Law Firms Sue for Fees; Can Legal Malpractice Cases be Far Behind?
Today's New York Law Journal reports that attorney collections cases are up, and as many as 7 a week are being filed in New York County. As morning follows night, there will be a commensurate number of legal malpractice counterclaims. Christina Simmons writes:Suing clients for unpaid legal fees could become routine as firms are growing more assertive about collecting overdue bills.
"Shari Klevens, a McKenna Long Aldridge partner in Washington, D.C., and Atlanta who represents malpractice insurers and firms sued for malpractice, said she believes the number of suits against clients is increasing because of the economic environment, where firms are less likely to let go of a large fee.
But she said she doesn't recommend litigation as a first step."As soon as you say 'you didn't pay it,' they say 'well the work isn't good,'" Klevens said.Malpractice claims are brought against firms in 42 percent to 47 percent of cases where the firm has sued for fees, Klevens said. Firms also face the risk of forfeiture or disgorgement if the client claims the legal services didn't meet the appropriate standard, she said.The number of suits against former clients tends to increase at the end of the year when firms try to wrap up their collections, she said.
"Clients who are not paying are identified in the third quarter" and through the fourth, she said.""Suing clients for unpaid legal fees could become routine as firms are growing more assertive about collecting overdue bills."There was a time when a lot of firms would feel it was unseemly to bring an action against a client" regardless of the amount owed, said Martin Wasser, a partner at 75-lawyer Phillips Nizer. "I think that's changed."
"Firms are more aggressive in following up with bills than they've ever been," said Wasser, whose firm is among the many that have filed suit to collect fees from former clients this year.The New York Law Journal reviewed law firm collection suits against former clients filed in the past two months in Manhattan Supreme Court. Each week, between three and seven such suits were filed during the period.Several attorneys said lawsuits are a last resort and that whether to sue a client is decided on a case-by-case basis depending on factors such as the amount owed, the length of the relationship and whether the client can afford to pay.
The fee suits were brought by large and small firms, and boutiques and solo attorneys who have pursued amounts ranging from a few thousand to hundreds of thousands of dollars or more.On one day in September, Epstein Becker & Green filed four complaints against former clients, seeking a collective $390,000. The legal services provided to clients ranged from litigation to loan and corporate advice and general legal work.Epstein Becker's former clients included a T-shirt vendor owing $80,438; a cable company owing $53,335; a produce wholesaler with bills totaling $55,138; and four individuals owing a total $198, 946, according to the complaints.
Epstein Becker also has filed at least three other collection suits this year, those totaling about $176,070, according to court documents."We only file collection actions after very deliberate and careful consideration, and we do not file often. The filing of more than one case on the same day was simply the culmination of a lengthy review process coupled with post-summer scheduling," said Marichelli Hughes, a spokeswoman for Epstein Becker.