instead pointed that the contract with him was hourly.
    I completely missed the hourly part on his contract because I only asked him to write a short demand letter on his letterhead and he agreed. Plus I was simply not familiar with the legal contracts and relied on him to help me with a letter.
    Except for the free consultation call all other communications took place via very, very, very short emails. (like ‘yes’, ‘no’)
    He also stated in front of judge that he was suing me because he “got upset” that I placed a complaint against him and apparently that is not considered to be unethical.
    He then promptly issued a subpoena for me to show up in court to bring all financial documents for collections and basically started legal process abuse.
    He could have contacted me and asked me when I would be paying trying to be reasonable and to work things out. Instead, he decided to be malicious.
    I am not a deadbeat. He is just a vindictive, unethical person. Basically the money I paid he wiped out any increase in my settlement. It was better to accept what the insurance company offered. Because all he did was to get himself a paycheck.

  29. During my years of practise, I have come across clients that promise to pay at the end of the matter, but fail to do so. Although a deposit is received from the client, generally it is not sufficient to cover the full costs of litigation. We have therefore adopted the strategy of “no pay, no work”. Clients are required to pay a deposit prior to taking of instructions, and further amounts once the deposit amount has been exhausted.I also learn Something New From Your Post And Next Time I Will Try To On My Financial Method. Thank Again For Sharing Awesome Tips.

  30. Thanks for sharing such an informative blog. The most I enjoy reading is “What Will Happen Next With the Tax Holiday?” Keep sharing such blogs. Best wishes for your upcoming blogs.

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