Involuntary Pro Bono: When Clients Ignore Invoices

Here’s a rule of thumb to keep in the front of your mind during every client interaction:

Clients are scum that will take every opportunity to screw you over.

Clients will walk off with your invoices unpaid, taunting you to come after them. If you do come after them, clients will file unfounded bar complaints that you have to defend. If you sue a client for past-due fees, you’ll draw the ire of the local bar association because you didn’t submit to their fee-dispute mediation program. If you try to retain a client’s file to try and force the payment, they file a bar complaint. At the end of the day, trying to collect from a client who wants to avoid paying you is a nightmare for the lawyer, to the point that many of us look at how much is owed, figure it’s the cost of doing business, and write it off.

By the way, those written off fees?  They don’t count towards your pro bono requirements if you have one.  Ain’t that some shit.

Alright, so let’s start with the basics of this process.  Client comes in.  Client has big-time legal problem. Client wants you to say some magic words and wave your hands, doing a dance and slaughtering a chicken as an offering to He Who Sits On The Bench, and secure a favorable outcome. You quote Client a retainer, you tell Client your fee. Client cuts a check for you. All is good in the world, you get a favorable result, you bill the client the agreed-upon rate, Client is happy, you are paid.

Then we all wake up from the dream world we’re living in and realize that while most people are good, honest folk, people hate paying for services they’ve already received. It’s almost as if once their problems are no longer bearing down on them like the Ignorant Defendant Express, making stops in Peoria, Chicago and Calumet City, clients don’t have any incentive to make sure your bills get paid in a timely and responsible manner. Ain’t that some shit.

Full Disclosure:  As of current, I have approximately $15,000 in outstanding, unpaid invoices that I have spent the past two days trying to collect on.  This is enough for a shitty new car, the downpayment on a nice new truck, or the downpayment on a shitty new house.  I’m currently biased against motherfuckers who aren’t paying their legal fees.

That’s $15,000 that neither my office nor myself can utilize.  I have completely come to accept that the clients will likely never pay that full amount, because at current they have no reason to.  Their legal matters were handled, and they’re no longer under the gun.  The immediate stress has ended, and now we’re on to them slipping back into the behavior that got them in trouble in the first place.

So, what can I do?

Well, there’s no easy solution, not for me nor for any other attorney with an “outstanding balance” ledger.  First, many attorneys are very good at sending out engagement letters per Model Rule 1.5(b) , which is adopted in pretty much every jurisdiction, that requires we communicate our fees to new clients.  Most attorneys even put a little part at the bottom that says “Seen and Agreed To” with a space for countersignature from the client.  The problem is that attorneys, in general, suck at getting these letters back.  It’s happened to me, it’ll happen to you, and while not having a countersigned letter isn’t generally an ethical issue (check with your jurisdictions rules, folks.  Don’t trust a guy on the internet), it can make it hell to collect the fees.

See, the ethics rule is really designed to make sure clients are aware of what you’re going to charge.  Sending a letter satisfies that.  But if a signed letter doesn’t come back to you, it isn’t going to help with collecting the amount, because, get this, your claim for fees is going to be a contract claim first and foremost. Sure, you can always argue they accepted by payment of other invoices or a retainer amount, but it’s a hell of a lot stronger to have a signed document that says the client agrees, isn’t it?  If you think it isn’t let me ask you the question you’ll get asked on a cross-examination:

“You told them to sign if they agreed, right?  They never signed, did they?  You never received a signed copy back, did you?  You never asked for a signed copy, did you?  In fact, you never even verified they received this letter, did you?”

That sucks, but admit it: that’s exactly how you would attack a contract claim, isn’t it?

Plus, it doesn’t help that Comment 9 to Model Rule 1.5 states that in fee disputes, attorneys should avoid bringing a lawsuit and, in some states, may even be barred from doing so.  In my state, fee dispute resolution procedures are optional, in others they are mandatory, but the general rule of thumb is they are preferred over having attorneys sue clients.  In the end, though, a fee dispute resolution process isn’t going to get you paid completely.  Maybe…maybe…it will get you half of what you’re owed.

That’s if your client doesn’t do something like hire the cannibals of lawyers: the legal malpractice attorney.  For example, this guy uses, as one of his Top Ten Tricks Lawyers HATE (clickbait title my own), the following statement:

For lawyers, however, the stakes are much higher. A lawyer’s professional judgment is at issue in every fee dispute case. Failure to collect a large legal fee can endanger the lawyer’s standing in his firm and within the larger legal or client community. Fee collection claims often lead to ethical complaints, and counterclaims for malpractice, fraud, breach of fiduciary duty, or breach of contract. Even if a malpractice claim is weak the lawyer must ordinarily disclose the claim to his partners and malpractice insurer. It is often more palatable for the lawyer and the firm to strike a deal which allows them to collect some of their fee rather than go through the uncertainties of a court or arbitration process.

Seriously.  Go read his site.  It’s essentially saying “make it hard enough and impugn the lawyer’s ethics and credibility, and he’ll either waive or cut his fee.”  This is what we deal with, and the sad thing is…he’s right.  A lot of us would rather write-off a $3,000 fee than face the expenses of a malpractice claim or a bar complaint, even when we know we did nothing wrong.

That’s shitty.  Restaurants hate having reports of health code violations filed against them.  Does that mean I can demand my steak be free or otherwise I’ll report that I saw a rat in the kitchen?

Don’t even get me started on “retaining liens,” where an attorney refuses to hand over the file until the bill is paid.  While they can be legal and ethical, they can also run afoul of Rule 1.16 of the Rules of Professional Conduct, which requires we turn over the file at the end of representation.  It sounds like a good idea to be able to say “pay me or I’m holding onto your file, you deadbeat,” and it’s especially ironic to do so if you’ve helped the client avoid something like, say, a mechanic’s lien.  However, as stated by the Tennessee Supreme Court and the Philadelphia Bar Association:

The Code of Professional Responsibility, however, requires that the lawyer – even one who has been discharged – take reasonable steps to avoid foreseeable prejudice to the rights of his client. If the failure to turn over documents and papers will likely lead to adverse consequences to the client, the attorney retains these papers at his peril. On the other hand, if the attorney turns over the papers to the client or the client’s new lawyer, the retaining lien will be lost. Thus, a lawyer can be, and often is, confronted by the conflict between a legal right to exercise a retaining lien, and the ethical obligations to avoid prejudice to a client.

So more ethical quandries, resulting in retaining liens being rare creatures indeed.

As for “withdrawing,” we can threaten it, but if the matter is before the court we can’t just walk away without court permission.  Granted, the court will normally give us that permission, but it isn’t an end-all be-all, and to be truthful, is mostly used just to “stop the bleeding,” in other words, getting the client to consent in return for a waiver of the balance owed.

At the end of the day, there’s simply no easy answer to how to get paid. Some clients will always be deadbeats. You will lose out on fees. It’s a fact of practicing. Really the only way to avoid it is to get a large enough retainer to make it worthwhile, assess whether or not the client will be able to keep up with billing at the outset, monitor clients and “put down the pen” when they fall too far behind, and stop the bleeding as soon as you can when they start missing payments. Remember, the type of client who will refuse to pay is the same type of person who will eventually need legal help again.

That’s when you insist they pay the past due amount before you handle anything new for them.

Until then, fantasize about doing terrible things to them, and try to collect those hours.