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.
Fee Agreement:
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?
Client:
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?
Representation:
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?
Alternatives:
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?