Suing Clients for Fees Cause Legal Malpractice Claims

Suing Clients for Fees Cause Legal Malpractice Claims

Fee-related lawsuits are among the top reasons attorneys face malpractice claims, accounting for about 33% of such cases. Law firms with a high percentage of 90 day past due receivables encounter challenges in collecting debts. These challenges result in malpractice claims and/or bar complaints. Law firms adapting the following reduce the need for client fee suits.

1. 1. 1. Discuss fee agreements up front prior to accepting the client.
      2. Tie attorney compensation to past due clients.
      3. Collect an adequate retainer for the work.
      4. Implement billing procedures for transactional work. Bill at least monthly. Accurately describe the billed work to the client.
      5. Designate office staff to review and follow-up on all past due accounts. Bring past due account that exceed firm guidelines to the attention of the management. Address client service deficiencies on past due accounts.
      6. Send past due monthly statements.
      7. Remove the account from the billing lawyer on over 90 day past due accounts.  Turn account to staff for collection follow-up.
      8. If a past due client submits a “reasonable” amount settling the account, take it and write off the remaining debt. Avoid wasting time pursuing deadbeat clients.
      9. When necessary to pursue legal remedies to collect the amount owed, make sure the debt is worthwhile and the services properly performed. Suing a client for a couple hundred dollars, might make you feel better, but the consequences of a disciplinary compliant or a claim made against the firm, can costs far more in attorney malpractice insurance premiums than the amount in dispute.

Minimizing the amount, the firm carries in past due accounts will help the law firm with better cash flow, reduce time spent chasing deadbeat clients for money, and minimize potential retaliatory claims because of a collection matter. With less time having to chase dollars, you will have more time to spend practicing law.

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Lee Norcross, MBA, CPCU
California License # 0D87292
    L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080

(616) 940-1101 Ext. 7080