Having Problems Getting Paid? Collecting Your Fees Within The Line Of EthicsPresentation Transcript
Having Problems Getting Paid?
Collecting Your Fees
Within The Line Of Ethics
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Business of Law®.
With over four decades of professional
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EdPoll, J.D., M.B.A., CMC
Law Is Both A Business & A Profession
“Law is not a profession at all, but rather a business
services station and repair shop.”
- Adlai E. Stevenson, Senator
Law Is Both Profession & Business
“Law is subject to the same laws of economics as any other
business. Having a great product is not enough.”
Tower Snow, Chairman (2001)
Brobeck, Phleger & Harrison
San Francisco Corporate Law Firm
The Work Cycle
Doing the work
Collecting your billings
Collecting your fee – from the start
Dealing with slow payers
When non-payment becomes serious
• Alternatives tosecure payment
• Suit or arbitration
Collection BeginsAt Intake
• Understand what client wants
• Seek that result for that client
• Want vs. Need
• “Competent” to handle the matter
• Want this client / matter
Written engagement Letter
Do you discusstimely payments with clientsduring
• Estimate future costs and expenses
• Manage client expectations
• Document likely outcomes
• Memorialize course of action client selects
• Makes client part of team
Bills Influence Collections
• Can the client understand the bill?1
• Value provided?2
• Does the bill make the services sound
meaningful and reasonably priced?
• (If billing cycles are relevant) Has the firm
sent the bill when client is likely able to pay?
Do you have a collectionpolicy?
Who Handles Collections?
• Lawyer involvement
• Staff involvement
- Obligation to supervise
• Need for joint plan and
Duringthe course of your representation,how often do you
connectwith your client?
Bills Not Paid Timely
• Did client receive the bill?
• Did client understand what was done and what was billed?
• Does client have any questions or problems with the bill or the
• When will the client pay?
Follow up – “Dial & Smile”
Interest On DelinquentAccounts
• Must disclose possibility of interest fees at outset of
• Some jurisdictions require written client consent to
Generallypermitted but . . .
• See engagement / fee agreement
• Impact on client and matter
• Impact on lawyer-client relationship
Withdrawal When Non-Payment
Alternatives To Non-Payment
• Payment plans
• Revisit when client’s finances improve
Avoid an arrangement that the client will
almost certainly fail to satisfy.
Lien On Client FilesAnd Property
• Can’t withhold client’s file for nonpayment
• Can withhold much or part of a file to obtain payment
• Can withhold only work product
• Can withhold only opinion work product
• May withhold file even if client prejudiced
Reporting Client To Credit Agency
States that reporting is not permitted because the disclosure is
not reasonably necessary to collect the fee.
NYSBAOpinion 684 (1996)
Promissory Note To Secure Payment
• Fair and reasonable
• Terms fully disclosed to client in (understandable) writing
• Advised in writing to seek independent counsel
• Signed agreement documenting informed consent
Complywith Rule 1.8(a)
MandatoryArbitration Clause For Fee Disputes
• Generally permitted under ethical rules
- DC Bar Opinion 218: Arbitration is consistent with Rule
• Generally may not require arbitration of all disputes
between lawyer and client
- Rule 1.8(h) limits when lawyer may make an
agreement prospectively limiting liability
• Check jurisdiction regulations
• Review E & O insurance policy
- Carrier may want / require notice
• Use outside counsel
- Better protection for confidences
Risk Of Cross-Complaints For Legal Malpractice
• Only 10-15% of suits for fees result in cross-complaint
• First loss is best loss
• Need to make sure case is one worth sending to suit
• Peer review of file before suit is filed
• DC Bar Opinion 298: Outright sale not permitted
• Must use alternative means of dispute resolution when
possible under Rule 1.5
• Must retain sufficient control over disclosure of
information to satisfy Rule 1.6
Taking Stock In A Client
• Fee must be reasonable
• Comply with Rule 1.8(a)
• Be mindful of potential conflicts
ABAOpinion00-418permits a lawyerto acquirestock in a
Settlement / Compromise Of Claims
• Agreement should be confirmed in writing
• Release of claims – beware Rule 1.8(h)
• Implications for future billing
What do you do whenyour client doesn’tpay you in
accordancewith your payment agreement?
• First meeting
• Engagement letter
• Internal collection procedure
• Peer review of file
• Arbitration if required
Ed Poll, J.D., M.B.A., CMC
LawBiz Management Co.
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