Practice of Law

Suing Your Client to Get Paid

Law firms are getting more aggressive about suing clients for unpaid legal bills. As the New York Law Journal says, what used to be “unseemly” may become routine. But bringing a breach of contract action against a client for unpaid fees is a very tricky business: first, you have to get out of the attorney-client relationship, and then you have to invoke your (hopefully) enforceable fee agreement.

You can’t sue a current client for fees. This would create a conflict of interest that impedes your ability to preserve the duty of loyalty to your client. See Los Angeles County Bar Ass’n Prof. Opinion (2007) No. 521.

So, before you sue a client to recover earned fees for services rendered, you have to end the attorney-client relationship, either by client consent to withdrawal or by a motion to withdraw. See CCP §284. Note that if it’s a domestic relations matter, you may file a notice of withdrawal of attorney of record after the finalization of the family law judgment without your client’s consent. See CCP §285.1.

Once you’ve terminated the attorney-client relationship, you can sue your former client for breach of your agreement for services. The agreement, which is usually in writing (Bus & P C §§6147-6148), is the underlying contract for your suit: an attorney may sue a client for breach of an express agreement to recover the outstanding balance owed under the terms of the agreement.

Don’t forget that you have to give the client written notice of his or her right to arbitration under Bus & P C §§6200-6206 before or at the time of service of a summons or claim against the client. Bus & P C §6201.

Once you’ve got a judgment in hand, you can seek to enforce it against the client’s nonexempt property, including by asserting a judgment lien. See generally CCP §§680.010-724.260.

Remember that there are risks to taking the extreme measure of suing your former client for fees. In fact, some malpractice insurers discourage doing so because it may raise malpractice claims against you. If you decide to go this route, be sure to carefully consider alternatives first.

For everything you need to know about how to get paid after being stiffed by a client, turn to CEB’s California Client Communications Manual: Sample Letters and Forms, chap 9. Not sure about the impact of the debt collection statutory requirements? Check out CEB’s Debt Collection Practice in California, chap 2. Before you get into these issues with a client, check out CEB’s program Making Sure You Get Paid: Accounts Receivable Management, available for FREE!

© The Regents of the University of California, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

13 replies on “Suing Your Client to Get Paid”

Suing your clients for payment rarely pay off in the long run. You should be aware that the Pro Liability Insurance companies ask about the number of suits for payment on their applications. Any number of suits (even one) can have an adverse affect on your premium. As a matter of claims prevention, enought money should be paid up front or paid throughout an extended case to avoid a large payment at the end that could be disputed or just not paid. A suit will not “Guaranty” payment, (an even if it does) it just would not be worth in to the firm. Many of the LPL companies have guildlines concerning this issue, you should read them before filling a suit.

Note: I originally posted this to Julie’s discussion group on LInkedIn:

I have to respectfully disagree (with some things said in the previous posts on LinkedIn, not here) .

The fact of the matter is that A/R is a sign of a much deeper problem with the way a law firm is being marketing, how legal services are being sold, absence of appropriate internal and certain key external policies and missing administrative procedures.

Too many lawyers want to blame the client when in fact it’s the lawyer’s own business management incompetence that is the cause of the problem.

Should this necessarily excuse the client from honoring their obligations? No, of course not. But if a lawyer has reached the point where he or she is suing a client for unpaid fees, that should be a big wake-up call that it’s time to take a hard look in the mirror and make an inventory of all those courses you took about the BUSINESS of managing a successful law firm.

We regularly conduct A/R workshops for our new members to help them recover tens and in many cases, hundreds of thousands of dollars of A/R. And along the way we are able to help them see the root causes of these problems.

The good news is, if you have the courage to take an honest look at what’s really going on (sometimes it helps to have someone there to hold your hand) you can discover the truth behind why happy lawyers really do make more money. Because no-one is happy dealing with A/R.

Here’s a 5 minute crash course on how to collect A/R that I shot way back in 2009. I’m sure I have more/better lessons somewhere if anyone’s interested let me know. This one just happened to be the first one I found on my YouTube Channel:

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