When Clients Don’t Pay Their Lawyers

Red text reading "Always the Last to Know" with blue text "Be Paid" superimposed over the word "know" illustrating article about legal fees.

The crisis has been averted. The lawyer did a great job for his client. The lawyer sent his client the final bill for services rendered. Unfortunately, the client now had other bills to pay and the legal problem the lawyer dealt with was starting to appear very small in the rearview mirror.

The lawyer came to Richard A. KlassYour Court Street Lawyer, to sue the client to collect on the outstanding bill.

Complaint for Legal Fees Filed against Client

The lawyer commenced an action against his client alleging several causes of action in the complaint, including:

Breach of contract: A written retainer agreement with an attorney is an enforceable contract. As held in Jacobson v Sassower, 66 NY2d 991, 993 [1985], “as a matter of public policy, courts pay particular attention to fee arrangements between attorneys and their clients. An attorney has the burden of showing that a fee contract is fair, reasonable, and fully known and understood by the client.”

Assuming that the fee arrangements were fair to the client, the lawyer may establish his prima facie entitlement to judgment as a matter of law against the client on the cause of action alleging breach of contract by submitting evidence of the existence of a contract, the lawyer’s performance under the contract, the client’s breach of the contract, and resulting damages. SeeJoseph W. Ryan, Jr., P.C. v Faibish, 136 AD3d 984 [2d Dept 2016].

Account Stated: Many times, an attorney is able to prove that he sent his client monthly invoices and the client never said one word about fees; then, when the bill comes due, the client ‘wakes up’ and starts objecting to all of the attorney’s charges.

An attorney can make out a prima facie showing of his entitlement to summary judgment on an “account stated” claim by providing documentary evidence of the invoices, and an affidavit stating that he sent the invoices on a monthly basis to defendant, and that defendant received the invoices and failed to object to the invoices until this litigation. SeeGlassman v Weinberg, 154 AD3d 407 [1st Dept 2017].

Quantum Meruit: This Latin phrase basically means that one should be paid the reasonable value of services rendered on behalf of another.

If the terms of a retainer agreement are not established, or if a client discharges an attorney without cause, the attorney may recover only in quantum meruit to the extent that the fair and reasonable value of legal services can be established. SeeSeth Rubenstein, P.C. v Ganea, 41 AD3d 54 [2d Dept 2007]. A cause of action for quantum meruit requires a showing of “a plaintiff’s performance of services in good faith, acceptance of those services by a defendant, an expectation of compensation and proof of the reasonable value of the services provided.” SeeHyman v Schwartz, 127 AD3d 1281, 1282 [3d Dept 2015].

Pre-litigation Considerations

Before an attorney files a lawsuit to recover legal fees, there are a number of considerations as to whether it is worth doing. The commencement of a lawsuit by an attorney against his client ought to be the last resort after an attempt to resolve nonpayment. While not exhaustive, some questions to ask before suing a client may be:

  • Did the attorney achieve a favorable result? While not necessarily a defense, the client in unsuccessful litigation may perceive that the attorney provided no value.
  • Is the client judgment-proof? Will any judgment actually be collectible?
  • Is there a written retainer agreement? It may be required by Uniform Rules of Court Part 1215.
  • Were contemporaneous time records kept?
  • Was the client sent detailed bills at regular intervals?
  • Has the client threatened to sue for legal malpractice? An estimated 40% to 50% of legal malpractice cases emanate from an attorney’s collection case.
  • Is the amount of unpaid fees large enough to justify bringing an action?
  • Is there a requirement for service of a notice of the availability of fee dispute arbitration under Uniform Rules of Court Part 137.
  • Is there the possibility of pursuing a charging lien on the case, or a retaining lien on the file?
  • How long has the clock been ticking on the dispute? The statutes of limitations are three years for the client to sue for legal malpractice and six years for the attorney to sue the client to collect his fees.

– Richard A. Klass, Esq.

Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached at (718) COURT●ST or RichKlass@courtstreetlaw.com with any questions.

Prior results do not guarantee a similar outcome.

© 2020 Richard A. Klass
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R. A. Klass
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