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Category: Ethics & Professional Responsibility

A Question for Solo Practitioners: Flat Fee or Hourly Rate?

September 11, 2019

A recent New York Law Journal article by Janet Falk, “Flat Fee or Hourly Rate? A Question Solo Attorney’s Question,” reports on which billing method to choose for solo practitioners.  This article was posted with permission.  The article reads:

Attorneys earn compensation by setting fees that are not excessive, according to the Rules of Professional Conduct. (Rule 1.5 (a)).  A lawyer communicates to the client the basis for the fee and expenses, consistent with the scope of representation, of course.  It is up to the individual attorney to determine the amount, the nature of the relationship and whether the fee is fixed or contingent.

For those solo attorneys who previously worked at firms in private practice, the rates for their services were set by firm management, largely based on seniority and experience.  Now, as a solo practitioner, it is time to calculate the amount of the fee, the basis for service and any payment accommodation.

Attorneys have multiple options for fees: hourly, flat fee, retainer, contingency and blended, to name a few.  Consider whether the activities you perform re-occur to the degree that you can accurately predict the time it takes to complete them.  There will be occasions, unfortunately, when you underestimate the activity required.  In anticipation of that possibility, an attorney may calculate an additional percentage as a cushion; alternatively, the agreement may include a clause to submit an invoice for the additional services and time at the conclusion of the work performed.

One advocate of the flat fee arrangement is Patricia Werschulz.  She notes: “I have about 20 different activities which I routinely perform for clients.  Each has its own price structure” for her patent and trademark services at Werschulz Patent Law.

Zara Watkins, who writes briefs for appeals and substantive motions in state, federal and immigration cases at On Point Expertise, also prefers flat fees.  She estimates the time (one hour per page of the brief) and multiplies it by her usual hourly rate.  “If I have to go over my estimate, I send an invoice at the end of the project.”  Werschulz and Watkins extoll the freedom to focus on the matter at hand and the legal analysis, and not track their time in small segments of an hour.

Other attorneys dislike flat fee agreements.  Craig Wolson, who leads Wolson Litigation Support Group with a practice focused on securities, lending and other finance, says: “Clients almost always want a fixed fee or cap fee arrangement, which I try to avoid if at all possible.”  Instead, he works on an hourly fee basis, billed against a retainer, based on his estimate of the time expected to be devoted to the matter that month.  Wolson finds that clients do not accurately anticipate the scope of work or the length of time it will take.  “Unexpected things often come up during the course of the representation, clients often change their mind as to what they want to do after the project begins, and/or clients often ask for more work to be done than they would if they knew they were paying by the hour.”  In other words, clients may receive additional services under the flat fee arrangement and the attorney may earn less than if the same work were billed on an hourly basis.

Another perspective on the hourly rate is that it may be more reliable, both for billing and in terms of the prevailing legal environment.  Craig Dobson, whose practice is focused on ethics and immigration at Dobson Law, says “I often bill by the hour when I represent lawyers on ethics matters.”  In the past, he charged flat fees for immigration cases, “but I am now considering more hourly billing because of the unpredictability of representing clients during the current administration.”

Even though attorneys may dislike tracking the fractional hour, and corporations are known to complain about it, Andrew Berks says “Larger businesses, businesses with experienced in-house counsel, and large organizations generally prefer hourly billing” for his services at Berks IP Law, which focuses on intellectual property, patents and litigation.  Whether on a flat fee basis or an hourly basis, be prepared to raise your rates as you gather more experience in your solo practice.  After logging more than 10 years, both Berks and Werschulz deemed it appropriate to increase their fees, based on their longevity in patent law.

In addition, consider that your own expenses will increase over time and that the market rate of your competitors will also be rising.  Wolson notes: “If I see that other lawyers with similar backgrounds are charging more, I will raise my rates.”  Such an increase in fees may cause some clients to stop using your services; indeed, Watkins lost a few accounts when she raised her rate.  However, she “was able to replace them with other, higher paying clients and do less work for the same amount of money.”

Nonetheless, attorneys may be flexible when advising a client who has a limited budget, on a case-by-case basis, of course.  For example, investigative counsel Charles-Eric Gordon, of the Law Offices of Charles-Eric Gordon, comments: “If a prospective or existing client consults me on a price-sensitive matter, which I believe will be extremely interesting, I may accept less of a retainer and an additional amount on contingency.  I also try to base my fees somewhat on a sliding scale, when appropriate.”

Patent attorney Werschulz has an alternative solution.  “If a client cannot afford my services, I send them to Volunteer Lawyers for the Arts to apply for pro bono representation.  If they truly can’t pay my fees, VLA can make a determination and I will take the case.”  There are attorneys who indicate a degree of transparency in their fee structure.  Berks has a tabular fee schedule “with a list of various services and costs.  I use this routinely as a starting point when clients request costs in advance.  Some people want to see it, especially foreign counsel.”

Payment of fees is yet another issue.  Perhaps, like Watkins and Werschulz, an attorney will require full payment up front, which is consistent with a flat fee agreement.  Others may offer a payment plan, on a case-by-case basis, of between three and 12 months.  Gordon states: “I always make certain to require a retainer of at least half of what I estimate the final fee and expenses will be.”

In addition to accepting payment via the usual credit card, check and ACH, consider online payment services.  Werschulz receives payments through the credit card and e-check services of LawPay.  She also notes that she accepts wire transfers from international clients and, perhaps once a year, is paid in cash.  Berks finds that using Quickbooks and hiring a bookkeeper to manage the service is efficient.  “I want to make it as easy as possible for clients to pay me. Something nice about Quickbooks is the emails with invoices have a payment link that accepts credit cards and ACH payments.”

All in all, the solo attorney has many choices regarding flat fee, retainer or hourly billing; flexibility and transparency of fees; payment plans and receipt of payments.  Based on years of experience, relationships with clients, the legal environment and the competitive market, the fees and payment plan that a solo attorney sets today will likely evolve over time.

Janet Falk is the head of Falk Communications and Research in New York.  She provides media relations and marketing communications services to law firms and consultants.

Attorney Fee Dispute Litigation in Pelvic Mesh Case

July 3, 2019

A recent Law 360 story by Bill Wichert, “NJ, Texas Firms Unlawfully Pocketed Mesh Funds, Suit Says,” reports that law firms including Nagel Rice LLP and Potts Law Firm improperly pocketed attorney fees and expenses from the settlements of roughly 1,450 pelvic mesh cases in New Jersey state court by using invalid retainer agreements or no agreements at all, according to a proposed class action made available.  The lawsuit, filed in Bergen County Superior Court, says the firms unlawfully retained excessive fee percentages, deducted those fees "off the top" of gross settlement amounts, took expenses out of clients' portions of the recovery, and engaged in invalid fee-sharing.

"The defendants were negligent in that their conduct fell below and breached the applicable standard of care, because they failed to ensure that all the cases were retained, filed, litigated, settled and disbursed in accordance with New Jersey law,” according to the complaint filed by Mazie Slater Katz & Freeman LLC.  The alleged misconduct was "reckless and undertaken with willful and wanton disregard" for the rights of plaintiff Debbie Gore and the proposed class members, the complaint said.

In addition to New Jersey-based Nagel Rice and Texas-based Potts Law Firm, the defendants include Texas-based firms Bailey Cowan Heckaman PLLC, Junell & Associates PLLC, Burnett Law Firm and Houston attorney Annie McAdams.  The complaint, which includes legal malpractice, breach of fiduciary duty and other claims, asserts that the defendants should be ordered to disgorge all attorney fees and expenses from the cases and be limited to collecting attorney fees on a quantum meruit basis.

"On information and belief, defendants performed very little, if any, actual legal services of value on behalf of plaintiff and the proposed class members, thus entitling defendants to little or no recovery in quantum meruit," the complaint said.

Gore, a Texas resident, has demanded that the defendants provide "a full accounting" of the retainer agreements in the cases, the settlements, and the attorney fees and expenses deducted from those settlements.  Superior Court Judge Rachelle Lea Harz ordered the defendants to appear in court on July 11 to show cause why the court should not issue an order requiring them to turn over that information.  Gore entered into an invalid retainer agreement with one or more of the defendants in May 2013 that provided for 40% in attorney fees that would be deducted from the gross settlement amount and for expenses to be taken out of her share of the recovery, the complaint says.

Those provisions ran afoul of a New Jersey rule governing contingent fees, the complaint says.  Under that rule, an attorney can collect a fee of 33.33% of the first $750,000 recovered and then smaller percentages for subsequent amounts, and those fees must be based on the "net sum recovered" after deducting expenses.

The retainer agreement also "failed to disclose that some or all of the defendants were sharing the legal fees, and New Jersey law requires that all attorneys sharing in the legal fees — and the fee-sharing arrangement — be disclosed to and approved by the client in writing," the complaint said.  The agreement "allowed for the sharing of legal fees to attorneys who provided no legal services," the complaint said.

Nagel Rice and Potts — even though they were not "retained to act as legal counsel pursuant to a retainer agreement compliant with New Jersey law" — filed a suit on Gore's behalf in July 2014 as part of multicounty litigation against Johnson & Johnson and C.R. Bard Inc., according to the complaint.  Following settlements in the roughly 1,450 cases filed by Nagel Rice and Potts, the defendants improperly retained attorney fees and expenses and took part in the unlawful fee-sharing, the complaint says.

Dentons Wins Fee Award Despite Litigation Finance Agreement

July 1, 2019

A recent NLJ story by Mike Scarcella, “Dentons Wins $7.4M in Fees, Costs Despite Litigation Finance Agreement,” reports that the global law firm Dentons has won more than $7.4 million in legal fees, expenses and costs for its successful work in a patent suit against the U.S. government, despite having a third-party litigation financing arrangement that Justice Department lawyers said should not have allowed the attorneys to receive any compensation at all. 

Dentons successfully sued the government over claims that certain U.S. combat ships violated patents that belonged to the firm’s client, FastShip LLC.  The law firm, as part of a deal to proceed with the case in the first place, received an initial payment of $600,000 from a Virginia-based entity called IPco. LLC.  FastShip ultimately was awarded $12.36 million in damages.

A Washington-based U.S. Court of Federal Claims judge last week rejected the Justice Department’s argument that FastShip’s legal team, led by Dentons, should be denied attorney fees because of its arrangement with a company that had partially funded the litigation.  Judge Charles Lettow awarded $6.2 million in fees and related expenses, and more than $1.2 million in costs.

Litigation finance arrangements are on the rise, and judges ever more are grappling with novel issues about evidence, legal fees and, more generally, transparency.  In his ruling, Lettow described litigation finance as a “controversial,” and evolving, area of the law.  The Federal Claims court, the judge noted, “has not yet adopted any rules regarding litigation financing agreements.”

Much of the fee litigation in the Federal Claims court, including the Dentons fee petition itself, and the Justice Department’s opposition, remains sealed.  Lettow’s ruling described the general contours of the dispute, and he included various hourly rates of Dentons partners and associates who worked on the case for FastShip.

The two highest billers for FastShip were Mark Hogge in Washington, chairman of Dentons’ legacy patent litigation practice, and Rajesh Noronha, the firm’s senior managing associate in Washington.  Hogge, the attorney of record for FastShip, charged an average rate of $835, and Noronha charged an average rate of $669, Lettow reported.  The firm received an initial payment of $600,000 from the third-party IPCo, which was first registered in 2012.

“Litigation financing agreements help bridge this divide by providing the attorney of record a source of guaranteed fees for their work, while granting the financer a share of the proceeds if the case is successful,” Lettow wrote in his ruling, dated June 27.  “Here, IPCo. acted as that bridge, covering the gap between claim and litigation, allowing FastShip to successfully pursue their infringement case.  Preventing recovery based on such an agreement would be anathema to the underlying purpose of fee-shifting statutes.”

The Justice Department disputed that FastShip was a real party in interest based on the litigation financing agreement between Dentons and IPCo.  The dispute was further complicated by the fact a lawyer for FastShip, Donald Stout of Washington’s Fitch Even Tabin & Flannery, was a “‘joint member and manager’ of IPCo.”  Virginia state corporation records show Stout is the registered agent of the company.

“[E]ven if this court had adopted a local rule mandating the disclosure of litigation financing agreements, the court is, and has been, aware of IPCo.’s role in the litigation.  As the involvement of Mr. Stout makes evident, at no point was the court in the dark regarding his status,” Lettow said in his ruling.

The judge said “nothing about Mr. Stout’s role as a counsel of record and litigation financer suggests that a conflict exists.  These two roles are independent of one another and there is no evidence in the record that Mr. Stout acted improperly.”

At one point in his ruling, Lettow examined how litigation-funding practices could be abused, much like the patent system itself.  He said he was satisfied “that no double payment or windfall will go to Dentons for any award of attorneys’ fees and costs.”

“[T]he possibility of abuse does not mean the entire system should be discarded,” Lettow said.  “Instead, courts have focused on the disclosure of such agreements to encourage transparency and ensure a shadow broker is not using litigation as a form of harassment or for multiple bites at the same apple.  Disclosure also enables judges to appropriately evaluate potential recusal due to conflicts of interest.”

Wells Fargo Must Face Claim It Inflated Attorney Fee Request

June 19, 2019

A recent Law 360 story by Nathan Hale, “Wells Fargo Must Face Claim it Inflated Atty Fee Request,” reports that a Florida trial court erred in finding that borrowers could not sue Wells Fargo for expenses they allegedly incurred as a direct result of the bank "grossly" inflating its attorney fees claim after suing them for a loan default, a state appeals court said.  In its opinion, the Third District said the lower court's dismissal appeared to be the result of confusion over the issues and that Florida law clearly allows borrower 345 Carnegie Avenue LLC and loan backers Vladimir Galkin and Yakov Baraz to seek damages if the bank made an inaccurate fees claim.

"The hearing transcript reveals that the trial court conflated the issue of whether Wells Fargo was entitled to attorney's fees based on appellants' stipulated default on the loan documents, with the different issue of whether Wells Fargo's estoppel letter was inaccurate causing consequential damages to appellants," the appeals panel said. "It is clear to us that this confusion resulted in the dismissal of a cognizable claim."  The Third District said it was not weighing in on whether the borrowers could prove that Wells Fargo Bank NA breached their loan documents and Florida's covenant of good faith and fair dealing, but it said that at this stage in the litigation, the court must accept their allegations as true.

The dispute stems from a 2007 loan issued to 345 Carnegie by Wells Fargo's predecessor, Wachovia Bank.  The borrowers did not contest Wells Fargo's March 2014 claim that they committed several nonmonetary defaults, but they disputed the bank's claim that they also owed it more than $100,000 in attorney fees in connection with its enforcement and collection of the note, according to the opinion.  The borrowers claimed that amount was grossly inflated and inaccurate, but the bank refused to provide further proof justifying it, citing attorney-client privilege, the opinion said.

The borrowers attempted to pay the roughly $1.2 million amount the bank had demanded aside from the $100,000 in legal fees, but Wells Fargo refused to accept it.  As a result, the borrowers filed suit in May 2014 to try to prevent the bank from collecting on the note and foreclosing on a mortgage on commercial property owned by 345 Carnegie that partially secured the loan.  Wells Fargo filed a counterclaim, the borrowers stipulated to their liability on the loan default, and the trial court entered a partial final judgment in Wells Fargo's favor and released funds it was holding to the bank to cover those claims.  The court said it would rule separately on the reasonableness of the attorney fees claim, the opinion said.

In a second amended complaint, filed in October 2017, 345 Carnegie, Galkin and Baraz claimed that the fees dispute had caused them monetary damages because they were unable to refinance or sell the mortgaged property securing the loan, according to the opinion.  The trial court subsequently granted Wells Fargo's motion to dismiss that claim for failure to state a claim.

But the appeals court said the damages the borrowers claim they suffered as a result of Wells Fargo's deliberately inflating its fees request were separate and distinct from the question of their being required to pay attorney fees to the bank, and there is "little doubt" that Florida law recognizes such a claim.

State law requires a mortgage lender to provide the borrower with a written estoppel letter detailing not only the unpaid balance of the loans secured by the mortgage but also "any other charges properly due under or secured by the mortgage," the court pointed out.  And the legislature "expressly contemplated" a cause of action rising out of that obligation, including a line in the relevant statute that a prevailing party in a civil action arising from that section of law is entitled to attorney fees and cost, the opinion said.

Nine Rules for Billing Ethically and Getting Paid on Time

May 28, 2019

An article on the ABA website by Todd C. Scott, “Nine Rules for Billing Ethically and Getting Paid on Time,” reports on the ethical rules on legal billing.  This article was posted with permission.  The article reads:

Henry Ferro (an Ocala, Florida, attorney) was very frustrated with his client, Ron Butler, for refusing to pay his legal fees from a criminal matter where Ferro represented Butler’s son Nick.  But all chances of Ferro recovering the $14,000 he says Butler owes him were probably lost for good when Ferro ran into his client at a Lowe’s checkout line and, according to a complaint filed against him, the attorney began yelling that Butler was “a deadbeat who does not want to pay his debts.”

As a result, Ferro became the subject of a harassment complaint by his client Butler, and Butler’s new lawyer argued that not only does his client not owe the fee (because there was no written fee agreement) but also that any amount in excess of the $3,500 Butler already paid to Ferro for his son’s burglary matter would be excessive and unreasonable.

Ferro’s personal attempt to recover his unpaid fee at a Lowe’s store were not any more successful than his other attempts, which are also coming back to haunt him.  According to the complaint, when Ferro’s phone calls to the client to inquire about the fees were unsuccessful, he attempted to discuss the fee issue with his client’s sister-in-law after phoning her about the matter.  Butler’s harassment claim sought a temporary restraining order enjoining the lawyer from having any further contact with Butler or any member of his family about the fee matter.

Nothing is more frustrating for a lawyer who has worked diligently on legal matters than the realization that clients do not intend to pay their bills.  Complicating matters is the fact that, given current economic difficulties, unpaid legal fees are on the rise, and lawyers are looking for ways to recover lost fees more than ever before.

From a malpractice carrier’s point of view, suing your client for unpaid legal fees rarely results in a good outcome.  Savvy clients who know that the legal fee is owed will often turn the tables on a lawyer, filing a counterclaim alleging that the fee the lawyer seeks to collect is unreasonable or cannot be justified because the lawyer did substandard work.  The client’s counterclaim may be a simple tactic to leverage a bill, but because it is a suit against a lawyer, it must be reported to the lawyer’s malpractice carrier, creating an added headache for a lawyer who just wants to be paid.

So what should a lawyer do to recover a legal fee in a matter that he or she is rightfully owed?  Most practice management experts agree that the key to successfully recovering the firm’s net receivables is to take certain steps up front, at the start of the attorney-client relationship, that will put the lawyer in control of the matter if the client falls behind in paying.  Also, what you do after the first time a client falls behind with a payment can determine whether you will ever recover anything for your legal services.

ABA Model Rule 1.5, Fees, is the primary regulatory guideline outlining proper fee arrangements and billing practices.  The rule addresses several aspects of fee setting, including contingency fees, prohibited fee arrangements, fee sharing, and whether a fee is reasonable.  Many states are now considering changes to Rule 1.5 to reflect some of the changing ways lawyers and clients are contracting for legal services.  Changes to the rule include provisions on flat fees, availability fees, nonrefundable fees, and unearned fees.  In Minnesota, changes to Model Rule 1.5 were adopted by the Supreme Court in late 2010 and became effective on July, 1, 2011.

Throughout Rule 1.5, a few themes are prevalent.  Legal fees, whether they are fixed, contingent, or shared with lawyers outside the firm, need to be reasonable.  Changes in the rule addressing availability fees and nonrefundable fees are also based on what’s considered to be reasonable billing practices.  Although determining whether a bill is reasonable can sometimes be difficult, the rule does provide some factors to be considered when determining the reasonableness of a fee including: the difficulty of the matter, the fee that is customarily charged, whether the work precluded you from working on other legal matters, the results obtained, and the experience of the lawyer performing the service.

Another theme throughout Rule 1.5 centers on consumer protection and has to do with putting the fee agreement in writing.  Although the rule stops just short of requiring that a fixed fee agreement be in writing, the authors of the rule state that the “preferable” method for communicating a fee arrangement to a client is in writing, and a written fee agreement is required for legal services involving contingent fees, nonrefundable fees, flat fees, and fee sharing.

So why do some clients choose to not pay their legal bills?  When asked, most clients involved in legal fee disputes will tell you the primary motivator for not paying their lawyer was their sense that the amount they were being billed was unfair.  Even one small item that affects the client’s sense of fairness in an otherwise large legal bill can sometimes be enough to delay payment and jeopardize the good will that the lawyer previously established.  By closely following the tenants of 1.5, lawyers stand a better chance of having clients who understand the billing process and pay the legal bill on time.

The following nine rules for billing and collecting fees from clients that will help you stay on firm ethical grounds, and avoid spending a lot of time on legal work for which you will never be compensated.

1. Communicate the fee arrangement before you start the case.

Getting your client to pay your bill starts with making sure he or she fully understands what you will charge for your services. It may not be a requirement in your jurisdiction, but putting the fee agreement in writing is a good idea, and it allows both you and the client to refer to the document if there are ever any misunderstandings about the bill.  Any lawyer that works for several hours on a legal matter and then discusses with the client the fee arrangement risks losing the billable time already devoted to the matter.   Clients may not like what they are being charged, but if they feel they understand why they have received the charge and it conforms to what they previously agreed to, they are more likely to pay their legal bill in full.

2. Your fee better be reasonable.

The factors for determining reasonableness of a legal fee in Rule 1.5 are a good guideline for fee setting, and they should be considered on the whole.  For example, your hourly fee may be appropriate for the type of work that you are doing, but if your lack of legal experience requires you to spend an inordinate amount of time performing a routine legal task, the amount you bill might be out of line with what’s considered to be reasonable.  It is a good idea to take a close look at the factors for determining whether a legal fee is reasonable because they are likely to be referred to by both the lawyer and the client when parties find themselves arbitrating a legal fee dispute.

3. “Nonrefundable” does not mean that you can be paid for doing nothing.

Nonrefundable retainer agreements have caused an increase in attorney-client fee disputes; especially when a lawyer accepts a large retainer fee at the outset of a matter and the matter is soon settled or the lawyer is discharged after having done little or no work.  The sense of “reasonableness” that permeates the rules on legal fees extends to nonrefundable fee arrangements, so even if your state has not yet adopted changes prohibiting nonrefundable fee arrangements, you should be ready to refund any unearned portion of your fee unless you can show the amount retained is not disproportionate to the amount of work you committed to the legal matter.

4. Verbal flat fee arrangements are as good as the paper they’re written on.

Some states have adopted changes to the professional fee rules to reflect the growing trend towards flat fee arrangements.  A flat fee represents a complete payment for specified legal services and is typically paid in full in advance of the lawyer providing the services.  Unless both the lawyer and the client have a clear understanding what the client will be receiving in exchange for the fee, flat fee arrangements can be fraught with misunderstandings and disappointed parties.  Therefore, make sure your flat fee agreement is in writing, signed by the client, and notifies the client with specificity the nature and scope of the services to be provided, the total amount of the fee and other terms of payment, that the fee will not be held in trust until it is earned, and that the client has the right to terminate the lawyer-client relationship.

5. Availability fees are separate and distinct from legal services fee.

An availability fee is a charge that ensures the lawyer may be available to the client during a specified period of time or on a specified matter.  Because the fee is only for reserving your time that could be used working on other legal matters, your writing to the client should state the fee is for availability only and that fees for legal services will be charged separately.

6. If the fee is shared with someone outside the firm, the client should know exactly where it is going.

It is never a good idea to surprise a client at the end of a legal matter by revealing to them in a remittance statement that an attorney who is not a member of the firm will be sharing in some of the fee.  Clients will sometimes assume that if an outside legal expert was involved, then the lawyer they’ve been talking to all along didn’t really do anything to earn the portion of the fee that is going to them.  Fee sharing between lawyers of different firms is permitted under Rule 1.5 so long as the division is in proportion to the services performed by each lawyer, the client agrees to the arrangement in writing (including the share each lawyer will receive), and the total fee is reasonable.

7. Three keys for effective invoicing: detail, detail, detail.

Clients may not always like getting a legal bill from you, but if they have sufficient information in the invoice about the legal services you performed, they are more likely to consider the bill to be reasonable and compensate you for your work.  The description area for each time entry in the invoice is a prime spot to inform the client with specificity what tasks the lawyer or the staff has performed on their behalf.  Even if you’ve handled tasks for which you have no intention of charging the client, let the client know about the work, how much time you spent on the task, and the fact they are getting the service for no charge.

8. When the payment is late, be direct. Clients like direct.

For individual clients that are on a tight budget, when deciding whether to pay the lawyer’s bill or the bill of the person who may have just completed shingling their garage, they think that the lawyer is sufficiently wealthy and won’t mind accepting a late payment.  Maybe you don’t mind, but if you do, contact the client after the first missed payment and be direct about your expectations.  Often, if you let them know that it is important, they will pay you on time.  They may need to be reminded to adhere to the payment schedule in order to continue receiving legal services.

9. Foonberg’s rule: If you’re going to get burned, get burned cheap.

It is much easier to resolve fee problems with clients early on in the legal matter then later when there may be much more at stake.  One question lawyers often reflect on when fee disputes arise is, “Why did I let the bill get so high?” If you have to part ways with a client who won’t pay, it is a lot easier to do if they don’t already owe you a lot of money.  Jay Foonberg, author of the best selling ABA publication “How to Start and Build a Law Practice,” sums up his advice for lawyers in these situations: if you’re going to get burned, get burned cheap.

Todd C. Scott is VP of Risk Management at Minnesota Lawyers Mutual and specializes in helping lawyers understand legal ethics, risk management techniques, and legal technology systems.  Todd blogs at www.attorneysatrisk.com and can be reached at tscott@mlmins.com.