I think all service businesses have experienced the problem. We have performed the requested work for our client. But now the client is not paying. This is a frustrating situation. However, quoting the lyrics from the old song by The Main Ingredient, “before you do anything rash, dig this…”:
Statistics indicate that fee disputes account for as many as 25%, if not more, of all legal malpractice claims. As a result, Insurance Company Underwriters take note if a firm has a history of suing its clients for unpaid fees and expenses. The following is a checklist to assist a law firm in evaluating its risk before filing suit for fees.
1. Is the fee agreement in writing?
2. Will there be a dispute over the terms of the fee agreement?
3. Will the billing records make good evidentiary exhibits at trial?
4. Has the client been contacted about the outstanding fees?
1. Is the client generally litigious?
2. Why is the client not paying the fees owed?
3. Will the firm be able to collect any judgment against the client?
4. Is there a risk of adverse publicity to the firm?
1. What results were obtained for the client?
2. Is there any basis for a malpractice claim?
3. Is there any basis for a claim of a conflict of interest?
1. Is an installment agreement feasible?
2. Is there an opportunity to sit down with the client and work out the issue(s)?
3. Is there an opportunity to participate in a Bar sponsored fee dispute program?