Holland & Knight v. Walsam,316 LLC, , which we discussed on Monday December 11, 2023 has three lessons about attorney billings. The first is how electronic research monthly fees to the law firm can be attributed to the client. The second, which we highlight today is how the account stated principle works in favor of the law firm.

“In January 2019, Walsam retained Holland & Knight and its partners Michael
Blumenthal and Stuart Glick to represent it in an indemnification action it commenced against non-party 316 Bowery Realty Corp. The parties executed an Engagement Letter that, among other things, defined the scope of plaintiffs representation (i.e., to “represent Walsam in connection with analysis of documents and pleadings to advise Walsam on prospective strategy in the lawsuit … against 316 Bowery Realty Corp.”) and listed the hourly rates of its partners. (NYSCEF doc. no. 2 at 1-2, Engagement Letter.) In pertinent part, the Letter also provides, “In addition to legal fees, the Firm charges for out-of-pocket costs and expenses incurred in representing Walsam. These costs and expenses include, but are not limited to, filing fees, travel expenses … and charges for the Firm’s access to and use of any electronic research services on Walsam ‘s behalf(emphasis added).” (Id. at 3.) The Engagement Letter continues, “By entering
into this representation agreement, Walsam agrees to timely pay the Firm’s invoices for fees and expenses related to the representation.” (Id.)

In March 2019, Walsam executed an addendum to the Letter that expanded plaintiffs
representation to include acting as special counsel defending a tenant rent overcharge proceeding against it in Supreme Court, New York County. (That action, Peter Arnold et al. v 4-6 Bleecker Street LLC et al., has the NYSCEF Index no. 158541/2013.) By Decision and Order dated October 18, 2019, this Court [Chan, J.] granted the tenants in that action summary judgment and entered a $2,081,539.02judgment against the named defendants, including Walsam. In August 2022, Walsam commenced a malpractice action-Walsam 316, LLC, et al. v Thompson & Knight, et al., the same action with which Walsam seeks to consolidate-against plaintiff, Blumenthal, and Glick. By Decision and Order dated August 2, 2023, the Court [Ramseur, J.] granted plaintiffs motion to dismiss the complaint in its entirety. (NYSCEF index no. 156653/2022, doc. no. 42.)”

“But even were plaintiff not entitled to summary judgment pursuant to CPLR 3211 (a) (1),it is entitled to dismissal of plaintiffs breach of contract counterclaim under the account stated doctrine. “Where an account is rendered showing a balance, the party receiving it must, within a reasonable time, examine it and object, if he disputes its correctness. If he omits to do so, he will be deemed by his silence to have acquiesced, and will be bound by it as an account stated, unless fraud, mistake or other equitable considerations are shown.” (Shaw v Silver, 95 AD3d 416, 416 [1st Dept 2012].) Where a client receives invoices from its law firm seeking payment for professional services rendered, and the client fails to object within a reasonable time, the law firm has an actionable account stated cause of action. (Levisohn, Lerner, Berger & Langsam v
Gottlieb, 309 AD2d 668, 668 [1st Dept 2003].) The same principle applies where the doctrine is invoked by the law firm in defense of a breach of contract claim brought by the client. (Atsco Footwear Holdings, LLC v KBG, LLC, 193 AD3d 493, 494-495 [1st Dept 2021]; An-Jung v Rower, LLC 173 AD3d 488,488 [1st Dept 2019] [holding breach of contract claims should be dismissed in light of defendants’ account stated defense where retainer required objections to be raised within 30 days of receipt of the invoice, plaintiff timely paid the invoices, and did not object to any of them until two months after she received the last one].)

Here, plaintiff sent nine invoices containing charges for electronic research conducted on Walsam’s behalf. (See NYSCEF doc. no. 16, invoices.) Of these nine, four accrued from March through October 2019; one from January 2020; and the final four from April through September 2021 (NYSCEF doc. no. 13 at ,i 4-5, Blumenthal affidavit.) Walsam promptly paid the first five invoices; only the final four remain unpaid. (Id. at ,J5.) The parties do not dispute that the Engagement Letter provides, “If Walsam has questions or concerns about the fees and expenses, please contact us promptly.” Nor does Walsam dispute that it did not object to any of the invoices until March 2023, when it answered and interposed counterclaims, approximately seventeen months after it received the final invoice.4 (See NYSCEF doc. no. 23 at 14; NYSCEF doc. no. 13 at ,J7-8, Blumenthal affidavit.) By submitting copies of its invoices outlining services rendered and billable hours and attesting to Walsam’s failure to object within a reasonable time,
plaintiff has made a prima facie showing of an account stated. (Law Offs of Clifford G.
Kleinbaum v Shurkin, 88 AD3d 659, 660 [2d Dept 2011]”