A recent NLJ story, “Sued Over Unpaid Legal Fees, Client Hits Squire Sanders with Malpractice Suit” reports that after suing a client for $1.2 million in unpaid legal fees, Squire Sanders & Dempsey has been hit with a legal malpractice lawsuit and is now running up its own bills by hiring an outside law firm to defend itself.  The case exemplifies why some law firms refuse to file lawsuits against clients for non-payment of fees and why law firms should keep a close eye on outstanding invoices.  The underlying litigation involves a patent case between two competing window screen manufacturers.  After spending millions in fees, the client, Armor Screen ultimately had its patent deemed invalid by the U.S. Patent and Trademark Office.

Several attorneys said they would never allow a client to get so far behind on its legal bills and keep a tight rein on accounts receivable.  Others said they would never sue a client for non-payment of fees in any case.  “Whenever an account falls 30 days past due, I get an e-mail.  Then I will send an e-mail to the client, and if he doesn’t pay we pull the plug.  I also try to screen clients effectively”, said one managing partner, who did want to be identified.  When an unpaid legal bill climbs to a range of $30,000 to $50,000, “alarm bells go off,” said the partner, who called $1.2 million “a very big number.”