Let it be said: we don’t work for free. The business of law, like any profession, is based on a simple formula: quality work + results = payment. Sometimes obtaining payment can be the most difficult piece of the equation. When a fee dispute does arise, an attorney may be required to strike a balance between demanding full compensation and maintaining a productive and ongoing relationship with the client.
We’ve previously warned of the risks of engaging in collection proceedings against former clients. However, that lesson in compromise appears to have been lost on a NY attorney who sought to recover an additional $6,000 in legal fees from a husband and wife the attorney represented in a real-estate dispute. When the attorney sued his former clients to collect the unpaid fees, the court took a close look at his invoices for professional services rendered. The result was not what the attorney hoped for.
Last Thursday, a Manhattan civil court judge ruled that the attorney was grossly over-billing the couple. According to the court, the lawyer lacked the requisite knowledge in real-estate to represent the couple, but continued anyway. After several months of work, with few results, the attorney had racked up legal fees in excess of $28,000. The clients paid the attorney $22,000, but refused an additional $6,200. In response, the lawyer fired the clients and filed a civil action. Unfortunately for the attorney, his aggressive collection strategy backfired. Rather than recovering the additional funds, he was ordered to refund his former clients over $21,000 for excessive billing practices.
The takeaways may seem obvious but are worth mentioning: (1) beware of the risks associated with engaging in collection proceedings against former clients and (2) always engage in ethical and reasonable billing practices. As clients become more conscientious of legal costs, professionals should expect that their invoices will be carefully scrutinized. Professionals should be prepared to justify costs, manage expectations, and engage in an open dialogue before and after submitting an invoice so as to avoid any surprises.